XBRL is a big but under-hyped wave of change in Fintech. So I was delighted when Christian Dreyer agreed to speak to me about how XBRL will change our world.
Christian Dreyer is a well known figure in the Swiss Fintech world. Christian is that rare combination, both deeply knowledgeable and able to think outside the box. Christian is Swiss and has worked for banks, service providers and associations such as the CFA Society Switzerland and XBRL Advisory Council to the IASC Foundation. You can read all about Christian on his LinkedIn profile.
I started off by asking Christian to tell us a bit about his background and how he got involved with XBRL.
Early adopting seems to run in the family: my grandfather had the first ICE car in town. I followed in his footsteps with the first connected computers in my circle of friends in the 1980s and, more recently, the first Tesla in town. Pairing such technophilia with a keen interest in financial analysis and in understanding how markets process information has inevitably led me to running into XBRL early on. The rest, as in founding XBRL CH, the Swiss XBRL jurisdiction, is history.
Q2: What do you think is the biggest impact of XBRL to date?
The eXtensible Business Reporting Language is a dialect of XML, one of the Internet’s core building blocks and a freely and openly available public domain standard. In the world of finance with its reliance on control and proprietary developments, this diversion from business as usual represented a major paradigm shift, which is only now beginning to bear fruit. Legacy financial institutions are still struggling, though. Here’s a piece of accounting science fiction I wrote a decade ago to illustrate how this might look like.
Q3: What do you think has been holding back the wider adoption of XBRL?
What’s the endgame of investment technology? I like to think of XBRL based reporting (and analysis!) as part of the investment value chain, which ultimately will be wrapped up in an investment platform. This platform will be global in scope, although compartmentalised along jurisdictional lines. It will either be a monopoly or a shared public infrastructure. I believe that the financial services industry’s aspiration towards the former and fear of loss of control in the latter goads it to work with the devil it knows rather than to engage with the open standards world that XBRL represents.
Q4: What has been the single most critical innovation in the history of XBRL to date?
The single most critical innovation surely is the standard’s specification 2.1. Everything else is a series of footnotes, not quite to Plato, but to the standard.
Q5: What is the one innovation currently lacking in XBRL that you would like to see?
Gosh, that’s a tricky one! I guess that “the one” would have to be a business model innovation rather than a technical one, as the technology is pretty much feature complete as far as I can tell. How do we get the investment management industry to integrate XBRL instances “at source” into their analysis? Short of disruptive platform innovations outlined above, my intuition tells me that non-financial (i.e. ESG related) information may become a sufficiently complex and granular source of investment alpha to warrant incremental innovation in the reporting – analysis – investing value chain.
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