The advent of Information Technology (IT) has helped the Financial Services Industry in more number of ways than we can ever imagine of. From the very fact that it helps me write this post related to finance, read by those unknown readers of The Finance Blog, belonging to geographies far across the world, to the valuation of companies that results in multi billion dollar deals; IT had unarguably made its stronghold in the Finance world!
Various IT applications catering to the same domain/sub-domains of Finance are made/being made. For example, there are umpteen number of applications that can handle the tasks of a bank alone (core-banking applications); Profile, FlexCube, Finnacle, Hogan, Temenos, Tieto Enator, to name a few. Since each of these applications are made by different owner companies, each of them follow their own standards for maintaining bank data (eg. name, a/c no, principal, interest rate etc.) in its databases. For example, some applications store date in DD/MM/YYYY format while others store it in MM/DD/YYYY format (as followed in UK and US respectively). This could lead to certain problems.
Consider a case in which two banks, a US and a non-US bank, are merging to form one single bank. After the merger, the customer base or transaction data of the two banks might need to be combined together. Quite obviously, if the two banks’ applications follow different data standards, then the merger would be difficult and may not even be possible at all.
Some times, the same bank may purchase applications from various vendors to create a combined IT environment to service the bank’s needs. I.e., the core-banking application may be from vendor A, the loan servicing application may be from vendor B and the portfolio management application may be from vendor C, so on and so forth.
The above situations point out the need for having some sort of a standard for storing financial data in applications meant for Banking and Financial Services industries. The Interactive Financial eXchange or IFX does just that. To put it simply, a financial application that follows the IFX standard is interoperable with any other financial application that uses the same standard and can be easily made to work in concert.
According to its promoters, IFX is an open, interoperable standard for financial data exchange that is designed to meet the business requirements of the global financial services industry.
Thus, IFX is a data standard that sets the norms for the usage of financial data in the global financial services industry. With the world economy growing towards one without barriers, IFX would probably set the tone in financial data handling, making the process a tad easier.
- IFX Framework
- IFX Standard
- What is a Core Banking System?