Commercial Credit is being Transformed with SBR
Dutch banks ABN Amro, ING and Rabobank are leading the effort to shift corporate reporting to credit providers from paper to data. Leveraging the XBRL standard and the SBR (Standardised Business Reporting) framework that already exists for business to government reporting in the Netherlands, the banks are driving this change through a collaboration called SBR Banken.
The Banks are encouraging commercial borrowers to provide Financial Statements and a range of other, ancilliary information, to them digitally, in XBRL, instead of on paper, fax or PDF. Companies in the Netherlands must now provide XBRL financial statements to the Business Registrar, and Dutch accountants have invested in the software necessary to both prepare the XBRL financial statements and securely submit them to an SBR portal. As a result, the marginal cost of also providing that data to a bank is extremely low.
At the XBRL Europe Day, ING’s project lead Paul Staahl described the pressures on banks that many finance professionals outside of Holland will also recognise. The banks are faced with:
- increased competition from alternative lenders
- a digital transformation within and around the bank, including customer expectations that business will be done online
- changes in societal expectations from banks; and
- a significant ramp up in data expectations from regulators
The banks are responding to these changes in multiple ways. Obtaining XBRL based credit reports from SMEs and other corporate borrowers changes the way that banks can do business.
It removes the small (around 4%) but inevitable error rates associated with the rekeying of data. It removes the administrative time needed to carry out that work, which allows banks to respond to their customers faster. It gives banks a better and deeper set of customer insights, as the XBRL data provided is more frequent and more detailed. Importantly it also means that the information that is provided to regulators is higher quality, including for key supervisory obligations such as Asset Quality Reviews, and the new EU wide Anacredit reporting arrangements.
But clearly the most important aspect of these changes is that banks’ mission critical risk models can be enhanced. With improved data within the data models banks expect to have finer grained and more accurate risk measurement. Ultimately this leads to improved capital allocation and potentially, lower regulatory capital requirements.
ABN Amro’s COO Commercial Clients, Erik van der Klei, in opening remarks to the XBRL Europe day, described the way in which SBR Banken is seeking in 2017 to rapidly add to the number of intermediaries (accountants and software vendors) as well as banks that are working to improve credit assessment through the initiative.
The data being used within SBR Banken is not restricted to regular feeds from commercial customers. It already extends to acquiring digital, and finer-grained versions of real estate valuations, also in XBRL. In the future additional data feeds are likely to be added, expanding the decision-useful information available to financiers.
With many other countries already having widespread software capabilities and XBRL-based business registrar filings, the opportunity for other countries to follow the Dutch lead is very real. Stay tuned for more developments in the coming months. In the meantime, find out more on the SBR Banken site. In Dutch, but Chrome does a passable job at translating these pages.