Written by Yoshiaki Wada Posted on May 11, 2009
Yoshiaki Wada is currently Director and the head of the financial data center section of the Bank of Japan's Financial Systems and Bank Examination Department. In this capacity, he is responsible for the operation of the bank's financial database system and leading the development of the XBRL-based data collection system.
Almost six years have passed since I found XBRL: I joined the XBRL world at the 8th International XBRL Conference in Seattle in November 2003. Since then, I’ve discovered -- as I am sure many of the readers of this blog have -- that it hasn’t been easy to get a broad appreciation of XBRL in the general business society. I hope our experience in Japan may give you some ideas on ways to overcome the difficulties you may encounter in your individual projects.
Outline of the Project
The Bank of Japan (BOJ) is the central bank of Japan. Our prime mission is maintaining price stability and the sound development of the Japanese economy. To achieve these missions, we closely monitor the soundness of financial service institutions (FSIs) in Japan. For timely monitoring, efficient data gathering from FSIs is essential, and XBRL has good potential for that purpose.
Although we decided to adopt XBRL, it was not clear to us what kind of business flow XBRL is most suitable for, nor the workload of implementing XBRL. In addition, there were the following three major issues to be solved before actual implementation:
- How to check whether XBRL is suitable for the BOJ's data-gathering framework
- How to make people aware of the merits of implementing XBRL
- How to encourage people to use XBRL
The XBRL Pilot: A Step-by-Step Approach
In the first stage, only a few persons on our team were available for the XBRL project. Because of limited budget and human resources, there were few options open to us, so we chose to execute in a step-by-step approach.
First, we started the pilot project with FSIs on a voluntary basis. In July 2004, an announcement soliciting voluntary pilot test participants was made on the BOJ's website. We were lucky that 31 cooperative and courageous FSIs applied for this test of unfamiliar technology, because XBRL was almost unknown in the finance industry in Japan at that time.
To help them understand XBRL and the purpose of the test, members of our XBRL team visited candidate FSIs one by one, which were located all over Japan, and gave hours of instruction on XBRL. The summer of 2004 was unforgettably hot for us, not only because of the elevated temperatures but also the psychological pressure to complete the first step of the project.
The contents of the test were rather simple. FSIs were requested to read the manual, install the necessary tools on their PC, and then convert their monthly balance sheet data from Excel format into XBRL. Although assistance was given by telephone because of limited manpower, all the FSIs could achieve the test program as planned.
As a consequence, we felt that any FSI could produce XBRL data provided they were given a user-friendly manual and easy-to-use tools. In addition, the IP-VPN system which was under construction for different purposes seemed to be suitable for sending metadata to FSIs and gathering XBRL data from them.
The most important result of the pilot test was that we found we could design the basic reporting scheme based on XBRL with complete confidence that XBRL was suitable for us.
How the BOJ's XBRL Scheme Works
BOJ's XBRL reporting scheme is based upon an interactive network system, which is called BOJ-Info system. BOJ-Info system connects BOJ and FSIs via IP-VPN, enabling both sides to send and receive any electronic data set smoothly and securely.
The resulting business flow works as follows.
(1) The BOJ prepares metadata such as the taxonomies required for reporting work. This metadata is uploaded to the BOJ-Info system.
(2) The FSI downloads the metadata via BOJ-Info and stores it on a PC which contains the BOJ’s tools for producing XBRL data.
(3) The FSI then imports report data previously created with Excel into the PC and creates data in XBRL format.
(4) Having checked and corrected any errors using formula linkbase, the FSI sends the XBRL data to the BOJ via the BOJ-Info system.
(5) The BOJ stores the XBRL data sent by the FSIs in a database. After again checking for errors in the database, the data is used for monitoring and producing statistics.
This reporting scheme has the following unique features.
(1) All necessary tools, taxonomy, and BOJ-Info system are supplied by the BOJ for free. Tools are designed to be easily added on the FSIs current system and do not cause any unexpected implementation cost for FSIs.
(2) The XBRL data generating tool is very easy to use, so FSIs can generate the XBRL instance file without any outside help. Consequently, data security can be maintained.
(3) By using formula linkbase, data accuracy is improved. The cost of data handling is minimized for both FSIs and the BOJ.
One of the most important features of our scheme is formula linkbase. When we decided to adopt formula linkbase, its specifications had not been finalized and only FDIC was implementing it. Why did we decide to use formula linkbase?
XBRL is a powerful tool for efficient data exchange. However, it is not useful enough for FSIs, because it is not necessarily worth the workload of generating XBRL data. To enhance the acceptance of XBRL in society, FSIs needed some benefit to offset the cost of generating the data. We searched for a solution and found the answer in formula linkbase.
Formula linkbase enables FSIs to validate data before submitting it to the BOJ, thus reducing the workload of correcting errors both for FSIs and the BOJ. Formula linkbase thus became core to the BOJ’s scheme in order to enhance and ensure the efficiency of XBRL.
What We Have Learned
Since February 2006, our XBRL scheme has been working without any major troubles. In addition, revision and re-distribution of the current taxonomy and the release of the new range of the taxonomy have been successfully done.
Simple revision and distribution of taxonomies is a key factor for using XBRL. Please remember that once you start using XBRL, you must maintain the taxonomy until you decide to shift to a better technology than XBRL. It is therefore crucial to build a workable and efficient overall reporting scheme which includes developing taxonomies in a timely fashion, notifying FSIs of revisions and new releases of taxonomies, delivering taxonomies, and receiving reported XBRL data.
One of the most important successes in the past three years has been that, although XBRL was not mandatory in our reporting scheme, all FSIs submitted in XBRL format voluntarily. In other words, once XBRL reporting was ready, 100% of FSIs used it. A colleague said he could not believe it, because some banks in his country would never submit XBRL data even if required to do so by law.
What made it possible to achieve 100% XBRL based submission? One of the key factors is undoubtedly formula linkbase. Looking at the results of a questionnaire survey on the usability of BOJ’s XBRL tools and reporting scheme, which was conducted in August 2008, more than 70% of the FSIs recognized the merit of formula linkbase. In addition, many banks wanted formula linkbase to be extended to other reports.
This reveals an important aspect of technology implementation. We must always pay attention to benefits for users and try to build a popular scheme.
Looking back on our project, the following factors seem to be critical for the smooth implementation of XBRL:
- Taxonomy with high maintainability
- User-friendly tool
- Well-designed reporting scheme
- Well-organized project team
If any of these factors had been missing, our project could not have succeeded. However, to me, the last factor seems to be the most important.
BOJ's XBRL team consists of five persons, three of whom have built all the taxonomies. They are always studying the latest technologies and trying to update their taxonomy library. In addition to the XBRL team, more than 20 people work together and cooperate to operate the database system, maintain the IT infrastructure such as BOJ-Info, and produce statistics. Without good teamwork, our breakthroughs could never have been achieved.
Future Plans
Once achieving a goal, one becomes greedy for new challenges. In our case, the XBRL-based data gathering scheme has been built. Although there is some room for improvement, basic functionality has been stable and the XBRL-based “bridge for data exchange” between BOJ and FSIs has been realized. What, then, is the next target? We have two major objectives in mind:
First is an XBRL-based database. We have stored XBRL instance data in flat files, but have not yet stored it into a native XBRL database. Currently, received XBRL instances are shredded into simple CSV that a conventional relational database can read; lots of metadata is not used. Our new database is a hybrid that is capable of supporting both XBRL and conventional data. The project started in this spring and live use is expected in September 2011.
Second is a handy and capable XBRL data analyzing tool. Using raw XBRL instances, various types of data analysis such as cross section analysis and panel approach can be easier realized. We anticipate experts both in Japan and around the world to be working on such an innovative tool.
In my humble opinion, it is just this kind of global cooperation that will continue to move XBRL forward, making it a vital and necessary tool not only in Japan, but throughout the world. I look forward to our working together and sharing the knowledge we gain.
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