Written by Makoto Shibata Posted on June 3, 2010
Makoto Shibata is Principal Analyst, eBusiness & IT Initiatives Division at The Bank of Tokyo-Mitsubishi UFJ and Chair, Financial Services Working Group at XBRL Japan.
XBRL has been adopted in key financial areas in Japan, including corporate disclosure, tax filing, and regulatory reporting. In 2003, the Tokyo Stock Exchange took its first step toward adopting XBRL by enhancing its Timely Disclosure Network, or TDnet, to support the data standard. In 2004, the National Tax Agency adopted XBRL for its online tax return filing and tax payment system, known as e-Tax. The Bank of Japan (BOJ) adopted XBRL in 2006 for gathering financial data from banks and, in 2008, the Financial Services Agency (FSA) renovated its electronic corporate disclosure system (EDINET) for XBRL and mandated its use for financial reporting by public companies.
A natural consequence of the adoption of XBRL by Japan’s regulatory bodies is that private-sector users of financial information are increasingly using XBRL data to their own advantage. In corporate disclosure, for example, new analytical tools and web sites have been created for EDINET and TDnet data. It is interesting to note that some of the new approaches are coming from outside of the XBRL community.
An excellent example of the way the financial community is now utilizing XBRL is the use of e-Tax filing data by bankers. The National Tax Agency now mandates that corporations attach XBRL financial statements with their electronic corporate tax filings and, for the fiscal year ended March 2010, more than 1.2 million corporations used e-Tax filing.
For many years, Japanese banks have been using the attached financial results of corporate tax filings for credit analysis. However, it takes a significant amount of time for banks to manually enter data into their loan processing systems from the paper financial statements obtained from borrower corporations. The inefficiencies of this process are especially notable in May and June, when banks need to allocate major resources to process their financial reports for March-end statements.
To cope with this challenge, various attempts had been made in the past to acquire financial information in digital format. But they have been far from successful, because the data format and account items were not standardized. Now, if banks can obtain borrowers’ financial data in XBRL format, the efficiency of lending and credit management functions can be improved dramatically by processing the data systematically.
My bank, The Bank of Tokyo-Mitsubishi UFJ, was the first bank to begin using XBRL e-Tax filing data in 2006, and other mega-banks in Japan followed soon after. As the graphic below indicates, dedicated web sites were set up to allow banks to download the data.
The loan customer (or their tax accountant) requests the National Tax Agency to download their filed e-Tax data and, once downloaded, it is sent to the lending institution. It is important to note that the bank does not obtain data directly from the National Tax Agency; it only receives data with the permission of the loan customer who filed it. At that point, the bank can utilize this XBRL data for credit analysis without entering figures manually.
Although only the Japanese mega-banks are currently accepting XBRL e-tax data and the number of customers submitting e-Tax data to banks this way is still limited, the progress made thus far nevertheless represents a significant advance for XBRL usage in the banking industry. I look forward to continuing efficiencies and improvements in data processing and analysis from the adoption of XBRL by Japan’s financial institutions.
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