XML Content Components in Financial Services
1. Introduction
Companies in the financial industry have been leaders in using Internet technologies to achieve a competitive advantage. Many are now early adopters of XML as the foundation for managing their content. XML gives them advantages of reuse and flexibility of output.
There is a trend away from creating monolithic documents to creating content that gets assembled in different ways for different customers and output channels. Instead of research analysts, for example, producing research reports to be sent to customers, the emerging model is one where the analysts create content components which are then assembled into products further downstream for delivery to customers.
The objective is to infuse the organization's technology and business infrastructure with flexibility in order to better deal with evolving business models. The idea is to better tier customers and better service different kinds of customers. XML is a good fit for this kind of application and enjoys tremendous industry support.
2. The Role of Content in the Financial Industry
Businesses in the financial sector have been among the first to adopt Internet technologies to achieve a competitive advantage. This is not surprising, for several reasons. First, for many such firms, content is one of the main products of their business: equity research notes, recommendations, newsletters, sector reports, and so on. The Web has created new channels for distributing this content. Second, timeliness is critical for financial data. Customers are demanding instant access to financial information, day or night. The Web makes this possible. Finally, the Internet has enabled the creation of new products, consisting of aggregated information and personalized content which go beyond printed reports to electronic formats, e-mail updates, summaries on PDAs and real-time notifications to mobile phones.
These new opportunities present some challenges to those who work with content in the financial industry. There is a history of supplying information to customers exclusively as paper reports, of creating marketing materials exclusively as printed brochures, and so on. Consquently many of the tools and processes are designed for print production and not for online delivery. With the advent of the Web, parallel production groups have sprung up and their efforts often do not integrate well with the traditional production groups, resulting in increased costs and slow publication times due to inefficiencies in the process.
As we will see, using XML for the content format has the prospect of eliminating those inefficiencies. Currently however, most analysts create their content in a word processor, usually Microsoft Word. Elaborate mechanisms have been built up around Word, collections of wizards and templates to achieve some integration with back-end systems and to impose some consistency in the content so it can be reused. Workflow systems to implement approval and revision cycles are awkward.
These are typically home grown systems that are not scaling up well to the new opportunities presenting by the Internet. Many leading companies in the sector are now looking to XML as the basis of more robust and flexible processes.
3. XML for Content
In this section, we review the basic characteristics of XML that make it a good technology for content intended for distribution through the Internet and other channels. XML (eXtensible Markup Language) is a standard text-based format for storing and transmitting information. It uses tags to indicate parts of documents and label portions of content in meaningful ways. For example, in an equity research note, the introductory section which gives a brief summary of the background of the subject company might be enclosed in tags like this:
<CompanyBackground>Company XYZ manufactures ... 810 employees.</CompanyBackground>
The <CompanyBackground> tags indicate the purpose of that section of information. Tags are also used to label individual words and phrases, for example to indicate that a word is a company name:
... competitors include <Company>Cisco</Company> and <Company>Nortel Networks</Company>.
It is also common to use tags to capture metadata associated with the content, that is, information such as the author's name and date of creation, which goes along with the content, but are not part of the content itself.
This use of tags is similar to how HTML is used for Web pages. There is an important difference however: HTML tags are used to indicate the appearance of content, XML tags are used to describe the content. In fact, XML by itself says nothing about the appearance of the information. Instead, the appearance is described in separate files called style sheets.
This characteristic of XML, often referred to as the separation of presentation and content, is one of its key strengths. It means that the same content can be delivered in several different ways by just changing the style sheet: to the Web, on paper, via e-mail, etc. This is an important advantage because the people who create the content are typically highly skilled and highly paid individuals. It makes a lot of sense to free them up from the complications of formatting their work for different contexts. But even more, this flexibility of output results in important cost savings because the content can be reused.
This situation is also very different from having the content experts use a word processor like Microsoft Word. A word processor is specifically designed to support formatting of content, especially for printing. This is almost the opposite of the intention of XML. If you want to take a Word and reformat it for the Web or other formats, this is typically a manually intensive process that does not scale up to a large number of users. Moreover, it is difficult to automatically extract pieces of information from a Word document and reuse them.
XML is extensible because the set of tags that are used in any particular application can be defined by the developer of the application. That definition is embodied in an XML schema, which is analogous to a database schema that is used to define fields and tables in a relational database. An XML schema defines the names of the tags, describes in what places they can appear in a document and other details such as the format of the information within tags (for example, a date format).
Schemas do not by themselves define the meaning of the tags. The fact that <Company> denotes a company name is part of the vocabulary of the application. Vocabularies are defined by agreement between the parties using the tags. Today, most XML applications are used within one enterprise and the schemas and vocabularies need only be agreed upon within that organization. However there are many industry groups working to standardize the definitions for their sectors which will enable increased sharing of content between enterprises. One of the important advantages of XML is that organizations don't need to wait for all those standards to be finalized. Once content is formatted as XML, it can be easily translated from one schema to another at a later date, if necessary.
4. XML in the Financial Industry
The financial sector shares many of the same requirements of any business that is heavily on content-oriented. But they also have several needs that are unique to the industry. The following sections describe some of the main ways XML can be benefit the financial industry.
4.1. Reducing Costs
Keeping costs under control is always of interest, but in the current climate of tight markets, reducing expenses is a prime consideration for the financial industry. Using XML for content provides a number of ways to reduce costs in the production of content. ROI studies indicate that cost savings of 30-60% can be expected under typical conditions.
These savings result from the factors described in the following sections.
4.1.1. Enable Reuse
Financial analysts are very highly paid individuals and their expertise represents the core competence of the organization. It is critical that their time be used as efficiently as possible, and that they can pinpoint sources of accurate, precisely targeted source information. Reusing existing content during the creation of new content is one of the prime motivating benefits of XML for many financial analysts.
XML enhances the ability to reuse existing content during the creation of new content because its well-defined structure and labeling allow database technologies to be brought to bear on it.
4.1.2. Eliminate Manual Processes
XML eliminates the need for manual conversion from unstructured input file formats to the desired output format. Because XML provides a predictable, consistent format such conversions can be done automatically.
4.1.3. Improve Efficiency of Analysts
In addition to improving efficiency through reuse, XML eliminates the need for content creators to spend time adjusting formatting. Also, native XML applications integrate better with backend databases and workflow systems and can be more precisely targeted to the needs of the analyst than a general-purpose word processor. They can even be configured to provide customized views of the content based on the role of the person accessing it.
4.2. Enhance Revenue
Revenue can be enhanced in a number of ways including improving the quality and timeliness of marketing materials, creating new products, and taking advantage of new channels of distribution. The key features of XML that figure into this are its separation of presentation from content, and its ability to label content in meaningful ways.
Because format and content are separated, it is easy to reuse content for different output channels. One of the main drivers for this is the need to get content that was formerly exclusively intended to go to print on to the Web. This need is common across many industries. The financial sector has additional opportunities to realize additional revenue from XML. The same content (or, more precisely, portions of it) that goes into printed reports and on to the Web site can be syndicated to financial reporting houses like Reuters and Bloomberg. It can also form the basis of e-mail newsletters, cell phone alerts, eBooks, slide show presentations, and summary reports delivered to PDAs by services such as AvantGo.
Another exciting prospect enabled by XML is the ability to create customized, personalized content on the fly, thus changing completely the dynamic of content delivery and enabling new business models. Because of XML's ability to clearly and reliably delineate portions of documents corresponding to different uses and audiences, analysts can create content components which are then assembled into products further downstream for delivery to customers. The resulting product might contain less information than before, but it is more valuable because it is targeted information.
Not only can these components be extracted from a large document to create summary or abbreviated versions, but the content can be aggregated from several documents and data sources. XML's ability to label content comes into play here too. Very precise questions can be asked to find the right content: e.g., "How many times was Company XYZ recommended by analysts A, B or C in the last six months?", "What comments have been made about Company XYZ with regard to the political situation in country A?", "What information has this customer requested in the past about Company XYZ and what has been provided?".
Finally, the efficiencies of an XML-based content system speed production cycles and reduce time-to-market of content. Early studies are showing process cycle time reductions of 50-60%.
4.3. Reduce Risk
Material inaccuracies in marketing and other data can lead to litigation. It is imperative that the quality of the information be as high as possible. An XML-based system for managing content provides a much more streamlined production process which enables more attention to be paid to content accuracy than to formatting. Such an approach is much more amenable to integration with workflow systems which can ensure that appropriate verification is taking place. Moreover, because XML content carries meaningful labels with it, it is much easier to set up systems to automatically cross check information for accuracy and compliance.
4.4. Ensure Compliance
Companies in the financial sector work within a strict regulatory environment. Maintaining an audit trail for the information in the reports is required. For example, it may be necessary to establish that a particular financial analyst did not have a personal interest in companies that were discussed in a given recommendation or assessment. XML's ability to capture metadata and to label information provides the perfect mechanism to maintain the necessary data.
In addition, different countries have different regulations for activities like insider trading and other regulations that can affect what content is allowed to be presented. XML enables the selective display or suppression of information depending on the jurisdiction where the content is to be delivered.
4.5. Share Information
In the preceding, we have discussed how XML enables the sharing and reuse of content within an organization. Equally important is the use of XML to share information between organizations. The syndication of information to financial news services is already common, for example. The advantage of XML is that it removes the need to work with the content manually on the receiving end to get it routed to the proper destination or to store it so it can be retrieved accurately later. Emerging standards like RIXML (Research Information Exchange Markup Language) are providing the means for describing how the information is packaged and delivered. Other standards are needed to describe the contents of those packages and are in development.
5. Implementing XML
An end-to-end XML solution for content would include content creation tools, a content management system (CMS) and formatting applications. At the moment, no one vendor has all the pieces and a best-of-breed approach is taken. This works well because the coupling between the different parts of the solution are based on an agreed-upon standard: XML.
The more tightly integrated the better though. The content creation tools need to integrate tightly with the CMS, and there needs to be convenient ways to access back end databases and importing legacy data.
The greatest benefits are realized when content gets into XML as early in the processing cycle as possible. At SoftQuad, we advocate putting tools such as XMetaL in the hands of the content creators to enable them to easily create valid XML. The good news is that such tools are easy to use, they do not require the content expert to understand or be aware of the underlying XML, and they provide a flexible platform for integration with existing processes.
Figure 1 shows what using XMetaL to create an equity research note might look like. The analyst starts with a template and works in an interface similar to a word processor, but is creating valid XML.
Figure 1. Using XMetaL to create an equity research note in XML
When the XML is processed for the Web site, it might look as shown in Figure 2.
Figure 2. HTML output from the XML created in Figure 1.
Figures 3, 4 and 5 show the same XML content transformed to PDF (for printing), to WML (for display on a cell phone), and for display on a PDA.
Figure 3. PDF output from the XML created in Figure 1.
Figure 4. Cell phone display of the XML created in Figure 1.
Figure 5. PDA display of the XML created in Figure 1.
6. Summary
XML adopters in the financial industry are realizing significant cost savings and time to market advantages. They are seeking to achieve early strategic competitive advantage by implementing upcoming standards, tools, and technologies. And they want to start working more closely with their customers and suppliers who already use XML. XML is the right technology for the content needs of the financial sector and the tools and applications for working with it are well supported by vendors.