Evolution in any form is to bring in complexity to the system. It is universal and inevitable. Now we are talking about banking industry, its language and the messaging systems that form the backbone of the industry.
Back in 1970s when computers were introduced in banking, the messages and files were mostly proprietary. Soon the industry realized the power of networking and common standards and numerous attempts were made to make the messages interoperable. In those days the resources were limited and most of the messages and standards that were devised aimed at transferring data efficiently between the end-points. The hardware devices used crude messages, while the programs were much more flexible.
In the next couple of decades, computing grew leaps and bounds to form the gigantic World Wide Web that covered the earth. The possibilities of interactions increased, even surpassing the national and geographic boundaries. The cost of transportation and storage of data steadily went down, while scope and size kept increasing unpredictably.
The messaging standards introduced were soon withered and dried in the process. Two notable standards that still stand against the wind are OFX (Open Financial Exchange) and Gold. They were on the right track but seriously limited in covering the entire scope of financial industry. Nevertheless, the two standards provided the base on which IFX could be built up – to be an open, consistent, extensible, and universal standard.
‘The IFX Forum, a working group consists of veterans in financial and technical domains, chart down the specification and publish it periodically. The standards are accessible to anyone on the web, and are open for inspection, suggestions and corrections. The huge effort that is put voluntarily in the development of this standard shows another trend of the times – to be open. Openness invites faster verification and adoption of the standard into the industry.
A great deal of care has been put into the development so that the standard remains consistent across various arms of the industry. Consistent naming, consistent structure and strict behavior mark the standard differently from the legacy messaging systems. The specification is divided into three classes: Business Message, File Format and Transport. The working group has envisaged the broad classification as the industry demands interoperability of different channels than the replacement of one with another. An example of an IFX message would be an ATM transaction (business message), formatted in XML (file format) sent over HTTPS (transport).
The ever-increasing scope of business messages increase two-dimensionally. In the domain new services are added and existing facilities are extended. In technology new channels are invented while the existing technologies can be hardly thrown away. These necessitate the extensibility of a standard that can cover the new and existing features alike. It should be also possible to discard the unused and unwanted features with equal ease. IFX is implemented over XML architecture which itself stands for extensibility. The proven concepts of object oriented methodology are also adapted in the development.
Another noted achievement in IFX is the universality of the standard. IFX already supports vast areas in financial industry covering the basic and advanced services in banking, payment, credit cards and presentments. Soon the IFX will pitch into insurance which is seen separately until recently. In the technology IFX spans from simple message system to complex Electronic Data Interchange based transactions.
IFX defines the entities such as Bills, Payments, Customers, Services, etc. as objects. There are six operations that can be performed over these objects, viz. Add, Modify, Delete/Cancel, Inquiry, Audit, and Synchronize. The messages are classified according to its directions, Request and Response. IFX also provides the sign-on and sign-off messages and session services.
Some of the current banking services include, account, statement, account transaction, interest rate, account taxation, foreign exchange rate, stop check, funds transfer, recurring funds transfer, check order, deposit book order, debit authorization, credit authorization, debit, and credit. The payment services include payee, payment, payment authorization, remittance and recurring payment. The operations on these services vary depending on the type of the service.
The extensibility and the universality always come with a price. When compared to its predecessors in the legacy environment, IFX implementations demands more processing power and storage facilities. Intelligent and PC based devices can handle volumes of data and may bring sudden surge of data as they replace the traditional devices. Think about the multitude of ATM transactions converted to wordy XML messages zipping across the world. This also brings in another twist to the tale as conventionally the financial institutions relied on the legacy systems. As these systems still struggle to catch up the new ways and waves of computing, the endless possibility of distributed and network computing stands poised at the other end.
The banking industry and its technologies are reaching a turning point to adapt newer and better ways. It is the question of deciding an appropriate time to break off from the old and embrace the new. While the industry is keenly watching the new developments and prepares itself to be in the excitement, the consumers and customers have a lot to hope for, endless and seamless ways of interaction and integration.