Application of XML in B2B financial services

Abstract

Financial services industry is undergoing tremendous transformation due to regulatory changes and technological developments. The thesis discusses these changes including the advent of internet and how it is impacting the financial services industry. The paper provides a detailed account of XML evolution and its comparison with SGML and HTML. Several organization bodies have been formed over the past few years to define and push XML based standards for various industries. Even though XML is still in its evolving stage, there is wide consensus that it will be the enabler for disparate systems to communicate with each other. The research provides an overview of various XML standards pertaining to financial services and firms behind these standards. The author derives the conclusion that several standards with in financial services will co-exist and the industry will converge to these standards. The thesis also provides an overview of some financial applications that are XML compliant along with examples of first mover financial services firms that have successfully applied XML to address systems issues. Based on the XML standards, changes in the industry and customer needs author predicts some future trends and milestones that will happen in the financial services industry. They include; General changes in industry Landscape, formation of Central Limit Order Book (CLOB), Emergence of HUBs and Exchanges, Global Straight Through Processing, Settlement time of T +O, Emergence of Aggregators and Enterprise Portals. The future trend section further discusses the role of XML in this changing environment and how it will help achieve some of the key break-throughs that were not possible before. In order to fully harness the potential of XML, firms need to understand the various elements of XML. The last section of the thesis provides an overview of internal factors; issues around understanding DTD's and other relevant factors firms need to consider for successful implementation. The factors are based on author's own understanding of XML, issues faced by financial services industry and interviews with financial services firms.