The need for transparency and control of financial institutions is constantly increasing. This is particularly true for Solvency II regulations in which reporting to the authorities and to the market plays a central role. Moreover, collection of data is intended to help compare financial institutions and prevent systemic risks. Consequently, reporting under Solvency II is facing several difficult challenges:
- First, the number of facts to be reported is significant and could even grow in the years to come.
- Second, the aggregation of all facts (data) collected requires a high level of standardization of the description of each and every data.
- Third, the facts to be reported are multi-dimensional and each fact is assigned several characteristics.
- Last but not least, facts are inserted in a web of reciprocal relationships and have to be consistent with one another.
Meeting all these requirements is only possible through the use of a common language to describe the facts reported. The chosen language for insurance, as well as for banks, is XBRL.
Based on a common taxonomy it aims at describing as accurately as possible the facts in their full complexity (currency, type, year, line of business…). Based on these descriptions XBRL generators will change the chaos of internal data of the company into a standardized identical reportable format for the regulator.
How does this generation happen? And more importantly why are we convinced the generator should be based on a database technology? These are questions we will try to address in this paper.