an analysis of xbrl adoption by d basel ii compliance...

XBRL IN THE BANKING INDUSTRY AN ANALYSIS OF XBRL ADOPTION BY DUTCH BANKS FOR

BASEL II COMPLIANCE REPORTING

“THE ANNUAL REPORT OF THE 21ST CENTURY WILL NOT BE ANNUAL AND IT WILL NOT BE A REPORT”

ALAN BENJAMIN (1998)

MASTER THESIS INFORMATION MANAGEMENT

H.J.W. van Hoogstraten BSc. August 17, 2006

Supervisors Dr. H. Weigand (Tilburg University) Drs. H.G.Th. van Gils RE RA (KPMG) Second reader Drs. A.L.W. Hexspoor MIM (Tilburg University) Institution Tilburg University

Faculty of Economics and Business Administration Department of Information Systems and Management

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Preface This thesis serves as the completion of my MSc Information Management at Tilburg University, the Netherlands. The late ‘BIK-bril’ this study was identified with when I started it, offered me the skills to apply a helicopter view on the business and the IT domains of the research area and to bridge them. Several items in public news and literature raised my interest by its proclaimed savings in financial reporting costs. The ambitious project of the Dutch government to decrease the administrative burden for corporations by harmonizing accounting definitions enabled by information technology offered me a very broad area to focus my master thesis on. The research has been conducted on an internship basis at KPMG Information Risk Management (IRM) Financial Services (FS) in Amstelveen (see Appendix P). I would like to thank the IRM FS business unit for providing me the opportunity to write my master thesis. The several workshops, discussions and client contacts were a valuable addition to my research and I sincerely appreciate the opportunities. I would like to thank Hans Weigand and Herman van Gils for supervising me in my research process. I am also thankful to my colleagues at KPMG for their support and interest in my research. Jeroen Dronkert guided me through the internship project and questioned me on assumptions and paths I took during my process. For providing me ideas and interview contacts, thanks go out to Brigitte Beugelaar, Erik Schut, Fons Basten, Hans Moonen, Henk Pater, Joost Groosman, Mariska Ooms-Pieper, Martijn Berghuijs, Peter Buur and Rochelle Degens. As the research topic was also dealt with in the Business Advisory Services line of KPMG, I would like to thank Franc van Erck, Guido van Aubel, Hanneke Knoop, Marc van Hilvoorde and Paul Rothwell. The internship would not have been as pleasant as it was without my fellow interns Delano Gonzalez Möllers, Dennis van Herk, Erik van den Hoek and Micha Sjoerts. I also thank the interview contacts for their time, interest and their contributions to the interview summaries. Last but certainly not least, I would like to thank my family and friends for their patience and support during my study activities and my internship. Special thanks go to my uncle Thieu Wetemans for providing me feedback on the English writing aspects of this thesis.

Amstelveen, August 17, 2006 Cover: quote from ‘The 21st Century Annual Report’, published by The Institute of Chartered Accountants in England and Wales, November 1998

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Management Summary The eXtensible Business Reporting Language (XBRL) is an electronic open standard to exchange financial and corporate information among computer systems within and outside the borders of an organization. Its most important advantages are to be achieved through its standardized information structure (taxonomy), its electronic layout, exchange and processing capabilities and the reduction of manual intervention. The adoption and use of XBRL is taking place worldwide with banking organizations being identified as advanced adopters. Banking implementations of XBRL are up and running in the US, Spain and Belgium on obligatory bases. In the Netherlands, the government has set up a project to enable Dutch corporations to use XBRL for their reporting obligations in a harmonized way to the Chambers of Commerce, Statistics Netherlands and the Tax Authority. However, the Dutch banks do not apply XBRL yet. These observations are the reason to investigate the aspects which define the adoption of XBRL. This research question has been focused on the banks’ financial business reporting processes to comply with the Basel II Accord for which they report to the Dutch regulator: ‘De Nederlandsche Bank’ (DNB). By applying relevant theories and enriching these theories with recent XBRL case studies, a conceptual list of critical success factors to adoption has been constructed. In order to check whether these factors are valid in the Dutch banking industry, interviews have been conducted with DNB, the Netherlands Bankers’ Association and with several banks ranging in size from banks nationally serving municipalities to large multinational banks. It has been found that DNB offers a well-advanced reporting portal to the banks that has comparable capabilities to an XBRL-based information exchange. Because of the availability of this satisfactory system, XBRL will not be obligated at short hand but it will be facilitated from January 1, 2007. Banks can voluntarily adopt XBRL for the reporting process to DNB while the current system is and will be supported. DNB however does consider discussing this ‘dual approach’ with the banks in the future to decide on a single format. It is important to mention that there cannot be given a common industry’s opinion. Opinions are diverse among banks, orientation and strategic planning processes are unique per bank and competitive stakes play a role. The degree of co-operation in the industry, however, has been valuated as satisfactory: i.e. there is sufficient consultation between DNB and the banks. What the banks often indicate is that the added value for their external Basel II reporting process is unbalanced in relation to the efforts to be invested. These aspects, other higher priority (compliance) issues and the indication of a lack of clear benefits and costs in a voluntary adoption process result in the low priority given to XBRL. The multinational banks, however, do recognize the value of XBRL for European harmonization of reporting definitions on the longer term. In addition to the orientation and awareness processes on performance and effort expectancies by the banks, social influences also play an important role. A network effect is expected here from January 1, 2007 when Dutch corporations are able to report financial information in XBRL format. This involves the growth of the ‘XBRL community’, the support of software suppliers but can also result in a demand by banks’ clients to exchange information with the bank in XBRL format too. As the Basel II specifications are available in XBRL taxonomies at European level, the free offer of these taxonomies indicates considerable support and pressure

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on DNB to support XBRL reporting. Again, since XBRL reporting for banks is possible in Belgium and Spain, especially the multinational banks are expected to influence the Dutch adoption by actively asking for XBRL support by DNB. Key words: adoption, Basel II, compliance, financial services, XBRL

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Table of contents

PREFACE…….…………………………………………………………………………….… i MANAGEMENT SUMMARY………...………………….………………………………... ii TABLE OF CONTENTS…………………………………………………………………... iv

1 INTRODUCTION............................................................................................................ 1

1.1 Problem area ........................................................................................................................................... 1

1.2 Problem statement .................................................................................................................................. 2

1.3 Research method..................................................................................................................................... 2

1.4 Demarcation ............................................................................................................................................ 3

1.5 Expected outcomes.................................................................................................................................. 3

1.6 Relevance................................................................................................................................................. 3

1.7 Outline ..................................................................................................................................................... 4

2 DEFINITIONS ................................................................................................................. 5

2.1 Financial business reporting .................................................................................................................. 5

2.2 Standards................................................................................................................................................. 6

2.3 Compliance.............................................................................................................................................. 8

2.4 Basel II ..................................................................................................................................................... 9

2.5 eXtensible Business Reporting Language ........................................................................................... 11

2.6 Initial matches between XBRL and Basel II ...................................................................................... 15

2.7 Comparison of XBRL to alternatives.................................................................................................. 17

3 ADOPTION THEORY INTERPRETATION AND ENRICHMENT...................... 18

3.1 Theoretical framework......................................................................................................................... 18

3.2 Theory interpretation........................................................................................................................... 20

3.3 Centraal Bureau voor de Statistiek ..................................................................................................... 21

3.4 Association of Water Boards................................................................................................................ 22

3.5 Federal Deposit Insurance Corporation ............................................................................................. 23

3.6 Australian Prudential Regulation Authority...................................................................................... 24

3.7 European Central Bank ....................................................................................................................... 25

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3.8 European banking industry ................................................................................................................. 26

3.9 Conclusions............................................................................................................................................ 27

4 VALIDATION OF ASPECTS - DESIGN.................................................................... 32

4.1 Banks...................................................................................................................................................... 32

4.2 Software suppliers ................................................................................................................................ 33

5 VALIDATION OF ASPECTS - RESULTS................................................................. 35

5.1 De Nederlandsche Bank ....................................................................................................................... 35

5.2 Nederlandse Vereniging van Banken .................................................................................................. 36

5.3 Bank A ................................................................................................................................................... 38

5.4 Bank B ................................................................................................................................................... 39

5.5 Bank C ................................................................................................................................................... 41

5.6 Bank D ................................................................................................................................................... 42

5.7 Bank E ................................................................................................................................................... 43

5.8 Conclusions............................................................................................................................................ 43

6 CONCLUSIONS AND RECOMMENDATIONS ....................................................... 46

6.1 Answer to problem definition .............................................................................................................. 47

6.2 Answer to research questions .............................................................................................................. 48

6.3 Recommendations................................................................................................................................. 49

6.4 Reflections on the theory...................................................................................................................... 51

6.5 Suggestions for further research ......................................................................................................... 52

6.6 Research evaluation.............................................................................................................................. 52

REFERENCES....................................................................................................................... 53

Publications ......................................................................................................................................................... 53

Websites ............................................................................................................................................................... 60 APPENDICES……………………………………………………………………………… 62

Master thesis Information Management ~ H.J.W. van Hoogstraten BSc. ~ XBRL in the banking industry 1

1 Introduction This chapter introduces the problem area in the first section. The research question and central problem definition are defined next along with the research questions. The research method is described, the research limitations are given in the demarcation section and the expected outcomes are listed. Finally, the scientific and social relevance and relevance to KPMG are discussed and the chapter finishes with an outline of the thesis.

1.1 Problem area This thesis deals with the combination of XBRL and compliance reporting. XBRL is an acronym for eXtensible Business Reporting Language and is a platform-independent open standard for the electronic exchange of financial information. It uses taxonomies which can be regarded as data dictionaries to describe the semantics of data based on legislation and accounting standards for annual reports and other financial documents. The compliance domain covers the need for organizations to act and report according to certain accepted agreements. Examples of such obligations are financial statements being in conformity with generally accepted accounting practices (GAAP) or boards of directors being in control over their organization, also known as corporate governance. Pressure on the quality of business reporting has increased due to accounting scandals and subsequent legal regulatory adjustments. There has been quite some activity in the literature and in the field regarding compliance with acts such as Sarbanes-Oxley (SOx) for corporate governance and the Basel II Capital Accord for enhanced stability and market discipline in financial markets [Verdegaal, 2004]. Banks and other credit institutions are obligated to implement a risk management framework to relate their capital requirements more closely to the actual level of risks. It is discussed that considerable resources need to be spent in order to be compliant [FD, 2006c; www24]. From an information management point of view, timelier and richer provisioning of information is asked for, resulting in increasing business-to-business (B2B) and business-to-government (B2G) information flows. The need for assurance over data quality is growing, intensified by the increasing dependability on information technology (IT) that organizations experience. This is where the promised benefits of XBRL come into scope. By being able to ‘tag’ data entries with its meaning, separating content from presentation and improved automated processing support, XBRL seems to be a good enabler of compliance in the field of financial business reporting. In the Netherlands, the ministries of Finance and Justice have initiated a project to develop the XBRL taxonomy to harmonize the Dutch companies’ financial disclosures of tax declarations, economic statistics and consolidated annual reports. The goal is to reduce the administrative burden to corporations by enabling reporting in XBRL format from January 1, 2007. However, Mulder et al. (2006) note that Dutch banks are rather reserved regarding this new possibility of digital reporting. Since implementations are running in other Dutch industries and banking industries abroad, it is questionable which factors influence the Dutch banks’ opinions regarding XBRL. A hypothetical explanation is that Dutch banks are dealing with a possibility to use XBRL in contrast to the Belgian and Spanish banking industries where reporting in XBRL format is obligatory. Such an obligation raises much more attention in the corporate industry than a possibility for XBRL reporting on a voluntary basis.


1.2 Problem statement Pros and cons of XBRL have been widely discussed in the international literature and practice. From a theoretical point of view, its capabilities and conditions are clear. However, the small amount of available case studies has not yet given the Dutch banking industry a useful business case. In some other industries the use of XBRL is operational while other industries show less applicability of XBRL. By taking into account the lessons learned from these practices and comparing the industries and the reporting requirements, the research aims to investigate the value of XBRL in helping the Dutch banking industry comply with Basel II. The following research question has been formulated:

Which aspects define the adoption of XBRL in a Dutch bank’s financial

business reporting process to comply with Basel II?

In order to answer this research question, the following questions are addressed:

• What information does Basel II require banks to report? • Which improvements does XBRL offer compared to alternative reporting

methods? • What is the importance of open standards for financial business reporting? • Which business cases exist in the financial services industry? • Which factors are noted by theory to be important to adoption? • Which predictions are given by theories and are they valid in this case? • Which factors influence a bank’s opinion and XBRL implementation plans?

1.3 Research method First, the characteristics of financial business reporting, communication standards, compliance, Basel II requirements and XBRL are described. The research is based on literature study identifying relevant aspects of each concept. Then, potential matches between XBRL and banks’ requirements are indicated along with an analysis of alternatives to XBRL. Second, a list is made containing aspects potentially influencing the adoption of XBRL by banks. This list is based on explanatory models for diffusion of innovations, adoption of information systems (IS), information technology (IT) and open standards. Empirical data is gathered based on developments, results and lessons learned from other industries or banking industries abroad. This exploratory study covers general and industry-specific aspects and it is investigated to what degree these aspects are applicable in the Dutch banking industry. Some aspects also apply here, some do not and some aspects are specific to the banking industry and are thus not known. The aspects are scaled in order to be validated in the third phase while taking industry similarities and differences into account. The third phase is concerned with validating the proposed list in collaboration with banks and its software suppliers. Using interviews and questionnaires, the aim is to acquire knowledge about their evaluation of the listed aspects and thus to validate the conceptual list of factors.


1.4 Demarcation Since both areas of Basel II compliance and XBRL are very interesting, the scope of the research is focused. The first demarcation concerns the focus on the banking industry in the Netherlands. Next, the research is only aimed at the externally oriented financial reporting application of XBRL to the regulator. A third demarcation excludes the research from technical characteristics and issues. Penler et al. (2002) define several business reporting processes for banks as scheduled in figure 1.1. This research is focused on regulatory reporting in the European and Dutch Basel II requirements, indicated by the encircled arrow.

Financial Reporting

G/L Packages Data Warehouse Operational Data

Operational Reporting

Financial Statements

Investor and Analyst Reporting

Detailed Financialand Operational

Reporting

Regulatory Reporting

Tax agenciesIndustry

regulators

Borrowers’ Reporting of

Quarterly Financial Information

Internal

External

Figure 1.1 Banks’ business reporting processes with the encircled arrow being the scope of this research. Taken and adapted from Penler et al. (2002).

1.5 Expected outcomes The aim of this research is to investigate the value of XBRL in helping banks comply with Basel II regulation. The expected result is a list of aspects that influence the adoption of XBRL by banks for financial business reporting. Validation in the industry is expected to quantify and prioritize the aspects by means of importance. The results should clarify the usefulness of XBRL to banks and offer input for a business case to be initiated.

1.6 Relevance The research is relevant to the scientific field, the social field and to KPMG. Scientific relevance As in many other fields than business reporting, the use of communication standards promises some well-known advantages. It is interesting to research how these theories’ predictions hold for the adoption of XBRL. It may result in confirmation or in new insights to a standard’s characteristics and impact. Furthermore, the used theories and models on adoption of IS and IT are illustrated in the banking industry. This may offer additional insight in industry specific factors or varying weighting of the constructs.


Social relevance Failing corporate governance in the scandals of Adecco, Ahold, Enron, Parmalat and WorldCom has had great impact on economic and social environments. Stakeholders such as shareholders and employees of those companies have suffered and public trust in auditing firms has been severely damaged. Several governments have anticipated on smaller earlier signals by formulating acts, guidelines and commissions to offer improved control. The COSO framework (1992), the Sarbanes-Oxley act (2002) and the Commissie Peeters (1996) and Code Tabaksblat (2003) in the Netherlands are examples of measures that experienced major interest and importance after the ‘bang’. These developments highlight the indirect importance of supporting methods such as XBRL to assure the reliability of business reporting. Also, the Basel II agreement with its goal of financial stability and market discipline plays a major role in economic and social well-being. Achieving trust in the financial services industry is essential to the prosperous societies we live in. Relevance to KPMG This new form of business reporting has impact on its auditing process. Since auditing is one of KPMG’s specializations, it is wise to be kept informed about the capabilities and developments of XBRL. The promise towards organizations of saving resources on hiring accountants and tax consultants is a development for KPMG to take into account too. XBRL is also expected to impact the internal working processes of KPMG such as paper versus digital archiving and supporting tools in providing assurance over financial statements and documents. For its IRM services, XBRL also brings along issues where clients may ask for assurance or advice. Some examples of these issues consider the alignment of XBRL taxonomies to business processes, authentication, security risks related to the electronic exchange of financial information and risks related to increasing IT dependability. On the longer term, even opportunities for new business development may evolve for KPMG, e.g. by providing audited financial information to analysts as a ‘certified information provider’. KPMG has recognized the relevance of this topic and plays a prominent role in the development of XBRL. Therefore, KPMG has been a member of XBRL International since this consortium was founded in 1998 and is a collaborating member of the Dutch Taxonomy Project [www2]. For its clients in the banking industry, the results of this research can be used to set up a business case answering any adoption obstructing questions the banks have regarding the application of XBRL for financial business reporting.

1.7 Outline In chapter 2 the theoretical definitions of financial business reporting, standards, compliance, Basel II, XBRL, its initial matches and its alternatives are described. Chapter 3 describes the theoretical framework for explaining adoption of IT. Various case studies from other industries provide research results and lessons learned as input to the conceptual list which with the banking industry is analyzed. Therefore, a comparison of the case study industries with the banking industry and an analysis of alternatives to XBRL are available in this chapter. The conducted field research is presented in chapter 4. The methods and structure to acquire the empirical data are described. In chapter 5 the results are given along with the validated list of factors. Finally, chapter 6 contains the answers to the research questions, the conclusion and recommendations to organizations concerned. The chapter ends with the research limitations and suggestions for further research. Throughout the thesis, sources are indicated by brackets which are found in the list of references. Appendices are numbered per corresponding chapter and a list of abbreviations can be found in the first appendix.


2 Definitions This chapter defines the characteristics of financial business reporting followed by communication standards. Compliance and Basel II requirements are dealt with in the next sections. Then the XBRL capabilities and conditions are outlined with initial matches with Basel II requirements described afterwards. Finally, a comparison between XBRL and alternative reporting methods is conducted.

2.1 Financial business reporting Financial business reporting can be identified as the ‘financial data’ subset within the broader definition of business reporting, e.g.:

“Business reporting is the public reporting of operating and financial data by a business enterprise under complex business and societal rules.” [Van Elk, 2001]

Business reporting aims to provide information to stakeholders in order to make well considered decisions. These include shareholders, managers, employees, credit institutions such as banks, governmental agencies such as regulators and tax authorities, the public as potential investors and customers. In order to generate and analyze those reports, it is usually necessary to extract and consolidate financial data from multiple sources to make meaningful information. A considerable part of this process is still manually performed which underlines the difficulty decision-makers have in collecting and analyzing such information [Hodge et al., 2004]. Nevertheless, business reporting has developed in a way that it is possible to perform these activities online, called ‘online business reporting’. Financial information that was traditionally communicated via paper-based annual reports, press releases and analyst briefings can now be disseminated electronically through the internet [Williams et al., 2006]. Business reporting supply chain Five steps are defined in the business reporting process in the upper ‘Processes’ area of Figure 2.1. From a bank’s point of view, internal financial reporting consolidates business operations data, followed by an auditor’s approval. Once assurance about the information has been given, it is sent out to its stakeholders in the external financial reporting process to be processed further on.

Figure 2.1 The business reporting supply chain for the banking regulatory reporting process. Taken and adapted from FFIEC (2006), KPMG (2006) and Van Elk (2001).


The challenge is to point out where XBRL can deliver value for the participants in the lower ‘Participants’ area of Figure 2.1. The traditional carrier of financial business reports is paper, e.g. an annual report. However, IT developments have offered ways to improve the accuracy and validity of reports and the speed and efficiency of the reporting process. Several methods are used such as filing tax returns via floppy, CD-ROM or B2B networks using Electronic Data Interchange (EDI). The disclosure of financial reports via websites of organizations or intermediaries has also grown to considerable volumes. The internet has a gigantic scope and thereby the chance of being diversified in data formats, e.g. documents in Hyper Text Markup Language (HTML), Portable Document Format (PDF) or even picture formats. This diversification causes the problem of data discovery and the problem of data aggregation. Farewell et al. (2005) estimated that U.S. companies spent 404 billion dollars paying workers to find and re-key information. This indicates that inefficiencies exist between supply chain participants and that automation of information exchange is not fully used. Achieving the goal of business reporting gets harder caused by these problems of data discovery and aggregation. A receiving party in the role of information analyst should spend its time on analysis and less on data discovery and aggregation. This is illustrated by the analysis process in figure 2.2.

Figure 2.2 The analysis process. The data aggregation part involves mechanics for re-keying data and (automated) data aggregation. Taken and adapted from [Van Elk, 2001].

2.2 Standards The use of standards in communication needs no clarification when considering the example of human beings having a conversation. The language in which they communicate can be seen as an agreed upon set of agreements about the meaning of words (semantics). In parallel, for information systems to communicate, standards are used to achieve an efficient exchange of information and to avoid misunderstandings. A standard is defined as:

“A document, established by consensus and approved by an accredited standards development organization, that provides for common and repeated use, rules, guidelines, or characteristics for activities or their results, aimed at the achievement of the optimum degree of order and consistency in a given context.” [www30]

Benefits of standards allow designers to rapidly and reliably build information technology with lower costs, reduced risks and with greater appeal [Aggarwal et al., 2005; Österle et al., 2001]. In the standard selection process, attention is as much, or more, an organizational issue as it is a technical issue. For this reason, strategic importance is given to organizational systems in setting IT standards. This can be settled within a consortium, which is defined as:

“A consortium is a form of co-operation between a group of firms that may otherwise be competitors, to jointly set and administer IT standards.” [de Vries, 1999]


For example, multiple firms involved with the use and development of the Digital Versatile Disc (DVD) format are organized in the DVD Forum and e-business standards are designed by RosettaNet [www7]. In the scope of this research, XBRL International is the not-for-profit consortium to build the language and to promote and support its adoption. Advantages and disadvantages The primary reason for using standards is to avoid the explosion when each business relationship has its own way of communicating or formatting data. Resources and efforts spent on agreements and maintenance can be reduced as soon as there is more than one business relationship (m:n) [Rukanova, 2006]. A second reason from theory mentions that software for using a standard is in general rather cheap and does not need to be developed separately. Third, standards incorporate ‘best practices’ and may therefore be better than what an organization itself would dream up. Using standards can also have some downsides to be taken into account. For instance at the start of a project, it may not be clear what standard or what version is the best to use. A missing analysis of requirements or the standard being in development faces the risk of implementing the wrong or premature standard. However, such a decision should be taken rather early to avoid problems later on. Second, a standard may be restrictive as it is based on ‘normal business’. For innovative strategic information systems, a company may decide to deviate from the standard. Emergence of standards Research on performance and development of electronic business networks distinguishes three situations for the emergence of standards [Smits, 2002]. In the first situation one strong supervisor has the ability to determine the communication standards and systems. The second situation involves a strong actor without a supervising role for the same purpose. In the third scenario, a group of actors form a community to jointly develop the standards and systems. Open standards A standard can be owned by an individual or by an organization that can put restrictions on users’ access and usage. In contrast to this proprietary type of standard, there also exist open standards which are free to use and usually developed and maintained by communities of stakeholders. For a standard to be open it should be and remain accessible to everyone free of charge and it should be documented in all its details [ITST, 2004]. In contrast to proprietary document formats such as PDF from Adobe and Excel spreadsheets from Microsoft, open standards offer the possibility to release oneself from a ‘lock-in’ relationship with a software supplier. An interesting development is that “more and more people are realizing the advantages of using open standards instead of proprietary ones” [Tie, 2005]. For Basel II compliance issues, information generally needs to be aggregated from several information sources. Hence, interoperability is a crucial requirement to have information systems communicate and exchange information. Rukanova (2006) defines interoperability as “the ability of two or more systems or components to exchange information and to use the information that has been exchanged”. Rukanova also notes that interoperability “needs to be expanded from purely technical to organizational (socio-technical) systems”. This recommendation follows the frequent problems with IT technically working to perfection, but often failing to support the way of doing business. For successful adoption of XBRL in the business reporting supply chain by its stakeholders, the interoperability aspect and the capability to avoid lock-in relationships are hypothesized to be crucial characteristics of XBRL as an open standard.


2.3 Compliance Recent corporate scandals have intensified the need to protect the interests of stakeholders and the organizations themselves from fraud and misbehavior. Supervision and control are united in compliance, which can be defined as:

“Compliance is a state of being in accordance with established guidelines, specifications or legislation.” [www11] “Compliance refers to the ability to reasonably ensure conformity and adherence to organization policies, plans, procedures, law, regulations and contracts.” [www12]

These definitions imply that compliance has two viewpoints. In the former it is interpreted as a black-white ‘test’ where an organization is either compliant or it is not. In the latter it urges on the process of continuously assuring that the organization is ‘in control’ and adheres to the rules. This thesis investigates the value of XBRL to compliance while keeping compliance in mind from a ‘state-point-of-view’ and a ‘process-point-of-view’. A typical compliance requirement deals with national law, such as the Sarbanes Oxley Act (SOx) in the United States. The widely discussed 404 section of the act strictly requires internal control reports proving that organizations maintain “an adequate internal control structure and procedures for financial reporting” [Sox, 2002]. The main idea of this act is that assurance over these processes is more strictly defined. In addition, the 409 section requires reporting process to be performed on a “rapid and current basis” which is expected to evolve in more frequent reporting or even ‘continuous monitoring’ with (near) real-time reporting. This condition has a large impact on the late disclosure processes of yearly or quarterly reports. Stakeholders painfully felt that those ‘time-delayed’ reports did not provide enough certainties about the organizations. Compliance is also applicable to specific industries that use guidelines and specifications from a regulating institution. For the banking industry, the most important one is regulatory reporting to national regulators such as De Nederlandsche Bank (DNB). Compliance regulations have a mandatory basis, but voluntary compliance can also be found. In most cases of voluntary reporting, it is a predecessor in a phased implementation approach to mandatory reporting. The type of compliance (mandatory or voluntary) logically influences the adoption level and opinion of the complying organizations. The impact of SOx is not ignorable in the research area of this thesis since the international characters of several Dutch banks cross the European borders. Even more, the corporate governance developments find their way in the Dutch ‘Code Tabaksblat’. For the scope of XBRL, it is interesting to see whether XBRL can add value in complying with the regulations as is being discussed in literature. In achieving transparency in risks and controls of an organization, the goals of SOx have certain overlaps with the European Basel II regulation.


2.4 Basel II The banking domain is a global business with large amounts of money being exchanged daily. Banks’ critical processes are highly dependent on information systems, which implies high systemic importance. To avoid malfunctioning of these systems and thus to maintain financial stability in the banking industry, the need for common rules has risen. Therefore the ‘Basel Committee on Banking Regulation and Supervisory Practices’ has been established by the central-bank governors of a group of ten countries, including the Netherlands, at the end of 1974. Its objective is “to promote sound supervisory standards worldwide” [www4], receiving support from the Bank for International Settlements (BIS) in Basel, Switzerland. The goal of the Basel I Accord was to make sure that banks would hold sufficient capital to meet potential future losses, for example due to non-payments, delays and fraud. This capital buffer is vital in reducing the risk of bank insolvency and the potential costs of a bank’s failure for depositors. Therefore the 8% BIS ratio (capital divided by total risk) has been introduced in 1988. Among other measures, this ratio is well-known by banks and banking supervisors for risk management. The Basel I agreement was considered a useful control measure. Its goals were met and extended in the updated version of Basel II. More than five years of negotiating in the international banking industry were needed to publish the definitive Basel II agreement in 2005. The main difference between Basel I and Basel II is that the former is focused on delivering strict calculation methodologies while the latter is more oriented on the embedding of risk frameworks into business processes (risk-based process approach). In contrast to the fixed BIS ratio the Basel II agreement permits the percentage to vary dependent on the creditworthiness of the banks’ clients. This implies that banks are offered more trading space, because the opportunity exists of needing to reserve less capital than in the Basel I situation. Banks have to design their own risk management models which are validated by the regulator. The better the risk is appreciated, the better a bank can offer customized and preferably lower interest rates to its clients and can thus improve its attractiveness in the financial markets [Boixo et al., 2005; Verdegaal, 2004]. The Basel II framework has been accepted on European level through the introduction of the Capital Requirements Directive (CRD). This guideline is used by national banks to incorporate the agreement in their requirements. Currently, credit institutions are dealing with the required changes in their information systems regarding the measurement and control of risks. One remarkable challenge is the management of data quality originating from multiple information systems. Different database structures, semantics and standards require a labor intensive mapping and aggregation process. The conditions to calculate the risks in the Basel II framework have been built upon three pillars as described below [BIS, 2005; KPMG, 2006c; Verdegaal, 2004]. The three pillars together provide measures to assure financial stability in the market. This relationship between the naming of the pillars and its contents is illustrated in Figure 2.3. Pillar 1: Minimum capital requirements The first pillar concerns calculative and modeling methodologies for measuring the various risks and the resulting capital requirements. Financial buffers are dependent on three types of risk: credit risk (e.g. non-payment), market risk (e.g. depreciation in stock investments or currency values) and operational risk (e.g. fraud and interruptions).


Pillar 2: Supervisory review process The second pillar deals with the conditions to which banks need to comply in order to be permitted to calculate the capital buffers. It also encourages banks to develop and to use better risk management techniques. Pillar 3: Market discipline The third pillar offers a set of disclosure reporting requirements which allows stakeholders to assess key pieces of information on the capital adequacy of the bank in order to result in disciplined behavior in the market.

Figure 2.3 The Basel II accord consists of three pillars [KPMG, 2006c]. Since the majority of Basel II activities relates to credit risk, three approaches are proposed for the credit risk calculation: the standardized approach (SA), the internal ratings based foundation (IRB - Foundation) and advanced (IRB - Advanced) approach. The more advanced the approach gets the more requirements are to be fulfilled. The chosen approach also determines the deadline to be Basel II compliant [Verdegaal, 2004; KPMG, 2006b]. The credit institutions are offered the possibility to continue using Basel I in 2007. This option lasts until the end of 2007 so that banks can choose the moment to adopt Basel II, but no later than January 1, 2008. However, for the IRB - Advanced approach there is a strict deadline of January 1, 2008. During a ‘parallel run’ of minimally one year the banks report to the regulator under Basel I and Basel II requirements to prove that the results “do not show any technical or functional issues” [KPMG, 2006b;c]. A positive outcome of this parallel run allows the banks to change to Basel II.

Minimum capital requirements Disclosure Supervision

Pillar 2 Pillar 1 Pillar 3

Financial stability

Internal risk management Risk modeling and quantitative measurement Calculation of minimum capital requirements

Reporting to supervisor Qualitative requirements for risk management Role of the supervisor Capture risks not identified under Pillar 1

Requirements regarding the disclosure of information to stakeholders Financial market will have more information to assess actual risk profile of banks


2.5 eXtensible Business Reporting Language Regarding the aphorism ‘knowledge is power’, one who admires power generally strives to acquire knowledge. Knowledge is defined as the combination of information with a certain goal. This goal is usually formulated by an organization as the result to be achieved using the information. Information subsequently, is the combination of data and context. Examples of data entries stored in information systems are ‘500’ and ‘8%’. The definition of ‘data’ does not equal the definition of ‘information’ since the meaning of solely ‘500’ is unclear unless context is ascribed to the data item. For the example data entries the contexts could be ‘profit’ or ‘return on investment’. This concept of ‘semantics’ is the core idea behind XBRL. The following definition of XBRL has been based on several sources:

“XBRL is an electronic open standard to exchange financial and corporate information among computer systems within and outside the borders of an organization”.

The technical constructs of XBRL consist of taxonomies, instance documents and style sheets [Van der Poel et al., 2004a]. A taxonomy is an eXtensible Markup Language (XML) schema serving as a dictionary or index. It defines all possible financial reporting elements with their mutual arithmetical relationships. The international standard structure is assured by always using English data definitions in the so-called CamelCase notation. For application in different countries taxonomies offer the ability for each country to add language labels for presentation of the elements in the language preferred. For example, the standard defines the element ‘AccumulatedDepreciationAndImpairmentPropertyPlantAndEquipmentTotal_lbl’ which is connected to the Dutch label ‘Materiële vaste activa, totaal, cumulatieve afschrijvingen en bijzondere waardeverminderingen’. Next, an instance document contains the corporate information as described in the taxonomy. Individual user reports can be generated by importing these documents in an XBRL supporting application. Finally, style sheets contain layout and calculative elements needed to make an instance document human-readable. Tagging data with context By attaching ‘tags’ to data, the data maintains its meaning if extracted from its context. This can be exemplified with a printed annual report of a certain company consisting of numbers clearly classified in tables denoting the meaning of each row, column and cell. Imagine this report falls on the ground and all numbers and headers are shuffled around. Then it is no longer clear what a certain number means or to which number a tag belongs. Advantages E&Y (2005), Van de Fliert (2003), Williams et al. (2006) and many others have described the value propositions of XBRL. Van der Poel et al. (2004) have described the benefits categorically for three roles that an organization can play (see Appendix B). Many of the advantages are posed to solve the problems in common ‘spreadsheet jungle’ scenarios in which organizations exchange information in a non-optimal manner using semi-automated spreadsheets with manual intervention. Generally, proclaimed advantages are related to enhancements on the following topics:

• Correctness, completeness and control of information; • Speed and efficiency of information provisioning; • Avoiding data redundancy in reports;


• Interoperability of information systems; • Extensibility by the modular structure of the XML schemas; • Transparency of the business reporting supply chain; • Less dependency (lock-in) of software suppliers’ data structures by using an open

standard; • Re-use of information different purposes.

Disadvantages Despite the benefits promised, disadvantages of XBRL are also known in literature. E&Y (2005) and Van de Fliert (2003) identified the following to which a critical note fits regarding the relativity of the disadvantages to other methods and technologies. Older or other solutions also have disadvantages which XBRL can partly overcome.

• Complexity; Technical issues and data mapping require resources to be spent on application updates and implementation. The choice for standard or custom built XBRL-software and whether a taxonomy is ready to use or is to be developed also influences the complexity.

• Security; Research has shown that organizations recognize security issues in disseminating corporate information through XBRL-documents.

• Inflexibility; Organizations expect a decrease in flexibility due to strict data definitions.

• Unproven application; The first Basel II specific case studies are just operational, results are to come.

• Little reference material available; Developments have gone fast since the publication of Van de Fliert, but there is still little comparable reference material available for the Basel II focus for the Dutch banks.

• Acceptation is not guaranteed. Although the promised benefits of XBRL are very interesting, there is no party that can guarantee the general adoption of XBRL.

Furthermore, implementation costs are to be taken into account too. Since XBRL is an open standard, the use of the language is free of cost. However, the total adoption costs depend on the type of implementation within an organization. The following aspects require attention or are expected to cause problems and thus form a risk in adoption and implementation of XBRL [E&Y, 2005; Van de Fliert, 2003, Wielaard, 2005b]:

• Training of employees; • Software, infrastructure and data mapping adjustments; • Change management costs; • New security costs; • Communication costs; • Specific XBRL project costs; • Connection to other countries; • Availability of skilled people; • Unclear definitions in taxonomies; • Start-up problems; • Validation and control issues.


For the validation rules, XBRL taxonomies do not support certain control and audit processes [Hoekstra et al., 2006]. Taxonomies enable calculative methods but do not incorporate the accountant’s, controller’s or regulator’s tasks. Additional software is required to check the validity of calculations performed with GAAPs. Furthermore, false style sheets can present information in an incorrect way while the data itself is correct [Van Hilvoorde et al., 2005a]. In an adoption decision process these aspects need to be estimated and must be outweighed by the benefits. Chapter 3 focuses on case studies identifying the achievements. Scope of application Extending on Figure 2.1, the internal exchange of detailed financial data such as journal entries is indicated by XBRL GL (General Ledger) and is applicable to internal systems and business processes of banks. On the other hand, XBRL FR (Financial Reporting) is concerned with the external exchange of aggregated financial data with parties in the financial reporting supply chain such as regulators, clients and tax authorities which is illustrated in Figure 2.4.

Figure 2.4 The business reporting supply chain for the banking regulatory reporting process, added with the scope of application of XBRL for General Ledger and Financial Reporting levels. Data mapping The data mapping activity is concerned with interlinking the data elements between two distinct data models, e.g. between a certain taxonomy and an internally used data model. The goal is to create a data transformation between a source and a destination to achieve standardization in the external scope. For adopting XBRL reporting, it is generally needed to perform this process once. Each organization can use different software applications, charts accounts and data structures; data elements rolling out of these systems need to be ‘connected’ to the corresponding element in the taxonomy. This task can be done in a variety of manners, from a hand-coded manual basis to a graphical tool supported basis using XSLT (eXtensible Stylesheet Language Transformation). Considerable thoughts on mapping issues must be made because of the choices to be made on differences between the taxonomy and the internal model and resources to be spent on the mapping process. Extensibility As discussed in section 2.2, using standards involves the risk of being restricted to a fixed set of definitions and procedures. The XBRL standard is primarily intended for exchanges among members of communities on common level. The restrictive problem is not expected in that field, but it is imaginable that an organization wishes to use the XBRL infrastructure throughout its organization, e.g. for business unit reporting and consolidation at group level.


This can be solved by the ‘X’ in XBRL which is the most crucial part of the concept. Since XBRL has a modular structure it is possible to build and implement a general part of the taxonomy which covers the standard part of reporting requirements. If industry or firm specific definitions are asked for, a taxonomy can easily be extended by defining extra definitions. This allows a regulator in this research to specify and define the elements it wishes its reporter to disseminate in addition to the general guidelines of the European supervisor. Examples of such industry specific definitions can be found for the banking industry in the high-level frameworks for Basel II and International Financial Reporting Standards (IFRS) reporting (see section 2.6). For firm specific definitions they are mostly related for internal application, e.g. in construction firms several subtypes of ‘work in progress’ may be used. Hence, extensibility offers an industry or firm to extend the general taxonomy with its own definition and needs. Shared responsibilities and benefits A taxonomy is developed for a certain goal and for a certain group of stakeholders. The introduction of a taxonomy is beneficial to the ultimate receiver(s) of the information, but also to the suppliers of the information. Due to varying sizes of these actors and importance given to the taxonomy, a shared importance is observed. An often found result is that some actors take on a more awaiting approach that can slow down the adoption. In the Netherlands, a strong incentive to adopt XBRL is observed with the Dutch government. The ‘Nederlandse Taxonomie Project’ (NTP), the Dutch Taxonomy Project, has been initiated “to simplify the preparation of reports and the exchange of financial data with the private sector, with projected savings of more that 350 million euros for Dutch business” [Tie, 2005]. The development of the taxonomy by an information receiving party with a beneficial stake such as the government is seen around the world to initiate and stimulate the adoption to reach shared responsibilities and benefits. Dutch Taxonomy Project The ministries of Finance and Justice have, as a part of other projects, initiated the ‘Nederlands Taxonomie Project’ (NTP) to reduce the administrative burden of businesses with 25%. The goal is to offer XBRL reporting in three important reporting chains that jointly cover 70% of the financial data flows (see Appendix C). The three most important financial reporting chains that the NTP covers are:

1 Reporting of taxes to the Tax Administration (Belastingdienst); 2 Reporting of annual accounts to the Chamber of Commerce (Kamer van Koophandel); 3 Reporting of economic statistics to Statistics Netherlands (Centraal Bureau voor de

Statistiek: CBS). Remarkable developments consider the publication of the final taxonomy in June 2006 and the project receiving the National Innovation prize for projects in the public sector in April 2006. The NTP receives international interest with projects in Australia, New Zealand and the U.S. taking the Dutch approach as an example. Other countries such as Japan, China, Belgium, Korea, Singapore and Spain are also developing implementations and results are coming out. Timeline The origins of XBRL are found in 1998 when the American Institute of Certified Public Accountants (AICPA) set up a business reporting language based on XML. In the early years developments primarily concerned defining agreements on technical design, pilots and


creating awareness. The first implementations were focused on external financial reporting, but as Figure 2.4 shows there is also potential for internal application of XBRL on internal business operations reporting and internal financial reporting levels. Debreceny et al. (2001) describe a timeline for the expansion of XBRL beyond financial reporting (see Appendix D).

2.6 Initial matches between XBRL and Basel II In the domain of regulatory reporting by banks, two projects exist that match the possibilities of XBRL with the reporting requirements of Basel II. The Committee of European Banking Supervisors (CEBS) published guidelines for the development of standardized reporting frameworks in December 2005. The goal was to decrease the administrative burden for banks, especially for internationally active banks [Van Hilvoorde et al., 2006]. Economies of scale are expected to be achieved by harmonizing reporting processes to national regulators within the European Union. Total harmonization is however not expected, since national regulators have different information needs and therefore interpretation freedom is offered. Those different report recipients can be national regulators such as DNB, or for internationally active banks, foreign central banks. Combining these information flows in a standardized manner offers benefits to be achieved by re-using information: ‘create once use many times’ [Williams et al., 2006]. The issues relate to transparency, quality and timeliness for which Appendix E lists regulators’ common challenges in their reporting functions [FFIEC, 2006]. Another opportunity has to do with one of the largest challenges in Basel II compliance. From empirical observations it can be seen that locating and aggregating information from multiple information systems is difficult [Debreceny, 2001; KPMG, 2004a]. Then it is hard to acquire the relevant information, especially when information has not been stored in the past for reasons ranging from little importance given to the value of storing it to data storage limitations, databases being differently structured and data stored in varying formats. With less or incomplete input to the calculative models, it is harder to calculate the risks the banks face. This may result in being required to keep a larger amount of capital at hand. This information problem is coherent to the problems mentioned in section 2.1: those of data discovery and data aggregation. The core idea of XBRL for the banking industry is hypothesized to roll out after the external application, in this case for Basel II reporting. Once a bank is familiar with XBRL in its Basel II reporting process, it is expected that the language is incorporated in internal reporting processes. Generally, in the first phase XBRL is used for external financial reporting using existing reporting standards (in this case Basel II), in a next stage for internal financial reporting supporting general ledger level information exchange standards. This phasing is clarified in Figure 2.5 while even further stages showing the transition from the financial to the operational dimension are given in Appendix D. A critical condition for matching XBRL and Basel II is that a common taxonomy must be available to the users in a definitive form. Because the use of a conceptual taxonomy faces the risk of implementing a premature standard, an agreed-upon and definitive form is needed. The development and maintenance is usually initiated by a representation of the user community and (partly) funded by the actor with initially the biggest benefits: the information recipient. In the Basel II scenario the CEBS has invested in the development of a taxonomy which has resulted in the common solvency ratio reporting framework for credit institutions and investment firms under the CRD: COREP.


Figure 2.5 External and internal application of XBRL in the banking domain with Basel II compliance reporting. In the future phase, XBRL is also used in internal information exchange. In this case for Basel II reporting it involves the aggregation of necessary information as input for risk measurement techniques. COREP: capital reporting requirements for Basel II The CEBS and the Basel II working group of XBRL International have taken the Basel II agreement and other directives as an opportunity to develop a common reporting framework [CEBS, 2006] for pillar 1 requirements [Boixo et al., 2005; Swyngedouw, 2006; www23]. COREP is a guideline for reporting which is originally independent of XBRL. The guidelines can be fulfilled using traditional text documents, spreadsheets or in the latest development, in XBRL formatted documents. In one of CEBS’ roles to enhance supervisory co-operation, including the exchange of information, it considers that XBRL can enable the reporting to supervising authorities. To support the development of such a European reporting framework the CEBS has initiated the XBRL COREP Project. Its mission is “to deliver the XBRL initial taxonomy for COmmon solvency ratio REPorting framework, for credit institutions and investment firms under the future European Union capital requirements regime” [www5]. The COREP framework consists of templates that are free of charge to the national supervisory authorities and supervised institutions. The authorities are free to decide on the specifications of the compliance reports, i.e. which set of templates are used. DNB, as a member of CEBS, is thus free to decide whether they adopt this XBRL reporting framework and if so, when they adopt it. DNB has decided to implement all full templates including its variants in its reporting system [DNB, 2006b]. However, DNB expects that banks will not report all templates since only those templates relevant to the bank’s risk calculation method are to be reported. Next to the COREP framework, guidelines exist for IFRS based financial reporting in the FINREP framework (see Appendix F). The COREP XBRL taxonomy is available in definitive form while the Dutch FINREP version is targeted for September 2006 [www25].


2.7 Comparison of XBRL to alternatives The alternative reporting media to XBRL comprise current technologies used for financial business reporting or ones that could be implemented in the future. A traditional reporting medium is paper, for which research by Pinsker et al. (2005) showed that participants perceived “XBRL-enabled analysis to be significantly more efficient than participants who used paper-based information”. In addition to paper based reporting several information technologies exist to exchange (business) information such as BizTalk, EDI, HTML, PDF, SDMX (Statistical Data and Metadata Exchange) and spreadsheets. Within these electronic media two alternative formats to XBRL are available: Open Financial Exchange (OFX) and XML. First, OFX is a specification for the electronic exchange of financial data between financial institutions, business and consumers via the Internet [www20]. It is based on XML but more aimed at individual consumer and small business applications at the transactional level. Furthermore, the XBRL consortium has a far larger public relations network and a higher marketing power than OFX. Second, XML is the technical basis of XBRL but is also the alternative format to XBRL in the Dutch banks’ Basel II reporting. DNB and the banking industry have spent two years on the development of a web based reporting portal called ‘e-Line DNB’ that replaced the floppy disks and CD-ROMs containing multiple applications [Van ‘t Hof, 2006]. By using the portal the banks are offered a direct login to e-Line to import their report data. E-Line offers control functions to check for input errors, data redundancy and other data errors before submitting the data. A major benefit to the banks is the fact that DNB is responsible for the technical maintenance of the system. This implies that banks hardly have to adapt their internal applications for XBRL support. The technical infrastructure of e-Line is based on a variant of XML defined by DNB. The e-Line system offers the Dutch COREP forms from May 22, 2006 [DNB, 2006c]. For adoption of COREP in XBRL format, DNB has chosen for a dual approach by supporting both their XML and the XBRL format. Due to recent investments in the system it is hypothesized that DNB may have certain XBRL adoption delaying interests in e-Line. Van Hilvoorde et al. (2006) note that banks have to make a strategic choice for reporting in XML or XBRL format. In conclusion, the only alternative to XBRL for the Dutch banking industry is the XML variant that they are currently using in e-Line DNB. This directly shows the restricting disadvantage of e-Line DNB to adoption of XBRL by being an advanced XML based system and thus the limited need for the adoption of XBRL to gain its projected advantages over the current way of reporting. The question arises why a new data format in the form of XBRL is needed. If data series are required to be well-defined and instructions and technical requirements are available, would there not be enough common understanding to report in a standardized way? FFIEC (2006) used this method in the past by distributing those definitions, instructions and requirements in a non-cohesive manner by means of collecting PDF, MS Word, and MS Excel documents. It was observed that these formats did not realize the planned standardization benefits. The reporting processes still required a significant amount of manual manipulation by each bank and its software application. It can thus be concluded that these types of data formats are not optimally applicable to standardization efforts. More binding methods are thus needed. Since the CEBS had adopted XBRL as the format for its Basel II reporting frameworks, XBRL seems the best supported option for Basel II reporting convenience. Although other formats, e.g. XML, can technically also ‘do the job’, the availability of the COREP XBRL taxonomy avoids the need for the banking industry to develop a taxonomy-like set of agreements. The statement by Gaskill et al. (2004) that XBRL has no competitors in reporting formats is thus not valid in the Dutch banking industry.


3 Adoption theory interpretation and enrichment This chapter deals with a theoretical background on adoption, followed by several case studies where XBRL has been implemented. The first case study involves reporting of statistical information in the Netherlands while another Dutch case considers the Association of Water Boards. Foreign approaches are described in two case studies in the U.S. and in Australia. After a review on some bank specific non-Dutch implementations, a comparison of the before mentioned industries with the Dutch banking industry is conducted. Finally, a consolidated list of critical success factors of ‘best practices’ and ‘lessons learned’ is given.

3.1 Theoretical framework In scientific literature, several theories and research frameworks exist for explaining variances in adoption of information technology. In this thesis the following theories are used, combining those constructs that are best applicable, workable and add the most value to what is already known:

1 Unified theory of acceptance and use of technology (UTAUT); 2 Resource based theory (RBT); 3 Information cascade theory; 4 Rational decision making; 5 Technology diffusion model; 6 Psychology of the decision maker; 7 Diffusion of innovation theory; 8 Game theory.

For the scope of this research, the UTAUT and RBT are the basis of analysis. The other theories have been identified as useful but are not directly applied here. At some points they offer confirmation on the UTAUT and RBT, but a more decision making theory is dealt with. Short descriptions can be found in Appendix G. In the next section the two theories are explained including its interpretations for this research and the proposed enrichments following from case study results. These enrichments of the models are hypothesized to be valuable because the results show factors not expected nor not taken into account in the models. Ad 1 The UTAUT aims to explain user intentions to use an IS and subsequent usage behavior in small and medium-sized enterprises (SME) [Venkatesh et al., 2003; www13]. For this thesis an important remark is necessary about its individual level of analysis. The question is to what extent corporate adoption of technologies (here: XBRL) is dependent on individual decision making. Nevertheless, the theory’s four key constructs are expected to be valuable here with the assumption that an organization’s adoption decision does not equal an individual’s decision. The original UTAUT is graphically displayed in Figure 3.1.


EffortExpectancy

SocialInfluence

Use behavior

Performance Expectancy

Behavorial intention

Gender

FacilitatingConditions

Age Experience Voluntarinessof Use

Figure 3.1 The original diagram of the Unified Theory of Acceptance and Use of Technology. Taken and adapted from [www13]. Four independent constructs and four mediating constructs are identified that altogether determine behavioral intention and use behavior. For application on a higher level within banks in this research, the independent constructs are interpreted as follows:

1 Performance expectancy The degree to which a bank’s decision maker believes that using XBRL will help to increase Basel II reporting performance.

2 Effort expectancy The degree of ease associated with the use of XBRL for Basel II reporting.

3 Social influence The degree to which a bank’s decision maker perceives that important others such as regulators, competitors, governmental organizations, XBRL organizations and media believe he or she should adopt XBRL for Basel II reporting.

4 Facilitating conditions (availability of organizational and technical support) Degree to which a bank’s decision maker believes that organizational and technical infrastructures exist to support Basel II reporting through XBRL. An example of organizational aspects cover taxonomy agreements in the banking industry and technical aspects include the quality and adaptability of data warehouses, legacy systems and business process mappings.

The mediating constructs ‘gender’, ‘age’, ‘experience’ and ‘voluntariness of use’ represent moderating effects on the independent constructs as is illustrated by the arrows in Figure 3.1. ‘Gender’ and ‘age’ indicate two clear personal characteristics while ‘experience’ indicates the knowledge gained in earlier IS implementations and ‘voluntariness of use’ shows the degree of free decision making regarding adoption or whether a mandate is expected or operational. Ad 2 Within the RBT, IT can be viewed as a resource to an organization. The main idea of the RBT is that an organization’s performance depends on having a set of unique inputs and capabilities. In order for a resource to provide competitive advantage it must be valuable, rare, hard to imitate and not substitutable. Caldeira et al. (2001) investigated factors causing different levels of IS and IT adoption and use by means of the RBT. Their research identified fifteen factors and provided insight in why and how these factors caused the variances. Two factors were identified to determine why organizations adopt IS and IT and they determine the


success of the IS/IT adoption. The first factor concerns IS/IT competences in the organization in the form of possessing skilled people and knowledge. The second determinant factor is the set of management perspectives and attitudes towards IS/IT adoption and use. The thirteen remaining factors are also important for IS and IT adoption and use but were not found to be critical to achieving success (see Appendix H). Remarks on applying the RBT A remark on the research context of Caldeira et al. is needed for application in this thesis. Their research was conducted among manufacturing SMEs which usually have less human and financial resources and are thus less prepared and less able to change and innovate. This limitation is relaxed by hypothesizing that the banking industry is more capable to change and to innovate since the human and financial resources are considerably larger. Another remark is based on the question whether reporting in XBRL format can be seen as a competitive advantage. Certainly in the case of mandatory use a bank is not likely to gain a competitive advantage with respect to a competitor with the same obligation. However, the degree of adoption is hypothesized to cause variances in advantages gained. For example, one bank may achieve efficiency improvements by using XBRL in its internal information systems while another may not because the latter is using XBRL for mandatory external reporting processes only. This implies that a strategic decision making process is needed. In addition to the level of implementation, another hypothesis expects differences in gained advantages between banks to be caused by varying soundness and method of XBRL implementation in the organization. At last, Mata et al. (1995) conducted a resource-based analysis to identify five attributes of IT and found that only ‘managerial IT skills’ attribute in delivering sustainable competitive advantage. This implies that “the search for IT-based sources of sustained competitive advantage must focus less on IT, per se, and more on the process of organizing and managing IT within a firm”.

3.2 Theory interpretation For the corporate scenario in which this research is conducted, the UTAUT is interpreted to explain XBRL adoption by groups within organizations. The constructs ‘gender’ and ‘age’ are removed from the model, assuming that they are of limited influence in group decision making processes. ‘Experience’ and ‘voluntariness of use’ are expected to be valid in this study because they can be ascribed to groups of people or organizations as a whole. Furthermore, it is hypothesized that out of the disadvantages of XBRL (section 2.5) the complexity and availability of a business case are to be of biggest influence. A frequent but false thought is that technological innovations get implemented directly after invention. This statement has been proven in the history of innovations such as the steam-engine, the wheel and the fax. Different reasons have been discovered why IT innovations follow a rough path to implementation. This is also the case for XBRL. The technically oriented people are often confident of, in their view, the clear benefits and capabilities of new technologies and are surprised that it is not implemented by organizations as enthusiastically as they do. Another important observation is the small amount of practical business case examples available to the banking industry. Since XBRL is not a new technique and publications have been discussing XBRL for some years already, questions by ‘non-IT related’ people arise why XBRL has not yet achieved the promised benefits. This observation indicates that it is important to pay attention to best practices and lessons learned from XBRL implementations. Implementations in other industries and countries present ‘proof of concepts’ but also show


factors and bottlenecks that were not expected or predicted by theory. For this reason the following sections describe some case studies and process the issues as input for the enrichment of the theoretical framework. The results are implemented in the interview protocol and in the questions related to each construct of the enriched UTAUT model. Special attention is paid to the voluntariness of using XBRL, experience with IT implementations, required IT and organizational business process adjustments, social and political issues and industry and firm specific characteristics. The latter include availability of financial resources for IT projects and support by software suppliers and industry regulators (e.g. providing the industry taxonomy). It is further expected that the ‘Social influence’ construct in UTAUT has a major weighting in the XBRL adoption process. Based on the considerable variances in literature on the value of XBRL, it is expected that the divergent opinions slow down the industry’s adoption speed. This is where the information cascade is applied in parts of the interview protocol. Out of specific organizations that have adopted XBRL for regulatory purposes [Pasmooij, 2006], the ‘best practices’ and ‘lessons learned’ are extracted. The case studies concern implementations in industries other than the banking industry and foreign banking industries. The goal is to list critical success factors (CSFs) for XBRL adoption and implementation. After a comparison of the Dutch banking industry with the case study industries, the industry similarities and differences are used to assess the effects on the CSFs when applied to the Dutch banking industry. Here, weakening, neutral or strengthening effects are expected. The conceptual list, as a result of this phase, is presented in the field and is validated on whether aspects apply and in what degree. Figure 3.2 summarizes this methodology.

Figure 3.2 The process of consolidating case study results, removing redundant items, the effect of industry similarities and differences on the applicability of the factors resulting in the conceptual CSF list and the validation by presenting the conceptual findings and measuring the recognition and importance of the factors in the Dutch banking industry.

3.3 Centraal Bureau voor de Statistiek The Economic and Monetary Union of the European Union (EMU) is requesting advanced accountability methods for municipalities (cities), water boards and provinces (states). The ‘Besluit begroting en verantwoording provincies en gemeenten’ (BBV) ordinance requires information to be reported regarding budgets, quarterly results and the annual account. In the Netherlands, CBS is responsible for collecting and processing these financial data. The ministry of the Interior and Kingdom Relations has decided that the reporting to CBS should preferably take place in XBRL format. In the role of data acquirer, CBS offered the XBRL solution to be used starting with the quarterly reports in 2004. However, it was foreseen that some municipalities would not be able to disclose their data in XBRL format before the deadline. Therefore transition methods in the form of Excel spreadsheets were available in case of suppliers not being capable of reporting in the new standard. In the first phase after


implementation only 5% of the municipalities was reporting in the XBRL format. This low percentage was the reason for CBS to initiate an investigation in collaboration with KPMG. Research was conducted on the reasons why the participating municipalities did join the XBRL effort, why the largest part did not and what would be necessary to get the latter involved [Van Erck, 2005a,b]. The results are described in general terms for easy applicability in the banking industry later on: Catalyzing factors for adoption A1 Intelligibility and speed of feedback by support office in response to delivered reports A2 An “if we need to comply, we better do it as soon as possible” mentality. A3 Availability of ‘product champion’ within the organization. A4 Although the use of XBRL was voluntary, it was perceived as obligatory. A5 Seize the opportunity to achieve internal improvements by recognition of XBRL

benefits for own organization. A6 Organization being positively supported by its software supplier. A7 Pro-active mentality on the application of IT. Obstructing factors for adoption A1- Insufficient information why reporting should be in XBRL format. A2- Insufficient compensation for spent time, capacity and financial resources. A3- Current reorganizations and projects demanding ‘all’ attention and resources. A4- Currently migrating financial system or major changes underway. A5- Reporting in XBRL format is not obligatory; some choose to wait until it is. A6- Not being fully enthusiastic about XBRL: “XBRL is not ‘alive’”. A7- Complex business process redesign (BPR) is required. A8- Lack of skills. A9- Insufficient provisioning of support. A10- XBRL not supported by software supplier. An interesting observation is that technology does not necessarily have to be the primary restricting aspect. Moreover, communication is an even more important aspect than technical capabilities or problems. Since this case study affected the voluntary type of compliance, pointing out the mutual benefits to the complying parties is crucial for adoption. As Van Duivenboden et al. (2005) point out it is hard to direct top-down policy to the right person and to translate it to the needs of the target group. Municipal managers are in a way specific that acquiring awareness among them is crucial to the success of a policy. Tangible communication that connects with their point of view should clear the challenge and increase involvement. These results indicate that the ‘Social Influence’ and ‘Facilitating Conditions’ constructs of the UTAUT deserve the highest importance in this case study. The social influence relates to the adoption motivation and feedback of CBS and the facilitating conditions refer to the variances in support by the software suppliers which indicated variances in adoption.

3.4 Association of Water Boards As described in the preceding section, the Dutch Association of Water Boards also needs to comply with the European legislation by consolidating quarterly financial reports to CBS. Considering their already considerable amount of reporting obligations, the Water Boards have adopted an XBRL solution in collaboration with CBS. In the Netherlands, this case study was one of the first movers with a successful implementation. An important observation


involves the technical XBRL specification at that time. The problem was that in the early adoption phase there were considerable uncertainties regarding the version (2.0) of the XBRL standard. This fact played a risky role in the implementation project. Semansys (2003) describes that the costs involved were minimal: the Water Boards have spent “just a couple of thousand euros”. However, a critical remark on these costs is needed because it is not stated which activities are included here and whether the estimation is complete. The benefits to the Water Boards are expected when all fifty reporting requirements can be fulfilled on XBRL basis. Since those other information flows are still to be standardized, it is hard to calculate the return-on-investment (ROI) in this case study. Important to take along however, are the low costs and recognition of benefits realization by standardizing other compliance requirements by re-using data. Catalyzing factors for adoption B1 Provision of a clear and voluntary proposition to the information disseminators at an

early stage with a very accurate picture of efforts, costs and returns involved. B2 Small financial benefit for early adopters. B3 Vendors of financial systems were involved to support XBRL. B4 Training provided by software supplier. B5 Use of underlying existing and proven IS and IT. B6 Low implementation costs (± couple of thousand euros). B7 Recognition of re-using data benefit by standardizing other compliance requirements. Obstructing factors for adoption B1- Uncertainties about changes in the XBRL specification 2.0.

3.5 Federal Deposit Insurance Corporation For the submission of quarterly reports, the Federal Deposit Insurance Corporation (FDIC) conglomerate of financial regulators obligates the 8,300 U.S. banks to tag their reported documents using XBRL taxonomies. This type of regulatory compliance mandate has been active since the end of 2004 and had been evaluated to be the most effective method for the FFIEC to have its information disseminators adopt XBRL in their compliance reporting process [FFIEC, 2006; Malykhina, 2006; Wielaard, 2006]. ‘Comply or die’ attitudes are common among the complying organizations since exceptions are not allowed. The FDIC has facilitated in providing the resources to banks by asking the banks’ software suppliers to create an interface that allows the banks to report in XBRL format. The followed approach considers a conversion to XBRL at the end of the information processing chain (see Figure 2.5). This approach is beneficial to the banks in a way that they did not have to integrate the XBRL data standard into their internal information systems. However, this approach clearly points out that the collecting party has the biggest advantages in relation to the disseminating party. By being supported by software suppliers, banks face little implementation and business process redesign issues and are less restricted in adopting XBRL. FFIEC (2006), Malykhina (2006) and McCright (2004) describe measurable benefits in this case study which include the generation of cleaner data (increase from 66% to 95%), the production of more accurate data with fewer errors that require follow-up by regulators (increase from 70% to 100%), faster data transmission to regulators and thus meeting deadlines (decrease from weeks to hours) and a 15% rise in analyst’s productivity in the


number of cases and amount of information that can be handled. Also, in favor of the regulator, better validation support of reports is provided. Catalyzing factors for adoption C1 Adoption of XBRL is obligatory. C2 Regulator requests software suppliers to support XBRL. C3 Few adaptations needed in internal IT systems of information disseminators. C4 Open, collaborative approach to business process change between regulator and

stakeholders. C5 XBRL benefits are well recognizable related to the old data collection process with

manual manipulation of PDF, Ms Word and MS Excel documents. Obstructing factors for adoption C1- Demand for programmers re-writing interfaces observed, BPR needed.

3.6 Australian Prudential Regulation Authority Williams et al. (2006) describe the implementation of XBRL in the Australian financial sector from an information management point of view. The case is focused on the Australian Prudential Regulation Authority (APRA) which collects data for prudential regulation from banks and other deposit takers. The APRA initiated a project with two other information collecting organizations to streamline the financial reporting supply chain using XBRL. Using the ‘Direct 2 APRA’ (D2A) software application, institutions can prepare and submit forms to APRA, using conventional spreadsheets [www21] or XBRL documents [www22]. The main results from the transition to XBRL included a reduction in the industry-reporting burden and savings of time and money. The following results have been found useful for the adoption of XBRL in the Dutch banking industry: Information re-design Regarding the information that is being reported and received, it was shown that specifically the information collecting organizations spent considerable resources on information re-design activities. This impact on the IT organization in this case and in current literature is still largely ignored or underestimated. Agreeing on semantic structures Differences existed between the way information disseminators defined their information and the way that information collectors treated the same information. Thus, setting agreements on semantic structures was needed which turned out to be a complex process of negotiation. However, the return on investment was realized through the benefits that were gained. Business case / value propositions The financial service providers identified the widely discussed advantages of XML-based systems but indicated having trouble recognizing their business case with a positive business case quantification. For adoption, such a value proposition was found to be needed for organizational acceptance. This shortcoming can be related to the pretty negative burden-like view on XBRL the financial service providers had: “XBRL is viewed as a reporting product required by external agents who require the tagged document instance complete with metadata that is defined for their own information needs. While it is important that regulators drive the initiative for standards development there is a risk that XBRL is treated only as yet


another reporting product generated at the end of the reporting cycle to meet external requirements” [Williams et al., 2006]. Work and business practices Preparing business reports involved the consolidation of information from distributed internal sources and needed considerable manual entry, checking and report generation. In the late method APRA used for its data collection, the ‘spreadsheet jungle’ appears. This can by illustrated by downloading the Excel-spreadsheets [www21]. Community acceptance Successful adoption of XBRL for the exchange of business information is found to be “an exercise in community building”. In the APRA scenario, the regulator did not execute a mandate on the use of XBRL, but facilitated it on a voluntary basis and collaborated with two other information collecting authorities. Summarizing this case leads to the notion that the financial service providers realized the advantages of XBRL but were not yet familiar enough with the business benefits. These quantifications in combination with a regulator facilitating the use of XBRL are key factors for adoption. It was also shown that the impact on IT and organizational structures are quite often ignored or misunderstood for which Williams et al. (2006) advocate a broader view from an information management perspective. Catalyzing factors for adoption D1 Regulator’s approach to collaborate with other information collecting organizations. D2 Benefits recognized in relation to current inefficiencies caused by manual entry,

checking and report generation. D3 Adoption on a voluntary basis facilitated by regulator. Obstructing factors for adoption D1- Hard to recognize business case with positive quantifications beforehand. D2- Information collectors were required to undertake a significant information re-design

activity. D3- Agreeing on semantic structures was needed which turned out to be a complex

process of negotiation. D4- Risk that XBRL is treated by information disseminators as a reporting burden. D5- Too little attention paid to IT and organizational structures.

3.7 European Central Bank This case study is not about the adoption of XBRL but does provide good insight on cross-border collaboration in the European banking industry. That is, the Euro was implemented in 1999 as the new currency for the fifteen participating countries in the European Monetary Union (EMU). For the international financial transactions between banks, the European Central Bank (ECB) offered two alternative systems to the banking industry. The two systems were implemented in addition to the old banking systems and the project was evaluated as a success [Smits, 2002]. Catalyzing factors for adoption E1 Convergent motives of stakeholders (ECB, National Banks and local banks). E2 Availability of existing standards and banking codes.


E3 Opportunities to link the systems to other inter-organizational systems (IOS) and internal systems in banks.

E4 Availability of information to control market risks and counterparty risks. E5 Improved process performance. E6 Trust in the central institutions involved. Obstructing factors for adoption E1- Many banking institutions and systems involved in many countries.

3.8 European banking industry This section discusses the XBRL implementations for financial business reporting by banks in Belgium, Finland of Spain which are the early adopters in the European Union. Belgium The Banking, Finance, and Insurance Commission (CBFA) has obligated the Belgian banks to disclose their financial reports in XBRL format from January 1, 2006. The reported information is based on FINREP and is used for financial and prudential reporting. The Central Balance Sheet Office of the National Bank of Belgium (NBB) adopts the COREP XBRL taxonomy for Basel II supervisory reporting starting January 1, 2007. The CBFA recognized that the Belgian industry might observe XBRL based reporting as an additional burden. However, in reconciling this obstruction with its supervisory wish the CBFA pointed out to the banks that XBRL delivers benefits, primarily as an efficiency tool for use of multiple information requestors: internally as well as externally. This communication aspect is part of the success factor in this industry: the good collaboration among the banks and the regulator. Collaboration is illustrated by the joint development of the Belgian extension on the standard IFRS taxonomy by the Belgian banking industry. The availability was even evaluated to be one of the major critical elements for adoption of XBRL [Creemers et al., 2005; Deladrière et al., 2006; Swyngedouw, 2006; Van den Nieuwenhof, 2006]. Catalyzing factors for adoption F1 Use of XBRL is obligated by regulator. F2 Availability of COREP taxonomy from European level. F3 Good collaboration among banks and regulator to establish national extension. F4 No other commercial standard than XBRL available. F5 Network effect: XBRL is already used by other public institutions. F6 Banks are pioneers in digital reporting. F7 Small size of industry leads to short development time of taxonomy. Obstructing factors for adoption F1- XBRL reporting seen as an additional burden. F2- Unavailability of a taxonomy. Finland The Financial Supervision Authority of the Finnish central bank [www26] has started a project on implementing XBRL for Basel II reporting by the Finnish banks. KPMG is currently involved with the implementation of the COREP taxonomy. The Finnish national taxonomy is to be published at the end of September 2006 while the reception of XBRL documents will be operational from April - May 2007. KPMG was questioned regarding


differences between the Finnish and Dutch banking industry to indicate factors that explain why the Dutch industry is not yet reporting in XBRL format. The observations indicated no significant differences between the industries in compliance regulations, adoption attitude, IT capabilities, culture nor politics. Spain The Bank of Spain has pressed ahead with the introduction of XBRL. After a satisfactory test run with appraisal companies, it was decided to extend XBRL reporting to credit institutions disclosing from 30 June 2005. A working group has been set up for the development of a taxonomy that is firstly used in a limited group of users. Approximately 90% of the Spanish banks is currently reporting regulatory information in XBRL format to the Bank of Spain [www27]. The success of XBRL in the banking industry has motivated the Spanish Senate to call on the government to push the use of XBRL forward in other lines of business, e.g. with regional and local governments and the private sector. Catalyzing factors for adoption G1 Use of XBRL is obligated by regulator. G2 Availability of COREP taxonomy from European level. G3 Regulator takes on a leading role. G4 Banks are early adopters.

3.9 Conclusions The catalyzing and obstructing factors for adoption found in the case studies discussed are merged and presented in Appendix I. For applying that consolidated list of CSFs in the Dutch banking industry this section briefly discusses similarities and differences between the case studies and the Dutch banking industry. This analysis shows to what extent the found factors are applicable in the Dutch banking industry. CBS vs. Dutch banking industry The most remarkable observations in this case study concern the obstructing factors experienced by the reporting municipalities. First, the recognition of the promised benefits is low which results in low enthusiasm to voluntarily adopt XBRL in a furthermore regulation driven context (BBV vs. Basel II). A similar signal is heard in the Dutch banking industry in the form of its resilient attitude towards XBRL. Second, in both industries, public and private respectively, the ‘effort expectancy’ and ‘performance expectancy’ of the UTAUT are unbalanced, i.e. the benefits do not outweigh the necessary investments for the reporting organizations. This is similar in the Dutch banking industry where it is also questioned who is paying for implementation costs: the banks are certainly not interested in facing the ‘burden’ alone. Since the banking industry possesses relatively more advanced resources on IT infrastructure and skills than municipalities, the ‘experience’ construct relaxes the ‘complex BPR’ and ‘lack of skills’ obstructions by the municipalities. Regarding the perception that the adoption of XBRL was obligatory instead of voluntary (A4), it is hypothesized that this factor will be less valid in the banking industry since the financial services industry is under more stringent regulation than municipalities and banks should thus be better aware of what is obligatory and what is not. On the other hand, this is expected to intensify the obstructing factor of the banks’ agenda caused by many other rules and acts to comply with (A3-).


Association of Water Boards vs. Dutch banking industry A major similarity between this and the above case is the voluntariness of use. However, since the Water Boards were provided with a clear proposition with efforts, costs and returns described, they apparently formed such a positive view on the ‘performance expectancy’ and ‘effort expectancy’ that a considerable part of them were willing to adopt XBRL. The information collector in the Water Boards case had a clear benefit in receiving XBRL formatted data which resulted in a financial compensation for early adopters. Regarding the obstructing technical uncertainties on the specification of the XBRL standard, it is beneficial that the technical specification (version 2.1) has in the meantime definitively been approved. Consequently, the risk of implementing a premature standard is no longer applicable. FDIC vs. Dutch banking industry This case’s distinction is the presence of a regulator with a strong influence on the adoption decision process. The straightforward obligation did not result in resistance from the banks. Two explaining factors are identified: the regulator’s request to software suppliers to support XBRL (C2) and the open and collaborative approach between the regulator and its stakeholders (C4). Furthermore, the FDIC provides solid quantifications of the benefits for the regulator but benefits for banks are not given in measurable amounts and are just indirectly deducted from the regulator’s improvements, e.g. faster feedback times. After the current phase with the XBRL-converter approach at the end of the reporting chain, banks may see benefits for themselves on the longer term. This concludes that benefits do not necessarily have to be realized in the first phase for all parties, but they may evolve once the adoption level is explored, i.e. from only externally to internally application. Summarizing, the ‘voluntariness of use’ (totally obligated) and the ‘facilitating conditions’ (support by software supplier requested by regulator) are the major constructs in this adoption scenario. APRA vs. Dutch banking industry The Australian case has close similarities with the Dutch banking industry. The D2A system is in a degree comparable to e-Line DNB which required information re-design activities for the regulator. This issue can be partially expected for the Dutch banks, but more for DNB’s ‘effort expectancy’ construct since it is applicable to the information collector instead of the information disseminator. Second, the problems in agreeing on semantic structures are less applicable in the Dutch scenario because a well-defined XML schema and COREP forms are already in use. Third, remembering the rather reserved position of the Dutch banking industry, the issue of recognizing the advantages but not yet the added value is shown in both the Australian and the Dutch areas. The corresponding risk that reporting in XBRL format is treated as a reporting burden emphasizes the need that users must recognize the value through the ‘performance expectancy’ construct. At last, in contrast to the obligatory use in the FIDC case, it is observed that community acceptance plays a key role for the APRA. By facilitating the use of XBRL on a voluntary basis and being open to collaboration, the ‘social influence’ construct was given significant importance. It also shows that adoption on a voluntary basis can be successful in contrast to the CBS case where the initial adoption rate was quite low. ECB vs. Dutch banking industry The parties involved in this case study are the closest to the research area of European Basel II regulation in the Dutch banking industry. The implementation of an IT (innovative) banking system involved several catalyzing factors that the banks embraced. ‘Performance expectancy’ (E3, E5), ‘effort expectancy’ (E2) and ‘social influence’ (E1, E6) turned out to be critical for adoption and success. Based on the matching characteristics of this case study with the Dutch banking industry, these factors are hypothesized to be of value for this research.


European vs. Dutch banking industry All of the catalyzing factors for adoption in the Belgian banking industry are applicable to the Dutch except for the obligation (F1) and the pioneering in digital reporting (F6). In addition to these differences, the Dutch context differs from Belgium that the former has a national taxonomy project. Although the Dutch banks’ Basel II reporting wishes not to be incorporated in the NTP, the Dutch banks have an awaiting attitude. This provides the Belgian banking industry with freedom and independence from NTP-like projects to collaboratively develop an industry specific taxonomy in a considerable shorter amount of time than a broader national approach would require. A second difference is that the Belgian accounting rules are more strictly defined by law than in the Netherlands whereby fewer agreements need to be made to define the taxonomy. The ‘experience’ (pioneering experience in digital reporting), ‘voluntariness of use’ (no choice, obligated by regulator) and ‘social influence’ (good collaboration between banks and regulator) constructs are shown to be the key influences. It is remarkable to note that the experience aspect is explicitly mentioned here and not in other case studies. Regarding the assumed lack of differences between the Dutch and Finnish situation, it is hypothesized that the analysis does unfortunately not cover all adoption influencing factors. The Spanish case study however, confirms the key ‘voluntariness of use’ construct with its industry obligation and the condition of industry support and collaboration in the ‘social influence’ construct. Consolidated list of CSFs The case study CSFs from Appendix I are merged in the following list. Factors are removed for redundancy and adjusted for application in the banking industry in its naming and validity as discussed in the above analyses. Catalyzing factors for adoption (consolidated) 1 Intelligibility and speed of feedback by regulator in response to delivered reports (A1). 2 An “if we need to comply, we better do it as soon as possible” mentality (A2). 3 Although the use of XBRL was voluntary, it was perceived as obligatory (A4). 4 Opportunity to achieve internal improvements by recognition of XBRL benefits for own

organization (A5, E3, E4). 5 Organization being positively supported by its software supplier (A6, B3, B4). 6 Pro-active pioneering mentality and knowledge on application of IT (A3, A7, F6, G4). 7 Provision of a clear and voluntary proposition to the information disseminators at an early

stage with a very accurate picture of efforts, costs and returns involved (B1, G3). 8 Small financial benefit for early adopters (B2). 9 Use of underlying existing and proven IS and IT (B5, E2). 10 Low implementation costs and development times through small size of industry (B6, F7). 11 Recognition of re-using data benefit by standardizing other compliance requirements

trough collaboration with other information collecting organizations - network effect (B7, D1, F5).

12 Adoption of XBRL is obligatory (C1, F1, G1). 13 Regulator requests software suppliers to support XBRL (C2). 14 Few adaptations needed in internal IT systems of information disseminators (C3). 15 Open, collaborative approach to business process change between regulator and

stakeholders (C4). 16 XBRL benefits are well recognizable related to the old data collection process with

manual manipulation which results in improved process performance (C5, D2, E5). 17 Adoption on a voluntary basis facilitated by regulator (D3).


18 Convergent motives and trust among stakeholders and its quality of collaboration (E1, E6, F3).

19 Availability of COREP taxonomy from European level (F2, G2). 20 No other commercial standard than XBRL available (F4). Obstructing factors for adoption (consolidated) 1 Insufficient quantitative information why reporting should be in XBRL format (A1-, D1-). 2 Insufficient compensation for spent time, capacity and financial resources (A2-). 3 Current reorganizations and projects demanding ‘all’ attention and resources (A3-). 4 Currently migrating financial system or major changes underway (A4-). 5 Reporting in XBRL format is not obligatory; some choose to wait until it is (A5-). 6 Not being fully enthusiastic about XBRL: “XBRL is not ‘alive’” (A6-). 7 Complex business process redesign (BPR) is required (A7-, C1-, D2-, E1-). 8 Lack of skills (A8-). 9 Insufficient provisioning of support (A9-). 10 Lack of skills and no support by software supplier (A8-, A10-). 11 Uncertainties about changes in the XBRL specification 2.0 (B1-). 12 Complex process of negotiation on agreeing on semantic structures (D3-, F2-). 13 Too little attention paid to IT and organizational structures (D5-). 14 XBRL reporting seen as an additional burden (F1-, D4-). Summarized areas of attention in the UTAUT constructs The enrichments to the UTAUT found in the case studies are listed below according to the respective constructs, viewed from a Dutch banking industry’s perspective. Note that these factors are not yet validated in the Dutch banking industry, yet they are only targeted in their description at the Dutch banking industry and to what is already known (e.g. the availability of COREP forms).

-/- Recognition of the promised benefits is low (CBS, APRA). -/- Unbalanced {performance expectancy : effort expectancy} (CBS). +/+ Clear value proposition (business case) provided by regulator (Water Boards). +/+ Benefits for banks as reporters do not necessarily have to be realized directly, a longer term approach is accepted (FDIC). +/+ Opportunity for internal and inter-organizational application (ECB).

+/+ Technical uncertainties on XBRL specification are not applicable anymore by the definitive 2.1 version (Water Boards). -/- Information re-design activities for regulator are needed (APRA). +/+ Problems and efforts in agreeing on semantic structures are less applicable in Dutch banking industry (APRA). -/- Many and complex banking institutions and systems involved (ECB).

+/+ Open and collaborative approach between regulators and its stakeholders (FDIC, Belgium). +/+ Facilitated adoption on a voluntary basis, openness to collaboration improves community acceptance (APRA). +/+ Convergent motives of stakeholders (ECB). +/+ Network effect: XBRL used by other public institutions (Belgium). +/+ Regulator takes on a leading role (Spain).


+/+ Financial compensation provided to early adopters by regulator (Water Boards). +/+ Regulator’s request to software suppliers to support XBRL (FDIC). +/+ Availability of well-defined XML schema and COREP forms for the Dutch banking industry (APRA, Belgium, Spain).

+/+ Relaxation of ‘complex BPR’ and ‘lack of skills’ obstructions in banking industry (CBS). +/+ Banks are digital reporting pioneers / early adopters (Belgium, Spain)

+/+ Banks are well aware of what is obligated and what is not thus there are fewer misunderstandings resulting in voluntary adoption (CBS). +/+ Straightforward obligation by powerful regulator (FDIC, Belgium, Spain).

The key factors per construct that are most interesting to take along in the research in the Dutch banking industry are as follows. First, the ‘performance expectancy’ results show that value expectations vary and are most often unbalanced in relation to the efforts to be invested. This relates to the second construct of ‘effort expectancy’ for which it is expected that these factors will not play major restrictions for the Dutch banking industry in the process of agreeing on semantics but they are expected for internal implementations at core levels. Third, the ‘social influence’ factors were found to positively influence XBRL adoption, the most returning aspect is an open and collaborative approach between stakeholders and the regulator. Fourth, ‘facilitating conditions’ have comparable positive influences on adoption as ‘social influence’ by moderating adoption through financial compensation, software support and availability of taxonomies. Fifth, because Dutch banks are reserved regarding XBRL it is assumed that they are no early adopters thus the main factor here is the experience and knowledge that Dutch banks have for process engineering related to the CBS case study. At last, an obligation is an ‘open door’ solution to adoption, banks should consider whether a future obligation can be expected.


4 Validation of aspects - design Based on the consolidated list of CSFs, theory from the UTAUT, RBT, Chang et al. (2005) and Sekaran (2000) an interview protocol and a questionnaire are constructed (see Appendix K and Appendix L respectively). The interviews are conducted among several banking organizations in the Netherlands including the national regulator and the national association of banks to validate the consolidated list of CSFs. The first part of the interview questionnaire is based on a 7-point numerical scale to assess the respondent’s attitude towards a particular statement, i.e. to what extent the respondent evaluates the statement to be applicable for the Dutch banking industry and for his/her organization. In the second part the respondent is asked to prioritize a list of factors by filling in his/her estimation of the factor’s influence on his/her adoption decision. Before presenting the field research results in the next chapter, the characteristics of banks and their software suppliers are described. This information is necessary to analyze the relationships between them and to evaluate the impact of XBRL for Basel II reporting.

4.1 Banks In the process of interviewing the banking industry, differences are expected in banks’ sizes, client portfolios, strategies, service areas and more specifically in Basel II approaches (SA, IRB - Foundation or IRB - Advanced). Therefore a topology by Boixo et al. (2005) is used to indicate the degree of banks’ and banking supervisors’ XBRL readiness (see Appendix J). The names of these banks have been omitted for confidentiality reasons. Previous to the actual research, the banks interviewed are estimated according to this classification. First, De Nederlandsche Bank is regarded as a supervisor in the initial stages since advanced XBRL processing systems are not known in this Dutch supervisor’s situation. Second, the Nederlandse Vereniging van Banken is actually not a bank but it is the industry’s association that represents the common interests of the Dutch banks. Therefore, no classification is given to this organization. Third, bank A is a bank only operational in the Netherlands and thus not an advanced or multinational bank. The interview points out what classification fits to bank A, either the situation with an own convertor or an external solution. Bank B and bank C are both large multinationals banks for which the first classification undoubtedly fits. Minimal signals indicate some attention given to XBRL by these banks but it still needs to be investigated whether bank B and bank C completely comply with Boixo et al.’s description of “reporting to different supervisors (…) in the various countries in which it operates”. Last, bank D and bank E are also multinational banks but initial research contact indicated that the Dutch locations were in such a low degree involved with XBRL that its levels of awareness and opinions were not significant for this research. Therefore no extended interviews were conducted with bank D and bank E. Two more banks were contacted for participation in the research. However, the first one indicated that its architecture department was not yet busy with XBRL. The other bank was not interested in participating in the research.


4.2 Software suppliers A banking systems survey [KPMG, 2005] showed that in 2005 32% of the participants had not decided on an IT solution to meet the Basel II requirements (figure 4.1). Out of the banks that did indicate a software solution, standard packages are concerned offering varying degrees of risk calculating and management models with integrated or connected reporting solutions. The five most used solutions are questioned for XBRL support.

Figure 4.1 Indicated solutions identified to meet the Basel II requirements by the Dutch banking industry [KPMG, 2005] Table 4.1 gives an overview of the XBRL support of the software solutions mentioned in the figure above. For the scope of this research, ‘XBRL support’ is interpreted as the availability of a basic function to export a report in XBRL format. This is minimally available in the ‘conversion approach’. For a ‘deeper’ implementation more sophisticated support is needed, but this is not investigated here. Table 4.1 Overview of Basel II compliance software solutions. Supplier Solution XBRL support Source Business Objects Risk Management and Basel II

Compliance Solutions Yes www14

Cognos Cognos 8 BI No1 www15 S1 FiRE 2 Yes www16 Ubitrade Fermat Capital Adequacy Directive Yes www17 SAS SAS Risk Management for Banking Announced3 www18 In a broader view beyond Basel II compliance, all major ERP (Enterprise Resource Planning) software suppliers (e.g. SAP) have ‘XBRL-enabled’ their applications [McCright, 2004]. Another interesting software domain used in the financial service industry covers office applications where Microsoft and other companies are also offering XBRL support. For software suppliers it is an opportunity to strengthen the relationships with their customers. Other sources claim the advantages of XBRL for the information disseminators, the banks,

1 Cognos only supports Excel, PDF, XML, HTML and CSV formats to be reported. Its infrastructure is built using open standards such as XML, SOAP and WSDL. 2 FiRE is the current market name of FRS Regulatory Reporting, an application within the FRS Analytics suite with FRS being a business unit of S1. 3 SAS supports the COREP models and has announced XBRL support in its next release, to be expected at the end of 2006.


once they make the strategic decision to implement open standards (e.g. XBRL) in their information systems. This leads to the opportunity for banks to gain benefits and not only deliver the biggest part of the benefits to the regulator. It is assumed that software suppliers do not motivate banks to change from their proprietary standards to open standards, e.g. from a chart of accounts maintained by the software suppliers to an XBRL based chart of accounts respectively. Despite the expectation that software suppliers would be resistant to open standards and thus to XBRL, Figure 4.1 shows good software support of XBRL to the Dutch banking industry. Demand for XBRL support The demand for XBRL support originates from several directions. In the case studies with the FDIC and the Association of Water Boards, the regulator and the stakeholders’ association respectively take the initiative to involve software suppliers in their adoption projects. In such a situation the stakeholders are indirectly involved. This offers the advantage of clarity by the regulator obligating the use of XBRL and requiring the software supplier to support it and the disadvantage (or risk) that stakeholders’ needs are inefficiently heard through low involvement and extra communication efforts through the association. Since the diffusion of XBRL, seen as an innovation, takes time the remark by SAS indicates that its XBRL support is questioned for in an early stage by its banking clients.


5 Validation of aspects - results This chapter describes the opinions and plans on XBRL adoption collected in the field research. The policy of the Dutch regulator is dealt with first followed by the opinions of the Dutch Association of Banks. Then the five case studies among Dutch banks are presented. Conclusions on the Dutch banking industry’s opinion and variations between banks are presented in the final section.

5.1 De Nederlandsche Bank ‘De Nederlandsche Bank’ (DNB) is part of the ECB network of central banks and is responsible for the supervision on Dutch credit institutions which include the banks. Being the industry supervisor, DNB has developed the e-Line DNB online reporting platform in collaboration with the Dutch banks. E-Line DNB is an advanced XML based collection of reporting forms that are filled in electronically (‘data entry’) or by importing XML files from banks’ software applications. E-Line’s XML format is defined by DNB and is in its initial stages in supporting XBRL. DNB considers XBRL as one of the available formats of the reported information for the FINREP and COREP models. In contrast to the Belgian and Spanish central banks, DNB does not obligate the use of XBRL. Neither will it be obligated on the short term; its aim is to facilitate reporting in XBRL format according to the wishes of the Dutch banks. Two major issues that DNB takes into account in its decision process are the banks’ full compliance agendas and the implications for IT and organizational processes. The current electronic and standardized reception of reports offers DNB enough measures for data validation, consolidation and processing. The added value of XBRL as an alternative to XML is thus perceived as minimal which results in DNB not applying XBRL in its internal systems. The main reasons to facilitate XBRL are the ‘European cooperation idea’ and to contribute to the reduction of administrative burden for reporters. For the latter reason, DNB specifically recognizes the multinational banks’ wishes to report along one harmonized data model, i.e. COREP, within their business units in European countries. DNB therefore offers the possibility to report in XBRL format from January 1, 2007 in parallel with the current XML format in e-Line DNB. However, by offering both the XML and XBRL format in 2007, DNB faces increased efforts and costs in this dual approach. Combined with the minimal added value of XBRL for DNB, its ‘performance expectancy’ does not outweigh its ‘effort expectancy’. If the banks are enthusiastic about the XBRL format, DNB will consider discarding the XML format, of course in consultation with the banks. DNB has the intention to discuss this decision with the banks on a short term. Since the supervision on the industry by DNB is financed by the industry itself, the industry is availed at an efficient supervision process and should rationally avoid multiple reporting standard and costs. The formats decision is thus also a matter to the banks, not only to DNB. By regarding the reporting population from a DNB point of view, an interesting remark concerns the degree of automation among the banks. Twenty out of the one hundred banks using e-Line DNB are capable of exporting XML files from their internal applications and to import them into e-Line. This implies that eighty banks use the ‘data entry’ method and that a potential ‘XBRL population’ among the Dutch banks consists of twenty banks. These twenty


banks include large multinationals for which European reporting harmonization is expected to be very interesting, but also banks that are not active in the European market are included. DNB expects that those banks that have a primary influence on possibly discarding the XML format on the longer term, take the initiative. DNB is more interested in offering XBRL support as a complete package combining the COREP and FINREP reports. In other fields, DNB is planning to support Basel II’s pillar 2 requirements in XBRL format, since they are not harmonized in COREP. The benefits of harmonizing data definitions in European context and a European version of an e-Line like system are regarded as interesting concepts to DNB. National differences and interests, however, are known to barricade such developments. Finally, DNB points out that decisions are frequently discussed with the banking industry. Until now, those sessions have not exposed enthusiastic opinions by the banks yet. In this collaboration process, the role of the Netherlands Bankers’ Association is discussed in the next section. Catalyzing factors for adoption H1 European collaboration supplies DNB with harmonized COREP models free of costs. H2 DNB facilitates reporting in XBRL format from January 1, 2007. H3 DNB recognizes value for multinational banks and is willing to support. H4 DNB is planning to develop XBRL support for pillar 2 requirements itself. H5 Quality of consultation between DNB and the banks. H6 The current data validations in e-Line DNB are also available when XBRL is added

as a reporting format. H7 DNB recognizes benefits of XBRL in harmonizing further European definitions and a

European version of an e-Line like system. Obstructing factors for adoption H1- DNB perceives added value of XBRL as minimal related to current XML format. H2- DNB recognizes the banks’ full compliance agendas and implications on IT and

organizational systems. H3- DNB lays the initiative to adopt at the banks. H4- Recent investments made in e-Line DNB. H5- Implementation costs of XBRL into e-Line DNB by DNB. H6- DNB plans to develop XBRL definition of pillar 2 requirements for Dutch

application (no European harmonization).

5.2 Nederlandse Vereniging van Banken The ‘Nederlandse Vereniging van Banken’ (NVB) represents the common interests of the Dutch banks and strives to align the banks towards legislation. The NVB is only active in non-competitive areas and is thus a perfect intermediary for collaborative purposes, e.g. for common Basel II reporting by all Dutch banks to DNB. Therefore, the NVB has a broad view on the industry and is able to communicate the common opinions of the Dutch banks. NVB investigated the advantages and disadvantages of XBRL for the information receiving (i.e. DNB) and disseminating parties (i.e. the banks). For the external financial reporting application, NVB found that banks do not benefit from reporting in XBRL format, because current IT, standards and procedures are already standardized, operational and working fine.


Even more, banks have varying opinions on XBRL due to pressure and pushing motivations by XBRL organizations and discussions in literature. Therefore it is hard to create a win-win scenario and to compare banks with each other. For the internal application within banks, the NVB indicates that banks recognize opportunities to streamline information flows. However, the immature character has not proven useful business cases in this field either yet. The NVB notes that such an internal application pilot has been started by a German bank, but neither positive nor negative results have unfortunately been presented so far. The NVB has a cordial opinion on the COREP guidelines and the harmonization of reporting definitions. The NVB appreciates DNB’s XBRL facilitating policy and its empathy regarding the banks’ full compliance agendas because banks attribute higher priorities to compliance regulations than to XBRL with its voluntary adoption. Regarding the benefits for multinational banks, the NVB agrees with DNB that these banks need to take the initiative if they want to adopt XBRL for their reporting process. Furthermore, the NVB confirms DNB’s opinion that e-Line DNB is an adequate and appreciated system for disseminating and processing Basel II reports. NVB estimates that software does not form a major adoption restricting factor. Although purchase and upgrade investments are needed, the availability of supported software packages is sufficient. Next to IFRS, Basel II and other high priority compliance regulations, the NVB does recognize another barrier for adoption: the lack of a clear business case. Signals from pushing XBRL organizations, software suppliers and governments accentuate the technical advantages of XBRL without indicating a clear business case with quantifications. If DNB was or would be enthusiastic about XBRL, an idea was raised to provide a financial reward to the banks by DNB to compensate for the spent resources by the banks with the gains of DNB. DNB has actually not proposed such a settlement, which can be directly related to its perception resulting from the previous section. This concept is illustrated by game theory: uncertainties about actions of others can result into a sub-optimal solution. By providing compensation for one actor’s (i.e. bank) investments through the gains of the other (i.e. DNB) while the calculation of those numbers is hard, limited information and rationality can result in sub-optimal scenario planning. Since the NVB indicates a good level of collaboration between DNB and the banks, this aspect of varying strategies on the industry common area of Basel II reporting, can partially be neglected. Of course, each bank can have its own strategic aspects that are not always expressed in industry meetings to the NVB. Catalyzing factors for adoption I1 DNB facilitates reporting in XBRL format from January 1, 2007. I2 DNB recognizes value for multinational banks and is willing to support. I3 Quality of consultation between DNB and the banks. I4 XBRL implementation for banks is easy for a ‘convertor approach’ because standard

software is available. Obstructing factors for adoption I1- XBRL is ‘technology push’ with little business case known. I2- The current reporting process is already electronic, standardized, operational and

working fine (e-Line DNB). I3- DNB lays the initiative to adopt at the banks. I4- DNB recognizes the banks’ full compliance agendas and takes it into account in not

obligating XBRL as another burden.


5.3 Bank A The interviewee of bank A is responsible for implementing the Basel II regulation and he notices that an aspect of Basel II is a possible transition to XBRL. The interviewee is personally involved with XBRL developments from 2006, but IT and reporting department colleagues investigated XBRL more thoroughly. Their internal research concluded that the bank could not ‘skip’ the new reporting language and that adoption was at hand. The interviewee expects that XBRL is implemented in the long run. For the external financial reporting to DNB however, bank A will not adopt XBRL until DNB is ready for it. Despite these negative statements, the interviewee does recognize the advantages of XBRL: not for the bank’s Basel II reporting process in the first place, but more for DNB and the ECB in receiving, consolidating and processing the reports. Bank A has decided to adopt Basel II as of January 1, 2007 and applies the standardized approach. Since DNB has indicated that XBRL reporting is not yet supported from that date, bank A continues reporting in the current XML format. The bank, however, does expect that DNB will start supporting XBRL during 2007 and it is the bank’s goal to start and finish an XBRL implementation project in 2007. For the actual implementation project, the interviewee does not expect any major adoption restricting factors. First, the bank’s IT department indicated that the technical implementation is a relatively small effort (positive ‘effort expectancy’) and that the current XML based reporting process is the only alternative to XBRL. Second, the interviewee expects that organizational developments, e.g. a full agenda, do not restrict its XBRL adoption plans in 2007. It is noted that considerable resources have been and are being spent on IFRS, Basel II and internal payment systems, but Basel II is regarded as the finalizing major project. This expectation does not imply that there are no higher priority issues on the bank’s agenda. Other European developments require attention but are planned to be outsourced in the next years, e.g. the ‘Markets in Financial Instruments Directive’ (MiFID). As regards the ‘social influence’ construct, the interviewee does not pay particular attention to the varying signals in the market. The market can be seen as two divided areas of support, i.e. support by software suppliers and support by DNB. While technical capabilities are praised and widely supported by software suppliers, the interviewee notes that it is generally neglected how hard it is to get market actors, i.e. the banking industry, aligned. In this context, the interviewee has observed resistance to XBRL obligation by other banks. He is also confident that DNB will ultimately obligate the use of XBRL after it has been operational and support for a certain period. Not on the short term, but his estimation is January 1, 2008 or later because that is also the final transition date to Basel II and a possible combination benefit can then be realized. The interviewee accentuates the importance of industry collaboration and recognizes that DNB discusses such decisions in advance with the industry. The added value of XBRL for the bank’s Basel II reporting process is estimated by the interviewee as nil. For all sub processes of the internal data consolidation, the report generation and the actual data transfer, XBRL is regarded as a technical matter, i.e. just a data format. XBRL does not offer added value in comparison to the XML format currently used in the in-house developed Basel II system. The ‘performance expectancy’ in Basel II perspective is thus minimal with the ‘bank with their own convertor’ classification by Boixo et al. (2005). The interviewee does see benefits of XBRL in an information collecting role with its clients. In that area the network effect of increasing connected users is expected to be a catalyzing factor for XBRL adoption with the NTP starting in 2007.


As concluding remarkable findings, the ‘experience’ construct is illustrated by the interviewee through the conservative character of DNB and the whole Dutch banking industry. This results in a prudent attitude towards the implementation of new developments like XBRL. Second, both the determinant RBT factors (availability of IS/IT competences and management perspectives towards IS/IT) are available in bank A’s scenario. Catalyzing factors for adoption J1 Opinion towards XBRL that it cannot be ‘skipped’. J2 Opportunity to combine Basel II and XBRL implementations. J3 No major projects expected in time of XBRL adoption plans (2007) while those

developments coming are going to be outsourced. J4 Benefits recognized beyond external reporting for regulator and benchmarking. J5 No restrictions observed in technical or organizational implementation. J6 Expectation that XBRL is obligated by DNB in the future. Obstructing factors for adoption J1- DNB is not yet supporting XBRL (lack of a definitive specification). J2- The estimated added value for the bank’s Basel II reporting process is nil. J3- Resistance to XBRL obligation by other banks is observed. J4- Banks’ opinions vary and it is hard to align the industry: co-operation is important. J5- DNB and the Dutch banking industry are conservative and cautious in implementing

new developments like XBRL.

5.4 Bank B The wholesale banking department of bank B considers XBRL as an ideal way to reach an efficient exchange of financial data in its corporate lending activities. In this area XBRL is perceived as a competitive advantage in optimizing the reporting chain and in gaining efficiencies in speed and costs as an information receiving organization. For the value of XBRL for the bank’s IRB reporting approach, the interviewee states the conclusions by the NVB advisory accounting committee in which he participates. The committee’s conclusion is that XBRL does not deliver savings for reporting to DNB on the short term and that only limited benefits are offered by XBRL. Bank B is clearly classified as a multinational bank because the group organization of the bank uses five hundred ‘base entities’ to consolidate its needed information for Basel II reporting in multiple countries according to multiple GAAPs. If an obligation or a voluntary request results in the adoption of XBRL for reporting to DNB, the implementation will be done with a ‘convertor approach’: due to the complexity and amount of the interlaced and cross-border processes, the exchange between the bank and DNB is adjusted only while the internal processes are not adapted. Therefore the effect of the RBT factor concerning available IS/IT competences is relaxed by the interviewee, i.e. technical issues are not that important since internal processes will not be adjusted to XBRL. Since bank B needs to report to international regulators, more interest is given to the harmonization of European reporting definitions. An obligation can boost the adoption of XBRL but has a minimal return and does not reach the benefits through harmonization for banks with foreign business and reporting requirements. The interviewee does however recognize barriers for this total European harmonization in diverse supervisors’ interests and resistance. A more accessible solution to decrease the administrative burden on the short term is to avoid new reporting requirements, especially with respect to the current pressure of SOx and Basel II.


The interviewee recognizes two major adoption restricting factors: the technology push of XBRL and the lack of a positive business case in the banking industry. First, he experiences the interaction between banks and XBRL Netherlands as minimal even though the latter is eager to get the banks involved. Second, such a set of quantifications of costs and savings in a business case directly influences the ‘performance expectancy’ of a bank. The example of the earlier discussed German bank that initiated an XBRL pilot is also discussed in this interview. The interviewee contacted this bank and notes that the project faced an exhausting implementation. The key barrier turned out to be a difficulty in indicating the benefits for the bank’s clients as information disseminators. This problem covers the same lack of a distinct business case indicating the benefits of XBRL to both actors in the information exchange process for Basel II reporting from bank B to DNB. According to the interviewee, the primary adoption catalyzing factor is the availability of a business case, e.g. including a truly harmonized XBRL taxonomy for application within the whole EU. Current barriers to reach such a development concern the degree of collaboration among the European countries in the CEBS. The interviewee notes that the UK is an important actor in this process and they are not participating in the COREP project yet. Even more, the European central banks are delayed in providing clarity regarding the use of COREP, FINREP and XBRL. A uniform policy is not given, other than a global set of COREP requirements that result in different interpretations by each central bank. Catalyzing factors for adoption K1 Advantages of XBRL recognized in the bank’s corporate lending process, pilot

started and experience available. K2 As a multinational bank, the bank is interested in harmonization of European

definitions for reporting in other countries. K3 XBRL Netherlands aims to involve banks in the XBRL adoption process. K4 Network effect expected to create demand by banks’ clients to report in XBRL

format to the bank after implementation of NTP from January 1, 2007. Obstructing factors for adoption K1- No savings expected for Basel II reporting to DNB at short notice. K2- Many, complex, interlaced and cross-border business processes are used for Basel II

reporting that are hard to implement XBRL in. K3- Pressure of other higher priority compliance regulations, e.g. SOx and Basel II. K4- XBRL is a technology push by XBRL Netherlands while the genuine efforts of

XBRL Netherlands to involve the banks do not result in the hoped for interaction among the organizations.

K5- Lack of a positive business case for the banks’ Basel II reporting using XBRL on a voluntary basis.

K6- Results of the German bank’s XBRL implementation are not published. K7- European collaboration is not optimal: the UK is not participating in COREP and

central banks are delayed in providing clear policies K8- DNB does not obligate the use of XBRL, it is only facilitated. K9- Fewer ‘XBRL minded’ people in Dutch banks in contrast to Belgium and Spain. K10- Dutch banking industry does not strive to be an early adopter.


5.5 Bank C An article in a Dutch newspaper describes that bank C is facing increasing compliance costs. A similar complaint regarding the increasing administrative burden to banks was expressed earlier by the NVB [www24]. Taking these points into account, bank C was interviewed about the possible value that XBRL could bring here. In 2005, the bank’s ICT Group has conducted a preliminary investigation on the value of XBRL on the provision of financial annual accounts by corporate clients to the bank for credit applications. This focus thus excludes the area of Basel II reporting, but the interview does provide additional information on top of the research results, interpretations and the opinion regarding XBRL in general. The bank’s research states that only those organizations that receive, produce or process financial reports in bulk are involved with XBRL. It has been observed that information disseminating organizations show little interest in XBRL. The voluntary use of XBRL and its accompanying limited application have resulted in little support by software suppliers at the time of research. Bank C recognizes the advantages of XBRL for incoming, internal and external information flows that still require manual interventions. The main conclusion is that XBRL is a standard that awaits broad acceptation while voluntary adoption is limited but growing. Second, by the extension of national taxonomies the standard has become more and more country dependent and third, it is unclear whether XBRL is applicable in cross-border situations. Fourth, it was found that the standard was not fully definitive and a considerable amount of resources needs to be spent that are largely beneficial to the information recipient. Another specifically mentioned issue that the interviewee named concerns the low involvement of small- and medium-sized enterprises and associations like ‘VNO/NCW’ for employers and ‘MKB Nederland’ for SMEs in XBRL which is the bank’s main target group of clients. Overall, bank C expects that XBRL will be successfully adopted if it is obligated and this is the bank’s current attitude towards XBRL. An important difference between the client-bank and the bank-supervisor relationship is that bank C recognizes advantages in the client-bank scenario in its information receiving role and that the benefits for its information disseminating role are expected to be nil. As bank C recognizes that its clients do not benefit from reporting in XBRL format, they consequently do not see that benefit for themselves in Basel II reporting to DNB. Bank C, however, concludes that benefits are realizable on the longer term. Hence, by applying the RBT to the bank’s situation, it is clear that bank C does not see XBRL as a competitive advantage. Consequently, bank C has not given a high priority to the implementation of XBRL since they have the plan of implementing it when it is obligatory. Finally, the interviewee notes that XBRL discussions are often focused on IT related issues, but that it is more a business and an organizational challenge than a technical one. This notion is confirmed in the questionnaire where the ‘facilitating conditions’ are given above average scores. The stronger expectation and dependability of DNB and the industry’s enthusiasm, willingness to adopt and business case are covered in the ‘social influence’ construct. Catalyzing factors for adoption L1 Advantages of XBRL recognized in information receiving role (for incoming,

internal and external information flows that still require manual interventions). L2 An obligation after implementation in the NTP is wishful, attitude refers to “if XBRL

is used for NTP processes, let’s use it for another area (Basel II reporting) too”.


Obstructing factors for adoption L1- Other priorities. L2- Digital reporting is not obligated. L3- Insufficient know-how regarding maturity of the standard. L4- Insufficient knowledge of used technology. L5- Insufficient know how of number of other users (network effect, proof of concepts). L6- Limited support by software suppliers. L7- XBRL is a standard that awaits broad acceptation. L8- By the extension of national taxonomies the standard has become more and more a

national standard. L9- It is unclear whether XBRL is applicable in cross-border situations. L10- Low involvement of the bank’s future information disseminators, e.g. SMEs. L11- Advantages of XBRL not recognized in information disseminating role.

5.6 Bank D As a member of the Belgian Banking Association, the group of bank D has been actively involved with XBRL. The Association has given its support to XBRL in 2003 which occurred in the operational use of XBRL since January 2006. After this approval, the Belgian industry contacted the banking associations of Luxemburg and the Netherlands to see what their opinions on XBRL were and whether a taxonomy could be developed together. A consequent intention was to extend the harmonization on European level. Based on the fact that the Belgian banks are currently ahead of the Netherlands regarding XBRL, it is deducted that the Dutch opinions were not that enthusiastic so that the Belgian industry took the first mover role. This difference between the Belgian and the Dutch industries is interesting to take along in this research. According to an XBRL Europe [www19] representative, this difference in adoption can be related to the level of collaboration among the banks and the central bank. It was noted that the collaboration was better and Belgium, taxonomy development times were short and taxonomies were specialized for one industry and not covering several industries as is the case in the NTP. For the Dutch internal audit department (IAD) of bank D as a multinational bank, XBRL is not on the agenda of the bank. The contact in the Netherlands indicated a low interest in XBRL and made a reference to the Belgian colleagues. Other issues were thus given higher priorities, particularly due to considerable business continuity problems at the time of research. Catalyzing factors for adoption M1 Within the international offices, experience regarding XBRL is available in Belgium. M2 Interest expected as a multinational bank due to reporting requirements in different

countries. Obstructing factors for adoption M1- Low enthusiasm regarding XBRL. M2- Dutch industry collaboration is less optimal for XBRL adoption in contrast to that of

the Belgian industry. M3- Current issues regarding business continuity required immediate and full attention.


5.7 Bank E For complying with Basel II, bank E has chosen for the Fermat solution to calculate and manage their capital risks. The bank is classified as a multinational bank in combination with an external solution (Fermat). Although Fermat is supporting XBRL reporting, the bank does not pay considerable attention to XBRL; the reporting project is in its initial stage. The reasoning behind this decision is ascribed to the trust in the software supplier in dealing with technical specifications and the expectation that the software supplier is able to cope with (future) XBRL obligations. Catalyzing factors for adoption N1 Trust in the software supplier to deal with technical specifications. N2 Interest expected as a multinational bank due to reporting requirements in different

countries. N3 Software supplier supports XBRL. Obstructing factors for adoption N1- Current implementation of new software is in its initial stages and no attention has

been paid to XBRL yet. During the time of research, KPMG was involved with a review of bank E’s Basel II compliance software solution. It was found that regarding XBRL, the focus of bank E was on Basel II reporting and there was little or no interest in XBRL support or capabilities. Since little attention has been paid to XBRL and the need for XBRL is regarded as nil, an interview was not feasible in this organization.

5.8 Conclusions The field research has provided several adoption catalyzing and restricting factors. Some are at first sight directly comparable to those in the case studies while others are specific to the Dutch banking industry and even others are strategical to one bank specifically. All CSFs from this chapter are consolidated in Appendix N while the most important are discussed below along the UTAUT constructs.

+/+ Opportunity to combine Basel II and XBRL implementations (J2). +/+ Extended benefits recognized beyond regulator’s benefits (J4). +/+ Advantages recognized in other areas (K1, L1). -/- DNB perceives added value of XBRL as minimal related to current XML format (H1-, K1-). -/- XBRL benefits not recognized while little business cases known (I1-, J2-, K4-, K5-, K6-, L7-, L11-, M1-). -/- Current reporting process in e-Line DNB is satisfactory (I2-).

+/+ XBRL implementation is easy for a ‘convertor approach’ because standard software is available (I4, N1, N3). +/+ No restrictions in technical or organizational implementation (J5). -/- Implementation costs of XBRL into e-Line DNB (H5-). -/- Internal XBRL implementation involves many, complex, interlaced and cross-border business processes (K2-).


-/- Limited support by software suppliers (L6-).

+/+ Quality of consultation between DNB and the banks (H5, I3). +/+ Opinion towards XBRL that it cannot be skipped (J1). +/+ XBRL Netherlands aims to involve banks in adoption (K3). +/+ Network effect caused by NTP from 2007 (K4, L2). -/- Varying opinions on XBRL among banks (J4-). -/- European collaboration is not optimal (K7-, L9-). -/- Low involvement of SMEs (L10-).

+/+ Availability of COREP forms for the Dutch banking industry (H1). +/+ DNB facilitates reporting in XBRL format (H2, I1) +/+ Value in European harmonization for multinational banks recognized (H3, H7, I2, K2, M2, N2) +/+ No major projects expected in time of XBRL adoption plans (J4) -/- Banks’ full (compliance) agendas (H2-, I4-, K3-, L1-, M3-, N1-). -/- Initiative to adopt XBRL is to be taken by the banks (H3-, I3-, J1-). -/- Recent investments in e-Line DNB (H4-). -/- By extension the standard (COREP) has become more and more a national standard (L8-).

+/+ Experience in XBRL adoption in foreign offices (M1). -/- DNB and banks are conservative and prudent in implementing new developments (J5-, K10-). -/- Fewer ‘XBRL minded’ people in Dutch banks in contrast to Belgium and Spain (K9-, M2-). -/- Insufficient know-how of XBRL characteristics (L3-, L4-, L5-).

+/+ Expectation that XBRL is obligated by DNB in the future (J6). -/- Resistance to obligation by banks observed (J3-). -/- XBRL is not obligated by DNB (K8-, L2-).

A general remark about the above overview is that it clarifies the existence of varying opinions among banks, e.g. in the ‘effort expectancy’ construct the support by software suppliers is graded as both sufficient and insufficient by several interviewees. A general viewpoint by all banks is not available, however the degree of consultation and collaboration with the NVB and DNB indicates healthy market circumstances. Then, first, the most remarkable observation within the ‘performance expectancy’ construct is the little value recognition of using XBRL for Basel II reporting by banks. Even though some participants’ organizations have experience with XBRL in other areas or foreign offices, the main obstruction mentioned was the lack of clear business case defining benefits and costs of implementing XBRL for the banks’ Basel II reporting processes. Second, the ‘effort expectancy’ shows very diverse expectations on implementation efforts. These reasons can be dependent on the bank’s size and service area or the assurance given by a colleague (e.g. IT related) or by an external party (e.g. a software supplier), but they also show different perceptions of the concept of XBRL and its maturity, particularly due to varying (incomplete) information sources. Third, the ‘social influence’ construct shows positive signals for a well-considered industry-wide decision on XBRL adoption for Basel II reporting. Consultation among the banks, the NVB and DNB is recognized by all parties to be sufficient while


collaboration at European level can be improved. Fourth, the ‘facilitating conditions’ are directly translated in the facilitation of XBRL by DNB from 2007 while it takes into account the full compliance agendas of the banks with other higher priorities than XBRL. It is indicated that the banks have to take the initiative when they are interested in adopting XBRL, they even are for the longer term application of XBRL for harmonization at European level. For such a political challenge to develop, the banks are required to ask for it. Fifth, the banks’ experience in the adoption of new technology is bilateral by being very IT dependent and advanced and on the other hand being conservative and having another mindset related to early adopting countries such as Belgium and Spain. At last, the ‘voluntariness of use’ is clear: no obligation is announced by DNB while dual approaches of XBRL and e-Line’s XML format are on the longer term not desired. This matter has driven DNB to discuss the ‘formats choice’ with the banks on the longer term, for the sake of the banks. These conclusions are supported by the questionnaire results which are plotted in bar charts in Appendix O. In short, the ‘social influence’ factors are given the highest influence degrees on adoption of XBRL.


6 Conclusions and recommendations The focus of this research has been on the financial business reporting supply chain between Dutch banks and the regulator ‘De Nederlandsche Bank’ (DNB) with respect to Basel II compliance reporting. It is concluded that for the Basel II reporting processes of banks the added value for banks is experienced as nil. Most benefits are theoretically to be achieved by the regulator in aggregating and analyzing reported information. Case studies in the banking industry in the United States, Belgium and Spain are proving the business case with quantified business benefits, primarily achieved by the industry regulators. Indirectly, the banks themselves benefit from efficiency gains that the regulators have made, for example by faster validation of reports and comments on the reports. However, the Dutch banking industry has shown that these initial expectations from the resource based and other theories are less valid. First, DNB as the receiving party in the business reporting supply chain indicated that the added value of XBRL over its current XML format is nil. Second, the Dutch banks consequently perceive the added value of reporting in XBRL format to DNB as nil too. Therefore DNB has decided in co-operation with the banks and the Dutch association of banks ‘Nederlandse Vereniging van Banken’ (NVB) not to obligate the use of XBRL but to facilitate it upon a bank’s request from 2007. Questioning the effects of a possible obligation in the future is quite stating the obvious. To comply is to comply, exceptions are not accepted. But until then, orientation and realization processes are observed to vary from bank to bank. Diverse opinions and strategies are not only observed among banks but also among software suppliers and advisory organizations. A more interesting question is whether banks are interested in and able to cope with XBRL implementation once they have identified an attractive and positive business case. One factor found to be of influence is the set of compliance priorities on the banks’ agendas. Also, the availability of resources appeared to be of influence and was evaluated as sufficient by the banks in terms of available experience, knowledge and external support. The real benefit for banks dealing with Basel II compliance is directly connected to the core idea of XBRL. This opportunity is contrary to the ‘conversion approach’ which has been observed to be applied when XBRL is obligated. The business processes of creating the solvency reports are continued in the current way with a mapping to the specified XBRL taxonomy at the end of the process. It is more interesting for banks to “pull XBRL into the financial reporting supply chain” with the aim to gain internal efficiency gains at general ledger level. This conclusion can be illustrated by returning to Figure 2.4. The conversion approach is indicated by the ‘FR level’ encircled part of the chain while the more valuable area is indicated by the ‘G/L level’ encircled part. A second beneficial area to the banks involves harmonization of reporting requirements on European level. Due to the freedom for regulators in the common reporting frameworks, differences in national interpretations are observed and thus can diverse XBRL taxonomies be expected. Of course, XBRL offers the ability to report information according to different taxonomies easily, but especially internationally operating and reporting banks have indicated interest in more stringent European harmonization for which XBRL can be a good enabler. Two remarks hold for the application of XBRL which are specific for the banking industry. First, for the external reporting goal Dutch banks currently use the e-Line DNB online reporting portal to report XML formatted documents to DNB. Considerable resources have


been spent in this system the recent years and banks are quite satisfied with this system. Furthermore, DNB may have a stake in reaching the payback period first before implementing a new XBRL infrastructure. Second, the banking industry is relatively advanced in IT application in its business processes related to other industries. The research has shown that banks have made considerable efficiency gains with automation and that current XML based processes are pretty optimized already. For adoption of XBRL technology by banks for Basel II reporting, a distinction can be made between the whole industry for external reporting and the strategic choice of a specific bank to implement XBRL for internal application. The latter choice is likely to be more related to the change to open standards; in this case XBRL. The conversion at the end of the reporting chain by mapping for instance spreadsheets to a XBRL taxonomy is in fact just an extra administrative burden instead of a reduction. It would be more interesting to map the XBRL taxonomy directly to the business operations level. This, however, requires questions to be answered regarding the impact on the IT and organizational adjustments to be made and regarding possible legacy systems. The research indicated that banks had varying opinions on the impact on IT: from relatively short implementation efforts speaking of days to big impact in many, complex, interlaced and cross-border business processes. Hodge et al. (2004) found that XBRL improves the transparency of organizations’ financial statement information and the reporting processes of that information. This research result can be directly matched to the goal of Basel II: assuring stability in financial markets by requiring transparency of credit institutions with the use of advanced risk measurement techniques and reporting. A second similarity between Hodge et al.’s and this research is the access to and the use of available technology. Hodge et al. reveal that many users do not access the technology. This observation can also be seen in the described case studies and in the decision process of the Dutch banking industry to adopt XBRL where voluntary adoption plays a key role in a negative adoption decision. The support of XBRL by software suppliers turned out to be sufficient at the time of research. The availability of taxonomies was in full development phases with the general NTP to be launched January 1, 2007 and the specific Basel II reporting framework COREP supported in XBRL format from the date by DNB. These factors were experienced by banks as positive, for which a network effect is indicated when banks’ clients are using the NTP and want to use XBRL too in their banking relationships.

6.1 Answer to problem definition The research question concerned which aspects define the adoption of XBRL in a Dutch bank’s financial business reporting process in complying with Basel II. In the Dutch industry it turned out that the estimated small value of XBRL for this purpose is one of the main factors influencing the adoption decision. This low performance expectancy involves the lack of a clear business case describing clear benefits and costs. This unbalanced relationship between the performance and efforts to be spent in combination with other higher priorities were considered in industry collaboration. The result is that XBRL is not obligated by DNB at short notice. Facilitating conditions also influence the adoption of XBRL, but both in a positive and a negative way: by the availability of a common reporting framework and support by software suppliers versus XBRL’s major alternative in the Dutch industry: e-Line DNB with a XML schema defined by DNB respectively. However, e-Line DNB is regarded by DNB as a supporting system to XBRL from 2007 onwards. The priority list of factors indicated by the interviewed banking organizations is to be found in Appendix N.


6.2 Answer to research questions The seven questions in relation to the central research question are briefly dealt with below. What information does Basel II require banks to report? Basel II requires banks to report about their risk management techniques and their consequent minimal capital buffers to meet potential losses due to the realization of credit risks, market risks and operational risks. The reports are built upon three pillars (minimum capital requirements, supervisory review process and market discipline) with which the regulator supervises on financial stability in the banking industry. Which improvements does XBRL offer compared to alternative reporting methods? It is found that in the Dutch scenario the XML format used in e-Line DNB is the only alternative reporting format to XBRL. Banks expected no improvements from using XBRL for external reporting to the current way of working. The resource based theory was used here to check whether XBRL could be a competitive advantage to a bank, but for this external reporting this is not found. Despite the hypothesis that DNB would be the largest beneficiary of XBRL in Basel II reporting, DNB does not apply XBRL in its internal systems. What is the importance of open standards for financial business reporting? The use of open standards stimulates an open and collaborative relationship between information disseminating and aggregating stakeholders and software suppliers. It also allows for higher level (European) development of frameworks to be applicable and interpretable by European regulators. The input from stakeholders is crucial to standard acceptation. Thus the importance of the open character of a standard development process is large. Which business cases exist in the financial services industry? Literature describes several implementation examples by the FDIC and SEC in the United States, by central banks in Belgium, Finland and Spain and by the national government in the Netherlands which are positively referred to in the promotion by XBRL International. Dutch banks however experience too little quantitative information published on benefits gained and investments spent. A case study in a German bank was for example publicly launched but results were not published. This shows that the implementation areas are still developing while pilots are not 100% profitable yet. Which factors are noted by theory to be important to adoption? The Unified Theory of Acceptance and Use of Technology (UTAUT) and the resource based theory (RBT) are the central theories used in this research. The form describes factors in four independent constructs: ‘performance expectancy’, ‘effort expectancy’, ‘social influence’ and ‘facilitating conditions’ and in two mediating constructs: ‘experience’ and ‘voluntariness of use’. The latter describes competitive advantage to be realized through a set of unique inputs and capabilities of which XBRL could be one as an IT resource. Which predictions are given by theories and are they valid in this case? First, it is predicted that the information receiving party has the biggest advantage of XBRL formatted data. DNB shows that this prediction is not valid in the Dutch banking industry. Second, from the RBT it was expected that XBRL cannot be regarded as a competitive advantage to a bank because of the compliance aspect that all banks are facing. It was therefore expected that XBRL is not given a high priority by the banks. This is observed in the research and the RBT thus provided explanatory power.


Which factors influence a bank’s opinion and XBRL implementation plans? From the discussed UTAUT constructs, especially the ‘social influence’ factors influence a bank’s opinion and XBRL implementation plans. Next, the bank’s estimations of the ‘performance expectancy’ and the ‘effort expectancy’ indicate their potential recognition of a positive business case.

6.3 Recommendations The findings of this research offer the possibility to make recommendations towards the banking industry, XBRL organizations and to KPMG. Recommendations to Dutch banks For the banks, it has been found that for the initial externally oriented application of XBRL, few competitive advantages are expected. This statement holds for the current scenario of voluntary use for reporting to the national regulator. For individual banks, risks have been found by means of implementing a premature and thus the wrong standard. Considerable resources on implementation and mapping to business processes are dealt with which show the impact on organizational structures and financial resources. From banking industries abroad where compliance regulations obligate the use of XBRL for financial reporting and the banking entities fully collaborate to achieve the optimal XBRL solution for the whole industry, it is observed that XBRL is being used. In the Netherlands, in contrast, the banking industry has taken a rather reserved position. Especially with the developments in the Dutch Taxonomy Project and the development of a common reporting framework for the European banking industry at European level taken into account, the factors ascribed in Appendix N give an explanation for this observation. What is even more interesting for the Dutch banking industry is the following. As other compliance regulations, such as SOx, have shown is that in the initial phases resources simply have to be spent to be in control, no exceptions possible. The compliance measures taken are roughly stated first, proving value for the external stakeholders that the organization is in control. Then, the measures provide value to the organizations itself by offering valuable control and insights on governance and management information. In the case of Basel II, this ‘protection’ part is initially oriented at the banks’ customers; offering stability in the financial markets. Then, the ‘value’ part for the banks is likelier to follow, i.e. in competitive opportunities a bank has by improving its internal processes. In concrete, the following recommendations are presented to the banks: 1 Consider the value of the ‘conversion approach’ and whether it supports the reduction of

the administrative burden or whether it aggravates it. Once this has been estimated, consider the degree to which you would like to ‘ask’ DNB to enable you to report in XBRL format.

2 Especially for internationally operating banks: get the Dutch banks on line and willing to adopt COREP framework for Basel II compliance reporting. Special attention should be paid to the roles of DNB and NVB. Experience and knowledge from foreign offices such as in Belgium or Spain should be taken along.

3 Decide on what reporting format is the bank’s preference: either the e-Line DNB XML format or the COREP XBRL format.

4 Analyze the internal business processes where the largest savings can be realized by using XBRL as data format. This analysis can be started right now. Because from January 1, 2007 the scope of use is extended to all Dutch business and governmental organizations, a bank’s clients (businesses, entrepreneurs) are also connected to the ‘XBRL-network’ of the NTP and use ‘XBRL-enabled’ software.


5 Analyze the capabilities offered by (current) software suppliers for internal application. It is remarkable that varying levels of XBRL support are offered by the software suppliers. If a bank is interested in internal application of XBRL, it is not sufficient to use software that applies the ‘conversion approach’ to be XBRL proof.

6 Analyze possible areas where to create a bank specific extension of the XBRL taxonomy for internal use. Such an extension could describe data definitions for credit applications in the corporate lending process. This taxonomy could be offered to the banks’ corporate clients. Important notion that follows from this research and to take along is that collaboration with those clients is crucial to the adoption for this ‘niche’. An important catalyst exists in the fact that those entrepreneurial clients are very likely to use XBRL compliant software and they can use their XBRL systems to transport information to banks easily. Other internal applications are interesting too, e.g. management reporting from business unit level responsibilities or consolidating information at group level.

Recommendation to regulators (DNB and further BIS, CEBS, and ECB) Given the advanced e-Line DNB system, the adoption of XBRL should not be relatively difficult to DNB. Reporting through e-Line has resulted in experience in digital reporting, just as in Belgium. In order to optimally benefit from XBRL capabilities, the following recommendations are proposed: 1 Define the Dutch interpretation of the COREP taxonomy as soon as possible. 2 Publish this Dutch banking taxonomy to the Dutch banks in an explicit form and consider

an obligation. Provide the banks with assurance that DNB is organizationally and technically ready to receive XBRL reports.

3 Stimulate the use of XBRL. DNB has planned to facilitate the banks if they want to report in XBRL format, but DNB is not yet ready to receive and process XBRL documents. Plan when this is done.

4 Keep collaborating with the industry, especially on business agreements and semantics of report data. The subject matter is more about making agreements on definitions than about information technology.

5 Take on a leading role since banks expect such a role while continuing the open and collaborative environment.

6 Investigate and learn from early adoption in Belgium and Spain and identify DNB’s strengths as mentioned by the Dutch banks.

7 Investigate feasibility of harmonization and more stringent definition of European Basel II definitions.

8 Consider supporting the eighty out of the hundred smaller and domestic banks for XBRL, e.g. through an XBRL-interface mapping solution to their reporting process.

Recommendations to the whole banking industry The following recommendations can especially be initiated by the NVB as a mediator: 1 Consider signing a convention just as is done by the NTP and their participants. This

registers the agreements made on each entity’s role to achieve collaborative benefits of XBRL. This can also take away the banks’ reserved opinion regarding XBRL.

2 Investigate and publish results from the German bank’s business case that is often referred to but is too unclear.


Recommendations to XBRL organizations and software suppliers XBRL jurisdictions and software suppliers share their commercial interests in wide adoption of XBRL. For adoption in the Dutch banking industry the following is recommended: 1 XBRL Netherlands should get SMEs involved in XBRL. Members of this organization

and covenant partners currently only consist of accountancy firms, software suppliers, business integrators, consultancy firms, governments and regulators. Boosting the network effect starts with motivating the future users, i.e. the information disseminators. So involve parties like MKB Nederland and VNO/NCW.

2 Openly discuss the future of e-Line DNB with DNB. 3 Focus on clear communication of benefits and lobby for obligating the use of XBRL by

regulators. This involves the provision of solid business case proof of concepts showing quantitative measures of costs and benefits. The second aspect, obligatory use of XBRL, has proven its value in other industries and bank scenarios abroad.

Recommendations to KPMG IRM FS And finally, for KPMG IRM FS this thesis has provided insight in the banks’ opinions and thoughts about XBRL. Next to an expectation about banks not fully adopting XBRL until it is mandatory, the research shows that they have other more important matters on their agendas. However, once banks are reporting in XBRL format, assurance is required for Basel II reporting. Knowledge about differences between XBRL and current reporting formats is required to answer clients’ questions on how to achieve the best performance in the assimilation and consolidation of compliance reporting. So for now, the recommendation is to focus on compliance pressures where banks are yet busy enough with and to keep informed about the developments until the industry is adopting collectively or a bank is individually starting an internally oriented implementation of XBRL.

6.4 Reflections on the theory The first of the two central theories in this research, the UTAUT, is experienced as very useful in this research, even though it is at a corporate level instead of the original individual level. During the interviews, the questions and questionnaire were easily interpreted by the interviewees which was beneficial to clear descriptions and answers. Finally, the interviews confirmed the used constructs, especially the ‘performance expectancy, ‘effort expectancy’ and ‘social influence’ constructs. For business development activities, the results per construct offer a clear view of the areas where work is needed in order to stimulate adoption or to enhance bottlenecks in actual implementation projects. Second, I expect that the RBT is better applicable in adoption of XBRL for true competitive areas which an external reporting process such as Basel II is in principle not. Requirements which every competitor needs to comply with, generally do not offer opportunities to differentiate one from others. If a bank decides to implement XBRL in an internal business process, e.g. its corporate lending process, then XBRL can be regarded as a unique resource and can thus be a competitive advantage by offering clients faster credit approvals for example. Even more, interviewees repeatedly indicated that the XBRL discussion is less focused on XBRL as a technical resource with its issues, but more on the community acceptance and business case quantifications.


6.5 Suggestions for further research The following ideas provide possible problem statements for further research on the applicability of XBRL for Basel II reporting or even for internal application within banks. 1 Investigate the recommendations made to banks concerning internal application of XBRL,

which business process offer the opportunity to save most? E.g. corporate lending process. Describe the business process redesign activities needed, implementation issues and support by software suppliers.

2 What are the legal boundaries to filing an electronic annual report? Which aspects are not (yet) met for XBRL formatted reports? Why have other formats, such as MS Word and MS Excel been denied in the past (by NIVRA)? What differences between legal and economic entities play a role in the acknowledgement of electronic documents?

3 How to provide assurance over XBRL formatted financial reports? Does this form of electronic reporting involve new risks and how can they be managed?

4 As is discussed in section 2.4 on Basel II, the value of internal application of XBRL in gathering information for Basel disclosures is questioned. What could XBRL offer in acquiring information from multiple databases from multiple business units from multiple international offices for reporting to the group headquarters?

6.6 Research evaluation In my opinion, the research has provided valuable insight into the young and developing research area that is often classified as ‘hype’. However, the most ideal analysis is based on hard quantifications, but it is experienced that that such indications of costs and savings are not as available as desired yet. Furthermore, in some fields strategic aspects were touched that partly obstructed the true reasoning behind a bank’s opinion or decision. In the meantime this made it a very interesting research topic as well. Finally, the Dutch banks involved are just a part of the Dutch industry, the sample taken does not represent the whole industry.


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http://www.xbrl-ntp.nl/english [www3] XBRL Products & Services http://www.xbrl.org/productsandservices [www4] Bank for International Settlements http://www.bis.org [www5] XBRL COREP Project http://www.corep.info [www6] Gartner Highlights Key Emerging Technologies in 2005 Hype Cycle http://www.gartner.com/press_releases/asset_134460_11.html [www7] RosettaNet http://www.rosettanet.org [www8] CBFA

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Appendix A Glossary AFM Autoriteit Financiële Markten

The Netherlands Authority for the Financial Markets is responsible for regulating behavior on the financial markets in the Netherlands.

AICPA American Institute of Certified Public Accountants Professional organization for accountants in the United States.

APRA Australian Prudential Regulation Authority In Australia, this organization collects the data required for prudential regulation from superannuation funds, insurance companies, banks and other deposit takers.

B2B Business-to-business B2G Business-to-government BBV Besluit Begroting en Verantwoording gemeenten en provincies BCBS Basel Committee on Banking Supervision BIS Bank for International Settlements

International organization which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. Its banking services are provided exclusively to central banks and international organizations.

BNG Bank Nederlandse Gemeenten BNG is a bank of and for local authorities and public sector institutions.

BPR Business Process Redesign CamelCase CamelCase is a standard identifier naming convention for several

programming languages refers to the practice of writing compound words or phrases where the words are joined without spaces, and each word is capitalized within the compound.

CBFA Commissie voor het Bank-, Financie- en Assurantiewezen The Banking, finance and insurance commission is since January 1, 2004 the single supervisory authority for the Belgian financial sector.

CBS Centraal Bureau voor de Statistiek (Statistics Netherlands) CEBS Committee of European Banking Supervisors COREP Common Reporting

COREP is the common solvency ratio reporting framework for credit institutions and investment firms under future EU capital requirements regime. The COREP-Taxonomy provides an XBRL representation of the CEBS Common Reporting Framework.

COSO Committee of Sponsoring Organizations of the Treadway Commission Refers to a document providing a common definition of internal controls, standards, and criteria against which companies and organizations can assess their control systems. It is one of the most widely-accepted internal control frameworks for the audit of internal controls.

CPA Certified Public Accountant CRD Capital Requirements Directive

Guideline for the implementation of Basel II in European legislation. CSF Critical Success Factor DNB De Nederlandsche Bank (Dutch National Bank) DVD Digital Versatile Disc ECB European Central Bank


EDGAR Electronic Data Gathering, Analysis and Retrieval EDI Electronic Data Interchange

The inter-organizational, computer-to-computer exchange of structured information in a standard, machine-processable format.

EDIFACT Electronic Data Interchange For Administration, Commerce and Transport The international EDI standard messaging syntax under the responsibility of the United Nations, for trading transactions in all industries. Also known as UN-EDIFACT.

EMU Economic and Monetary Union (of the European Union) ERP Enterprise Resource Planning EU European Union FDIC Federal Deposit Insurance Corporation

The FDIC is part of the FFIEC and supervises banks and financial service providers in the United States in order to help maintain a stable and sound banking system.

FFIEC Federal Financial Institutions Examination Council The FFIEC is a formal interagency body in the United States empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS) and to make recommendations to promote uniformity in the supervision of financial institutions.

FINREP Financial Reporting framework Guidelines for this framework have been published by CEBS to enable credit institutions to use the same standardized data formats and data definitions for prudential reporting in all countries in the EU where the framework will be applied.

FR Financial Reporting FS Financial Services

FS is a specialized service industry within KPMG consisting of financial institutions like banks, insurers, leasing companies and pension funds.

GAAP Generally Accepted Accounting Principles GL or G/L General Ledger HTML Hyper Text Markup Language I(C)T Information (and Communication) Technology IAD Internal Audit Department IAS International Accounting Standards IASB International Accounting Standards Board IFRS International Financial Reporting Standards

Formerly called IAS. IMF International Monetary Fund ING Internationale Nederlanden Groep

ING Group is a financial institution of Dutch origin offering banking, insurance and asset management services. ING once stood for Internationale Nederlanden Groep.

IOS Inter-Organizational System


IRM Information Risk Management IRM is a line of business within KPMG and provides as part of Risk Advisory Services assurance and advisory services to assist clients in identifying risks and establishing appropriate controls and security measures arising from the use of information systems and technology.

ISO International Standards Organization Iv3 Informatie voor derden (Information for third party stakeholders) KPMG Klynveld Peat Marwick Goerdeler KvK Kamer van Koophandel (Chamber of Commerce) MiFID Markets in Financial Instruments Directive MKB Midden- en Kleinbedrijf

Dutch for small and medium-sized enterprises. MKB-Nederland

Royal Association MKB-Nederland MKB-Nederland protects the interests of around 186,000 entrepreneurs.

NBB National Bank of Belgium Belgische Nationale Bank

NIVRA Koninklijk Nederlands Instituut van Registeraccountants (Dutch Institute for Public Accountants)

NTP Nederlands Taxonomie Project (Dutch Taxonomy Project) NVB Nederlandse Vereniging van Banken (the Netherlands Bankers’

Association) OECD Organization for Economic Cooperation and Development OFX Open Financial Exchange

Open Financial Exchange is a specification for the electronic exchange of financial data between financial institutions, business and consumers via the Internet.

PDF Portable Document Format Format developed by Adobe that enables a document to be distributed on different operating systems while preserving the layout.

PIE Public Interest Entity Serves stakeholders such as shareholders, banks, tax and customs administrations, clients, governments, regulators and employees.

RBT Resource Based Theory The resource based theory has been developed to understand how organizations achieve sustainable competitive advantages. The theory focuses on the idea of costly-to-copy attributes of the firm as sources of business returns and the means to achieve superior performance and competitive advantage [Caldeira et al., 2001].

RDM Rational Decision Making RFID Radio Frequency Identification SDMX(-ML) Statistical Data and Metadata Exchange (- Markup Language)

Initiative started in 2001 by BIS, ECB, Eurostat, IMF, OECD, the United Nations Statistical Division and the World Bank, with the aim “to set standards that can facilitate the exchange of statistical data and metadata using modern information technology” [Milani et al, 2004].

SEC Securities and Exchange Commission SME Small and medium-sized enterprise

A legally independent company with no more than 250 employees and either an annual turnover not exceeding EUR 50 million or a balance sheet not exceeding EUR 43 million.


SOAP Simple Object Access Protocol SOx Sarbanes-Oxley Act of 2002 SWIFT Society for Worldwide Interbank Telecommunications

SWIFT is the financial industry-owned co-operative supplying secure, standardized messaging services and interface software to 7,800 financial institutions in more than 200 countries.

TCO Total Cost of Ownership (of an IT system) A frequently used measurement to assess the total cost of maintaining (or investing in a new) IT system, including hardware, software, installation and maintenance services, and the associated cost of the business process(es) that the IT system supports.

UTAUT Unified Theory of Acceptance and Use of Technology VNO-NCW Verbond van Nederlandse Ondernemingen - Nederlands Christelijk

Werkgeversverbond The Confederation of Netherlands Industry and Employers (known as VNO-NCW) is the largest employers’ organization in the Netherlands. VNO-NCW represents the common interests of Dutch business, both at home and abroad and provides a variety of services for its members.

Wft Wet op financieel toezicht (financial supervision law) WSDL Web Service Description Language XBRL eXtensible Business Reporting Language XLS Excel spreadsheet

File extension that is associated with digital documents created in Microsoft Excel.

XML eXtensible Markup Language XSLT eXtensible Stylesheet Language Transformation


Appendix B Value propositions for three roles Van der Poel et al. (2004) describe the value propositions of XBRL for the following participants in the business reporting value chain: Preparers of information • More efficient preparation of financial statements and management reporting. • Financial reports created once and re-used many times, e.g. as printed reports, Web pages,

or regulatory filings. Data Aggregators and Financial Publishers • More efficient data collection. • Avoid costs associated with custom data feeds and re-keying. • Fewer errors. • More time to focus on analysis. Analysts, Investors and Regulators • Enhanced distribution and usability of existing financial statement information.. • Automated analysis tools. • Less re-keying of financial information. [Van der Poel et al., 2004]


Appendix C Overview of financial reporting chains NTP (2005) provides an indicative overview of financial reporting chains in the Netherlands. The overview has been constructed in order to analyze the relevant chains in the first phase of the project and is by no means intended to be complete.

[NTP, 2005]


Appendix D Transitional application areas The expected transitions in the application areas of XBRL for financial use are laid out in the figure below.

Figure D Expansion of XBRL beyond financial reporting [Debreceny, 2001] The four blocks in the center of Figure D can be viewed as four cells in a 2x2 matrix. Vertically, reporting can be divided into external and internal. Horizontally, the contents of the reports could be divided between financial and operational. The larger arrow in the background of Figure D illustrates the evolutionary flow of the expanding XBML domain. Initially, XBRL is focused on external financial reporting. As was also illustrated in Error! Reference source not found., in the near future, XBRL will next move upstream and become an integral part of internal financial reporting. Then, XBRL will expand to include non-financial business operations reporting. Finally, over the next several years, XBRL will expand to include external business performance reporting. Eventually, companies who use XBRL for external business reporting will be easier for investors and analysts to compare in terms of business performance metrics, since the reporting syntax will be based on a standard specification, namely, XBRL. [Debreceny, 2001]


Appendix E Regulators’ common challenges FFIEC (2006) describes common challenges that many regulators share in their reporting functions: • Securely obtaining data that can be entered automatically and seamlessly into systems

without re-keying, reformatting or other "translation" effort. • Reducing costs through automating of routine tasks. • Quickly and automatically identifying errors and problems with filings. • Validating, analyzing and comparing data quickly, efficiently and reliably. • Shifting focus of effort more on analysis and decision-making with filers rather than on

data manipulation. • Promoting efficiencies and cost savings throughout the regulatory filing process. [FFIEC, 2006] Appendix F Difference between COREP and FINREP In addition to the description of the COREP and FINREP frameworks in section 2.6, this appendix provides further differences. As discussed, the common reporting framework is to be used by credit institutions and investment firms to report their solvency ratio to supervisory authorities under the Capital Requirements Directive. The standardized financial reporting framework (FINREP) however, “will enable credit institutions to use the same standardized data formats and data definitions for prudential reporting in all countries in the EU where the framework will be applied” [www9]. Summarizing, the COREP framework is to be used for capital reporting requirements for Basel II (CRD in the EU) and the FINREP framework for financial reporting requirements for IFRS reporting.


Appendix G Other research theories Other theories mentioned in section 3.1 are: Ad 3: Information cascade theory As stated by Walden et al. (2002), the adoption of information technology “seems to be particularly susceptible to fad and fashion, resulting in herd-like behavior by firms”. For managers who are involved in adoption decisions processes this fad-like behavior is a rational reaction in a strongly uncertain environment. Also, it is observed that a couple of individuals influence the decisions taken by a group. With cascades being defined as sequences of attention and information often being incomplete, it is suggested that firms may follow other adopters in spite of private information. The information cascade theory recommends that practitioners “should be sensitive to the possibility that other firms’ adoption decisions are the result of an information cascade rather than due to a positive private signal”. By considering other’s decisions, one should realize that those decisions, no matter how widely common, might be built on any single firm’s historic adoption decision. These issues show a connection and can be used in factors explained by the ‘social influence’ construct of the UTAUT. Ad 4, 5 and 6 Miralles et al. (2005) describe the phenomenon of CIO herds and user gangs in the adoption of open source software. They describe three traditional ways of IT adoption: rational decision making, technology diffusion models and the psychology of the decision maker. The importance of a strong and diffused development community is indicated which includes for this research area XBRL International, the NTP, ECB, CEBS, DNB, NVB, the Dutch banks, software suppliers and governments. Ad 4: Rational decision making The concept of rational decision making (RDM) focuses on total costs of ownership (TCO), technological attributes and lock-in situations. The latter area deals, in the case of XBRL adoption, with advantages through the release from proprietary standards by using industry open standards for internal use as well. Ad 5: Technology diffusion models The second explanation given by Miralles et al. (2005) are the technology diffusion models (TDM). Ad 6: Psychology of the decision maker Finally, the psychology of the decision maker plays a role in the adoption of open source applications. Since XBRL is an open standard, it is hypothesized that XBRL implementation decisions are also subject to this concept. Ad 7: Diffusion of innovation Rogers categorized adopters of any new innovation as innovators, early adopters, early majority, late majority and laggards based on a bell curve. Willingness and ability to adopt are influenced by the characteristics of awareness, interest, evaluation, trial and adoption. Ad 8: Game theory Economists use the game theory to analyze a wide array of economic phenomena. XBRL adoption can be related to the formation of social networks for which the game theory focuses on sets of strategies that are based on norms of rationality [www29].


Appendix H Secondary factors by Caldeira et al. (2001) Caldeira et al. (2001) identified thirteen secondary factors that are important for IS and IT adoption and use but are not critical to achieving IS and IT success. The secondary factors include: • Availability of financial resources in the firm; • Users' qualifications; • Quality of the software available in the market; • Quality of IS/IT external expertise and services available; • Type of IS/IT to be implemented; • Definition of IS/IT objectives; • The time of IS/IT adoption. • User attitudes; • Power relationships between the members of the firm; • IS/IT vendors’ support; • Business pressure to adopt IS/IT; • Availability of IS/IT training; • Profile of the people involved in the process of IS/IT development; For example, user

attitudes were only a problem in the firms where top managers were not exerting pressure on employees to use computer systems properly. In the firms where top managers were involved, problems of resistance to change were not an issue.

[Caldeira et al., 2001]


Appendix I List of case study CSFs The catalyzing and obstructing factors found in the case studies of chapter 3 are Catalyzing factors for adoption A1 Intelligibility and speed of feedback by support office in response to delivered reports A2 An “if we need to comply, we better do it as soon as possible” mentality. A3 Availability of ‘product champion’ within the organization. A4 Although the use of XBRL was voluntary, it was perceived as obligatory. A5 Seize the opportunity to achieve internal improvements by recognition of XBRL

benefits for own organization. A6 Organization being positively supported by its software supplier. A7 Pro-active mentality on the application of IT. B1 Provision of a clear and voluntary proposition to the information disseminators at an

early stage with a very accurate picture of efforts, costs and returns involved B2 Small financial benefit for early adopters B3 Vendors of financial systems were involved to support XBRL B4 Training provided by software supplier B5 Use of underlying existing and proven IS and IT B6 Low implementation costs (± couple of thousand euros) B7 Recognition of re-using data benefit by standardizing other compliance requirements C1 Adoption of XBRL is obligatory C2 Regulator requests software suppliers to support XBRL C3 Few adaptations needed in internal IT systems of information disseminators C4 Open, collaborative approach to business process change between regulator and

stakeholders C5 XBRL benefits are well recognizable related to the old data collection process with

manual manipulation of PDF, Ms Word and MS Excel documents D1 Regulator’s approach to collaborate with other information collecting organizations D2 Benefits recognized in relation to current inefficiencies caused by manual entry,

checking and report generation D3 Adoption on a voluntary basis facilitated by regulator E1 Convergent motives of stakeholders (ECB, National Banks and local banks) E2 Availability of existing standards and banking codes E3 Opportunities to link the systems to other inter-organizational systems (IOS) and

internal systems in banks E4 Availability of information to control market risks and counterparty risks E5 Improved process performance E6 Trust in the central institutions involved F1 Use of XBRL is obligated by regulator. F2 Availability of COREP taxonomy from European level. F3 Good collaboration among banks and regulator to establish national extension. F4 No other commercial standard than XBRL available. F5 Network effect: XBRL is already used by other public institutions. F6 Banks are pioneers in digital reporting. F7 Small size of industry to develop taxonomy for leads to short development times. G1 Use of XBRL is obligated by regulator. G2 Availability of COREP taxonomy from European level. G3 Regulator takes on a leading role. G4 Banks are early adopters.


Obstructing factors for adoption A1- Insufficient information why reporting should be in XBRL format. A2- Insufficient compensation for spent time, capacity and financial resources. A3- Current reorganizations and projects demanding ‘all’ attention and resources. A4- Currently migrating financial system or major changes underway. A5- Reporting in XBRL format is not obligatory; some choose to wait until it is. A6- Not being fully enthusiastic about XBRL: “XBRL is not ‘alive’”. A7- Complex business process redesign (BPR) is required. A8- Lack of skills. A9- Insufficient provisioning of support. A10- XBRL not supported by software supplier. B1- Uncertainties about changes in the XBRL specification 2.0 C1- Demand for programmers re-writing interfaces observed, BPR needed D1- Hard to recognize business case with positive quantifications beforehand D2- Information collectors were required to undertake a significant information re-

design activity D3- Agreeing on semantic structures was needed which turned out to be a complex

process of negotiation. D4- Risk that XBRL is treated by information disseminators as a reporting burden D5- Too little attention paid to IT and organizational structures E1- Many banking institutions and systems involved in many countries F1- XBRL reporting seen as an additional burden. F2- Unavailability of a taxonomy.


Appendix J Banking typologies Boixo et al. (2005) present the following typologies of supervised entities and national authorities. Additional figures can be found in their article.

a) Advanced or multinational bank: it reports by means of XBRL to the different

supervisors of each country, in the various countries in which it operates. Its information is structured following the XBRL format. When several supervisors request it to provide reports in XBRL, a bank of this type obtains an immediate saving, since it can meet its obligations to the various national Supervisors by sending the information required in the same format, thus processing the data only once, with no need to carry out any specific work for each supervisor.

b) Banks with their own converter: They simply need to manage their risks in accordance

with their internal information system. The software suppliers provide the appropriate converters so that the relevant aggregates are transformed into information in XBRL format, ready to be sent to the supervisor.

c) Banks with external solution: It could be the case that the information required can simply be keyed into a spreadsheet or a Web page and then, once accepted, a set computer procedure would generate the XBRL report to be sent to the supervisor. This automatic generation can be done without any technological obstacles even by an applications service supplier (ASP) who may perform this function as a service for a number of different banks, thus obtaining economies of scale.

d) Supervisors in the initial stages: They simply need a converter that transforms the XBRL reports into files that can be assimilated by their own information system. The XBRL converter is a standard product, and is independent of whichever entity has generated the XBRL report. From the point of view of the supervisor, it is irrelevant that the report may have been generated by a small bank local, with basic technology or by a large multinational bank, or even generated and sent from a data processing centre in another country, since the XBRL format is standard, and the information from all sources will reach the supervisor in the same way.

e) Supervisor with advanced systems: In addition to receiving XBRL reports corresponding to obligations under the New Basel Capital Agreement, such supervisors can process others reports that arrive in the XBRL format, which may be based on applications of the International Accounting Standards (IFRS), or on other relevant information specifications.

f) Exchange between supervisors: when they receive the information in a normalized format, supervisors can share important information more easily. The XBRL reports are directly legible when passed from one supervisor to another, since they are internationally normalized and have their labels defined in different languages, and all their characteristics of accounting detail and legal references have been specified.

[Boixo et al., 2005]


Appendix K Interview protocol The interview protocol is in Dutch since all interviews were conducted with Dutch speaking persons. An English version is available upon request ([email protected]). Algemene vragen Ontwikkelingen 1 Op welke wijze is uw organisatie op de hoogte van XBRL en de ontwikkelingen? Welke

bestaande praktijktoepassingen kent u? Welke bronnen gebruikt u 2 Welke onderzoeksresultaten heeft uw organisatie bevonden m.b.t. XBRL (intern)? Welke

kwantificaties van kosten en voordelen en praktijkvoorbeelden kent u? 3 Welke projecten lopen er binnen uw organisatie op het gebied van Basel II en XBRL? 4 Zijn de ontwikkelingen van een rapportageframework specifiek voor het voldoen aan

Basel II u bekend (COREP)? 5 Zijn andere projecten (zoals IFRS, Basel II, SOx, Tabaksblat, MiFID, SEPA, etc.) een

belemmering om XBRL aan te pakken i.v.m. capaciteiten? Zoja, welke (€ - mensen)? Aanpak (succes- en faalfactoren) 6 Is er binnen uw organisatie een speciaal beleid voor Basel II resp. XBRL? Zoja, waar

blijkt dit uit? {visie, projectgroep, stuurgroep, projectleider, externe ondersteuning o.i.d.}Wie beslist of beslissen in uw organisatie?

7 Los van XBRL: waar is vernieuwing / verbetering mogelijk voor Basel II zaken die niet optimaal lopen? {niet teveel afdwalen van XBRL, hier kun je uren mee vullen}

8 Hoe definieert u succes van een Basel II of XBRL implementatie? Stel, u implementeert XBRL, hoe zou u succes aanduiden? {Caldeira et al., 2001}

9 Als u een positieve business case (opbrengsten > kosten) heeft berekend, zijn er dan nog beperkingen om het niet te doen? Zoja, welke? {mankracht, kennis,geld..}

10 Het ene deel van de markt juicht implementatie aan en motiveert het gebruik (o.a. XBRL international, XBRL Nederland, overheid, NTP, software leveranciers), terwijl het andere deel kritisch is over het feit dat het al lang voordelen belooft maar dat adoptie erg lang duurt ondanks een artikeltje hier en daar. Hoe ervaart u deze druk/tweestrijd?

11 Als u tegendruk, bestaat dat dan uit “eerst zien en dan geloven”? 12 Hoe zou u uw organisatie beschrijven kijkende naar het openstaan voor nieuwe

technologieën en hoezeer de strategie ‘technology minded’ zijn? 13 Als u aan de slag wilt met XBRL, welke tijdsplanning gebruikt u? 14 Moet u in meerdere Europese landen rapporteren? Dan XBRL wellicht voordelig? Belemmerende en/of bevorderende factoren (knelpunten – oplossingen) 15 Wat zijn de belangrijkste barrières voor XBRL adoptie in uw organisatie? 16 Acht u het Nederlands Taxonomie Project en de beoogde administratieve lastenverlichting

haalbaar? 17 Wat denkt u dat er moet gebeuren alvorens XBRL aan zal slaan? 18 Verwacht u op termijn verplichtstelling van het gebruik van XBRL door DNB? 19 Waarom zou u XBRL wel respectievelijk niet verplicht willen zien? Hoe kritiek is een

verplichting voor adoptie? 20 Wat vindt u van de leidersol van DNB, voldoende of zouden zij dit strenger moeten doen? 21 Welke beren op de weg worden vooral onderkend? 22 Hoe kijkt u aan tegen de legale erkenning van een digitaal XBRL-document of

jaarverslag?


23 Er wordt wel beweerd dat de leveranciers niet erg zullen meewerken XBRL-interfaces te leveren (bescherming eigen software tegen open standaarden). Klopt dat beeld?

24 Met welke belemmeringen en kansen heeft uw organisatie te maken bij een mogelijke implementatie van XBRL: a) Politiek-bestuurlijk gebied;

Hoe zou u de samenwerking tussen de Nederlandse banken en de DNB beschrijven m.b.t. XBRL adoptie?

b) Technisch gebied; Hoe denkt u over de technische complexiteit van XBRL?

c) Organisatorisch gebied; Welke competenties of organisatorische veranderingen verwacht u door XBRL?

d) Financieel gebied. 25 Waardoor worden deze belemmeringen en kansen veroorzaakt? Denk bijvoorbeeld aan:

a) Aanpak; b) Leiderschap; c) Communicatie (zowel intern als extern) d) Geld/budget; e) Capaciteit/inzet personeel; f) Kennis; g) Draagvlak.

26 Welke oplossingen ziet u voor deze belemmeringen voordat XBRL van waarde wordt? Ondersteuning Over softwaresuppliers 27 Welke softwaretool(s) gebruikt u voor het in kaart brengen van risico’s ten behoeve van

Basel II? 28 Zijn die tools XBRL ondersteunend dat u weet? 29 Ervaart u verschillende niveaus van XBRL-ondersteuning bij softwareleveranciers? 30 Welke mate van belang schenkt u aan toekomstige XBRL ondersteuning van uw

softwareleverancier? 31 Welk belang hecht u aan het feit dat u van een open standaard gebruik kunt maken? Over DNB 32 Is in uw opzicht DNB voldoende voorbereid op XBRL? 33 Welke ondersteuning ontvangt u van DNB bij haar verzoek om in XBRL te gaan

rapporteren? Acht u die ondersteuning voldoende? 34 Van welke andere ondersteuning maakt u gebruik? Intern, extern? 35 Bent u geïnteresseerd in de validaties die DNB uitvoert op, stel, door u opgestelde

rapportages in XBRL formaat? Zou het nuttig zijn dat de DNB ze beschikbaar stelt zodat u ze ook al kunt uitvoeren en mee kunt nemen in uw interne rapportageprocessen?

36 Welke samenwerking is er geweest tussen banken en DNB voor de ontwikkeling van de COREP taxonomie? Bent u daar tevreden over?

Afsluiting 37 Stel, u krijgt de mogelijkheid om drie knelpunten (gerelateerd aan XBRL en Basel II

compliance) die op dit moment binnen uw organisatie spelen direct (althans zo snel mogelijk) op te lossen, welke drie knelpunten/problemen zouden dit dan zijn? {drie wensen: geest in de fles!}

38 Wat zouden andere partijen (zoals landelijke initiatieven (COREP)) hier aan kunnen bijdragen om deze knelpunten op te lossen?


39 Zijn er nog facetten die in dit interview niet aan de orde zijn geweest, maar wel aandacht verdienen in dit onderzoek?

40 Heeft u nog rapporten/documenten die ik kan gebruiken voor mijn onderzoek? {zoals visies, plannen van aanpak en evaluatierapporten}

Specifieke vragen NVB 1 Hoe lang bent u al bekend met XBRL? 2 Presenteert de NVB een algemene mening vanuit de Nederlandse banken? Is jullie rol

stimulerend of neutraal en onafhankelijk? 3 “NVB meent dat regelgeving uit de hand dreigt te lopen” Is XBRL een oplossing of alleen

een hulpmiddel? 4 Wat doet DNB goed? 5 Wat doet DNB minder goed? 6 Wat zijn jullie adviezen aan DNB? Meer stimuleren i.p.v. verplichten? 7 Wat zijn jullie adviezen aan banken? Wachten, DNB aanmoedigen? 8 Welke contacten hebben jullie met buitenland (Bel, Spa?) 9 Welke projecten lopen er nu binnen de banken? 10 Wie is er vanuit de NVB betrokken bij ontwikkelingen en beslissingen op het gebied van

XBRL? 11 Wat is het nut voor een bank om naar de DNB in XBRL te rapporteren?

Zou daarover een compensatie beschikbaar dienen te zijn? 12 Verwacht de NVB op termijn een verplichtstelling van XBRL? Zoja, welke termijn? 13 Waarom zou u XBRL wel danwel niet verplicht willen zien? 14 Wat vindt u van het idee om, net als bij NTP, een convenant te tekenen om afspraken en

rollen vast te leggen om gezamenlijk doel te bereiken, kostenvoordelen van DNB door te geven aan banken?

15 Vindt er bij de banken wel onderzoek plaats naar XBRL mogelijkheden? 16 Welke beren op de weg worden vooral onderkend? 17 Er wordt wel beweerd dat de leveranciers niet erg zullen meewerken XBRL-interfaces te

leveren (bescherming eigen software tegen open standaarden). Klopt dat beeld? 18 Zijn banken voldoende geïnformeerd over de voordelen en kosten van XBRL? Zijn

banken bekend met ‘harde’ kwantificaties? 19 Bent u bekend met de ontwikkeling van een Europese XBRL taxonomie voor Basel II

rapportages, COREP genaamd? 20 De Nederlandsche Bank is bezig met een COREP-invoermogelijkheid in e-Line.

Verwachten banken hiervan op termijn een verplichting en hoe ervaren zij deze ontwikkeling?

21 Welke andere compliance vraagstukken staan hoger op de agenda van een bank dan XBRL? Ik denk dat XBRL relatief laag staat ten opzichte van IFRS, Basel II, SOx, Tabaksblat, MiFID, SEPA, etc.

22 Welke gedachten hebben banken over de toepassing van XBRL voor interne processen? Interne processen: bijvoorbeeld interoffice communicatie.

23 Zien de banken ook voordelen bij XBRL wanneer de bank de ontvangende partij is? Bijvoorbeeld in het kredietverleningsproces.

24 Welke ondersteuning verwachten banken van DNB en softwareleveranciers? 25 Kent de bancaire sector (voldoende) voorbeelden van het gebruik van XBRL in de

financiële sector? 26 De goede samenwerking in de Belgische bancaire sector schijnt van positieve invloed te

zijn geweest op het feit dat er nu al mee gewerkt wordt. Herken je dit, hoe zit dit in Nederland? Is de samenwerking een belangrijke rol?


27 Het ene deel van de markt zegt implementeren en motiveert het gebruik (o.a. XBRL international, XBRL Nederland, overheid, NTP, software leveranciers), terwijl het andere deel kritisch is over het feit dat het al lang voordelen belooft maar dat het erg lang duurt ondanks een artikeltje hier en daar. Hoe ervaart u deze druk?

28 Hoe zou u de mate en kwaliteit van samenwerking tussen de Nederlandse banken en DNB omschrijven?

29 Hoe kijkt u tegen de situatie in België en Spanje aan (hij kent ze!)? Waarom daar al wel, kunt u verschillen aanwijzen? Is er contact geweest? Vertel…

30 Hoe zou u de mentaliteit van de Nederlandse bancaire sector omschrijven? 31 Zijn hier partijen in aan te wijzen die de kar trekken / naar voren springen? 32 Wat zou hieraan verbeterd kunnen worden om adoptie te bevorderen? Welke leidende rol

heeft de DNB hierin? Welke rol heeft NVB hierin? Wat zou NVB willen en kunnen doen? Specifieke vragen DNB 1 Hoe lang bent u al bekend met XBRL? 2 Wie is er vanuit de Nederlandsche Bank betrokken bij ontwikkelingen en beslissingen op

het gebied van XBRL? 3 Welke projecten lopen er op dit moment? 4 In de VS wordt de bancaire sector verplicht om XBRL te gebruiken. Waarom is het

gebruik van XBRL in Nederland nog niet verplicht? 5 Jullie willen XBRL faciliteren, klopt dat? Wat is daarvoor de achterliggende gedachte?

Meedenken met banken, niet te veel druk op willen leggen? 6 Zijn jullie daar klaar voor? Zonee, wanneer wel? 7 Welke redenen kunt u bedenken om het wel te verplichten? 8 De belastingdienst gaat haar openbare validaties delen met het NTP zodat bedrijven al een

controleslag uit kunnen voeren. Is dat iets voor jullie? 9 In 1e instantie heeft DNB grootste voordeel. Hoe denkt u over (financiële) compensatie? 10 Wat adviseren jullie aan banken? Conversieslag op eind of interne toepassing? Eigen keus

bank / rol software weg. 11 Wat vindt u van het idee om, net als bij NTP, een convenant te tekenen om afspraken en

rollen vast te leggen om gezamenlijjk doel te bereiken, kostenvoordelen van DNB door te geven aan banken?

12 Welke mogelijkheden ziet DNB als toepassing van het COREP framework in e-Line? 13 Boehlé: hoe staat het met de peiling van belangstelling XBRL als invoerformaat voor e-

Line in de eerste helft van 2006? 14 Hoe loopt het met COREP in e-Line systeem voor parallel run? 15 Stel, jullie ontvangen straks XBRL documenten van de banken. Willen/kunnen jullie dan

bij binnenkomst automatische validaties laten uitvoeren? 16 Zou je deze aan de banken beschikbaar willen stellen zodat zij ze van te voren ook kunnen

uitvoeren als test en in hun interne rapportages al kunnen meenemen? 17 Welke samenwerking is er geweest tussen banken en DNB voor de ontwikkeling van de

COREP taxonomie? Bent u daar tevreden over? 18 Wat is jullie houding t.o.v. de rechtsgeldigheid van XBRL documenten? Ze zijn immers

niet digitaal ondertekend? Bieden ze voor jullie toepassing voldoende integriteit (niet onderweg aangepast, toegangsbeveiliging, etc.)


Appendix L Interview questionnaire The questionnaire used in the interviews is, as the interview protocol, also in Dutch. An English version is sent upon request ([email protected]). De vragen dienen beantwoord te worden met het oog op het rapporteren van Basel II gegevens met behulp van XBRL naar De Nederlandsche Bank. Omcirkel het getal dat weergeeft in hoeverre u het met de stelling eens of oneens bent. In de kolom “Mijn organisatie” geeft u aan in hoeverre u vindt dat de in de stelling genoemde eigenschap wel of niet in uw organisatie aanwezig is of hoe tevreden u hierover bent. Voorbeeld: De mate waarin X geldt, beïnvloedt in dezelfde mate de adoptie van XBRL. Des te hoger X, des te hoger de adoptie van XBRL. Des te lager X, des te lager de adoptie van XBRL.

Stelling geldt voor: Prestaties

Bancaire sector Nee Ja

Mijn organisatie Nee Ja

1 De mate waarin praktijkvoorbeelden met kwantificatie van besparingen en implementatiekosten bekend zijn, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

2 De mate waarin XBRL de efficiency in Basel II

rapportages kan verbeteren, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

3 De mate waarin XBRL nut heeft voor interne toepassing,

beïnvloedt in dezelfde mate de adoptie van XBRL. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

4 De mate waarin XBRL hogere betrouwbaarheid levert over

de kwaliteit van gerapporteerde gegevens, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

Gebruiksgemak

1 De mate van organisatorische en IT-veranderingen die XBRL vraagt, beperkt de adoptie in dezelfde mate. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

2 Voor de adoptie van XBRL zijn specifieke IT-

vaardigheden (mensen, kennis) nodig. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

3 De beschikbaarheid van interne mensen en kennis om

XBRL te adopteren is voldoende. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

4 De beschikbaarheid van externe mensen en kennis om

XBRL te adopteren is voldoende. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

5 De mate waarin taxonomieën (bijv. COREP) aangeboden

worden, beïnvloedt in dezelfde mate de adoptie van XBRL. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

6 De mate waarin XBRL is geïntegreerd in mijn

risicomanagementapplicatie, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7


Stelling geldt voor: Omgeving

Bancaire sector Nee Ja

Mijn organisatie Nee Ja

1 De mate waarin het management positief gestemd is over XBRL, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

2 De mate waarin XBRL breed ondersteund wordt in

de markt, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

3 De mate waarin de markt eensgezind is over XBRL,

beïnvloedt in dezelfde mate de adoptie van XBRL. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

4 De mate waarin samenwerking tussen banken en

DNB bestaat, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

Faciliterende condities

1 De mate waarin de huidige technische infrastructuur geschikt is voor XBRL, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

2 De mate waarin de softwareleverancier XBRL

ondersteunt, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

3 De mate waarin een bank bereid is om druk te zetten

op de softwareleverancier om XBRL te implementeren, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

4 De mate waarin DNB compensatie biedt voor de

implementatiekosten van XBRL, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

Ervaring

1 De mate waarin een bank eerder betrokken is geweest bij de ontwikkeling van standaarden, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

2 De mate waarin een bank zich als ‘early adopter’

opstelt, beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

3 De mate van innovatie en een proactieve mentaliteit

over ICT-toepassingen in de organisatiecultuur beïnvloedt in dezelfde mate de adoptie van XBRL.

1 2 3 4 5 6 7 1 2 3 4 5 6 7


Stelling geldt voor: Vrijwilligheid

Bancaire sector

Nee Ja Mijn organisatie

Nee Ja 1 Als er eenmaal XBRL taxonomieën beschikbaar zijn,

heeft dat een positief effect op de adoptie van XBRL. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

2 De belangrijkste manier om adoptie te stimuleren is

het ter beschikking stellen van XBRL taxonomieën. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

3 Het is beter om XBRL positief te stimuleren, bijv.

door het ter beschikking stellen van XBRL taxonomieën, dan door het gebruik op te leggen ("de wortel is beter dan de stok").

1 2 3 4 5 6 7 1 2 3 4 5 6 7

4 Een verplicht gebruik van XBRL voor Basel II

rapportages zou ongewenste reacties van banken teweeg brengen.

1 2 3 4 5 6 7 1 2 3 4 5 6 7

Omcirkel in de volgende lijst per factor de invloed die de factor heeft op uw adoptiebeslissing van XBRL voor Basel II rapportages. Naar uw mening ontbrekende factoren kunt u zelf aanvullen en een waarde geven.

Invloed op adoptiebeslissing laag neutraal hoog

| | | Kennis \/ \/ \/ Beschikbaarheid van interne of externe mensen. 1 2 3 4 5 6 7 Kwaliteit van IT expertise en dienstverleners in de markt. 1 2 3 4 5 6 7 Kwalificaties van de uiteindelijke gebruikers in mijn organisatie. 1 2 3 4 5 6 7 Beschikbaarheid van XBRL-trainingsmogelijkheden. 1 2 3 4 5 6 7 ………………………………………………………………… 1 2 3 4 5 6 7 Organisatie Beschikbaarheid van financiële middelen in mijn organisatie. 1 2 3 4 5 6 7 De commitment en houding van het hoger management tegenover XBRL. 1 2 3 4 5 6 7 Tijdstip van adoptie (komt het gunstig uit qua planning/drukte agenda). 1 2 3 4 5 6 7 Houdingen van de uiteindelijke gebruikers in mijn organisatie. 1 2 3 4 5 6 7 Machtsstructuren binnen mijn organisatie. 1 2 3 4 5 6 7 De mate waarin mijn organisatie ‘early adopter’ is. 1 2 3 4 5 6 7 ………………………………………………………………… 1 2 3 4 5 6 7 Markt Verkrijgbaarheid van XBRL-ondersteunende software. 1 2 3 4 5 6 7 Kwaliteit van XBRL-ondersteunende software. 1 2 3 4 5 6 7 Ondersteuning van software leveranciers. 1 2 3 4 5 6 7 Verwachte verplichting door DNB. 1 2 3 4 5 6 7 Druk vanuit de markt om XBRL te implementeren. 1 2 3 4 5 6 7 Kwaliteit van samenwerking van banken en centrale bank. 1 2 3 4 5 6 7 Vertrouwen in softwareleverancier om technische complexiteit te regelen. 1 2 3 4 5 6 7 ………………………………………………………………… 1 2 3 4 5 6 7


Appendix M List of interviewees The following persons have contributed to the research by interviews, in chronological order of date in 2006: Bank Nederlandse Gemeenten (BNG) drs. P.J. (Paul) Kortleve, head of R&C internal control The Hague, May 22 Nederlandse Vereniging van Banken (NVB) drs. D.R. (Dennis) Koot, advisor financial reporting drs. M. (Michael) Samson, advisor information technology Amsterdam, May 30 De Nederlandsche Bank (DNB) drs. H.J. (Hendrik Jan) Boehlé, head of monetary and supervisory statistics J.C. (Ron) Baremans, project manager statistics and information Amsterdam, June 2 Rabobank Group ICT R.C. (Rob) Heijjer MSc. - security manager (innovation manager at time of research) Utrecht, June 21 ING Group, corporate control & finance H.H. (Hans) Buurmans RA - head DNB reporting and Basel II Amsterdam, June 29 The following persons have contributed to the research by providing information via e-mail and/or telephone contact (in chronological order of date): Dexia Bank Henk de Boer - manager internal audit department April 28 SNS Bank ing. B.A (Ben) van Zuijlen - head of information security IT bank May 15


Appendix N List of interview case study CSFs All CSFs resulting from the interviews in chapter 5 are consolidated here. Catalyzing factors for adoption H1 European collaboration supplies DNB with harmonized COREP models free of costs. H2 DNB facilitates reporting in XBRL format from January 1, 2007. H3 DNB recognizes value for multinational banks and is willing to support. H4 DNB is planning to develop XBRL support for pillar 2 requirements itself. H5 Quality of consultation between DNB and the banks. H6 The current data validations in e-Line DNB are also available when XBRL is added

as a reporting format. H7 DNB recognizes benefits of XBRL in harmonizing further European definitions and a

European version of an e-Line like system. I1 DNB facilitates reporting in XBRL format from January 1, 2007. I2 DNB recognizes value for multinational banks and is willing to support. I3 Quality of consultation between DNB and the banks. I4 XBRL implementation for banks is easy for a ‘convertor approach’ because standard

software is available. J1 Opinion towards XBRL that it cannot be ‘skipped’. J2 Opportunity to combine Basel II and XBRL implementations. J3 No major projects expected in time of XBRL adoption plans (2007) while those

developments coming are going to be outsourced. J4 Benefits recognized beyond external reporting for regulator and benchmarking. J5 No restrictions observed in technical or organizational implementation. J6 Expectation that XBRL is obligated by DNB in the future. K1 Advantages of XBRL recognized in the bank’s corporate lending process, pilot

started and experience available. K2 As a multinational bank, the bank is interested in harmonization of European

definitions for reporting in other countries. K3 XBRL Netherlands aims to involve banks in the XBRL adoption process. K4 Network effect expected to create demand by banks’ clients to report in XBRL

format to the bank after implementation of NTP from January 1, 2007. L1 Advantages of XBRL recognized in information receiving role (for incoming,

internal and external information flows that still require manual interventions). L2 An obligation after implementation in the NTP is wishful, attitude refers to “if XBRL

is used for NTP processes, let’s use it for another area (Basel II reporting) too”. M1 Within the international offices, experience regarding XBRL is available in Belgium. M2 Interest expected as a multinational bank due to reporting requirements in different

countries. N1 Trust in the software supplier to deal with technical specifications. N2 Interest expected as a multinational bank due to reporting requirements in different

countries. N3 Software supplier supports XBRL. Obstructing factors for adoption H1- DNB perceives added value of XBRL as minimal related to current XML format. H2- DNB recognizes the banks’ full compliance agendas and implications on IT and

organizational systems. H3- DNB lays the initiative to adopt at the banks.


H4- Recent investments made in e-Line DNB. H5- Implementation costs of XBRL into e-Line DNB by DNB. H6- DNB plans to develop XBRL definition of pillar 2 requirements for Dutch

application (no European harmonization). I1- XBRL is ‘technology push’ with little business case known. I2- The current reporting process is already electronic, standardized, operational and

working fine (e-Line DNB). I3- DNB lays the initiative to adopt at the banks. I4- DNB recognizes the banks’ full compliance agendas and takes it into account in not

obligating XBRL as another burden. J1- DNB is not yet supporting XBRL (lack of a definitive specification). J2- The estimated added value for the bank’s Basel II reporting process is nil. J3- Resistance to XBRL obligation by other banks is observed. J4- Banks’ opinions vary and it is hard to align the industry: co-operation is important. J5- DNB and the Dutch banking industry are conservative and cautious in implementing

new developments like XBRL. K1- No savings expected for Basel II reporting to DNB at short notice. K2- Many, complex, interlaced and cross-border business processes are used for Basel II

reporting that are hard to implement XBRL in. K3- Pressure of other higher priority compliance regulations, e.g. SOx and Basel II. K4- XBRL is a technology push by XBRL Netherlands while the genuine efforts of

XBRL Netherlands to involve the banks do not result in the hoped for interaction among the organizations.

K5- Lack of a positive business case for the banks’ Basel II reporting using XBRL on a voluntary basis.

K6- Results of the German bank’s XBRL implementation are not published. K7- European collaboration is not optimal: the UK is not participating in COREP and

central banks are delayed in providing clear policies K8- DNB does not obligate the use of XBRL, it is only facilitated. K9- Fewer ‘XBRL minded’ people in Dutch banks in contrast to Belgium and Spain. K10- Dutch banking industry does not strive to be an early adopter. L1- Other priorities. L2- Digital reporting is not obligated. L3- Insufficient know-how regarding maturity of the standard. L4- Insufficient knowledge of used technology. L5- Insufficient know how of number of other users (network effect, proof of concepts). L6- Limited support by software suppliers. L7- XBRL is a standard that awaits broad acceptation. L8- By the extension of national taxonomies the standard has become more and more a

national standard. L9- It is unclear whether XBRL is applicable in cross-border situations. L10- Low involvement of the bank’s future information disseminators, e.g. SMEs. L11- Advantages of XBRL not recognized in information disseminating role. M1- Low enthusiasm regarding XBRL. M2- Dutch industry collaboration is less optimal for XBRL adoption in contrast to that of

the Belgian industry. M3- Current issues regarding business continuity required immediate and full attention. N1- Current implementation of new software is in its initial stages and no attention has

been paid to XBRL yet.


Appendix O Questionnaire results The following bar charts are based on the questionnaire as mentioned in Appendix L. The titles of the charts are in accordance to the categorized questions and the constructs of the UTAUT. Each question has a ‘bs’ (banking industry as a whole) and ‘mo’ (the interviewee’s organization) perspective.

Performance expectancy

012345678

bs mo bs mo bs mo bs mo

P1 P2 P3 P4

Bank ABank BBank CNVB

Effort expectancy

012345678

bs mo bs mo bs mo bs mo bs mo bs mo

G1 G2 G3 G4 G5 G6



Social influence

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O1 O2 O3 O4


Facilitating conditions

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F1 F2 F3 F4



Experience

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bs mo bs mo bs mo

E1 E2 E3


Voluntariness of Use

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V1 V2 V3 V4



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Appendix P KPMG IRM FS This appendix provides information about the KPMG organization and about the Financial Services line of business within Information Risk Management. KPMG Outstanding professionals, working together to deliver value. We offer Audit, Tax and Advisory services. Three complementary areas of knowledge and insight that enable us to meet the needs of our clients. We turn knowledge into value for the benefit of our clients, our people and the capital markets. Our vision The KPMG vision is that we want to be leaders in the markets that we serve. Our aim is to have the best reputation in our industry. We want to be recognised as a market leader in our professional services, because of our knowledge of the developments and issues in the markets, industries and sectors in which our clients operate. In the Netherlands, KPMG has 19 offices with a total staff of 4,200. Worldwide, KPMG employs more than 94,000 people in 148 countries. Information Risk Management Technology enables rapid global business growth and advancement. It is also a major source of business risk.

Boards and senior executives recognize the importance of technology, but can struggle to understand and manage it effectively. Often, business executives and IT professionals don't speak the same language. This communications gap can lead to misunderstandings and misaligned expectations and outcomes.

KPMG's Information Risk Management practice helps bridge the communications gap with a combination of technical skills and business experience.

Financial Services This segment combines services to banks, insurance companies, pension funds, securities institutions, investment funds, social security institutions, real estate organisations and lease companies. Issues that relate to this market segment include new partnerships and other forms of cooperation, a reduced financial products life cycle and the increasing forms of distribution. Stricter international regulations are an additional dimension to be taken into account. Our Financial Services professionals continually invest in the expansion of their knowledge and in product innovation in order to support their financial sector clients.

an analysis of xbrl adoption by d basel ii compliance...

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