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Deena M. Amato-McCoy
Deena M. Amato-McCoy
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Interactive Financial Exchange Forum Creates Messaging Standards

The Interactive Financial Exchange Forum strives for financial messaging harmonization.

As the banking industry increasingly relies on electronic communications to streamline operations and improve collaboration with customers and business partners, new protocols continue to pop up. The host of protocols, however, threatens the very efficiencies promised by electronic collaboration.

Enter the Wakefield, Mass.-based Interactive Financial Exchange (IFX) Forum, which strives to create platforms that support harmony among different standards. The IFX Forum is an international, non-profit association committed to promoting the adoption of open, interoperable standards for financial data exchange. Although the association's agenda is based on messaging projects typically steered by members and the user community, the IFX's roots were a bit more targeted.

"During our inception a decade ago, home banking was really starting to take off," explains Rich Urban, president, IFX. "Banks were connecting with customers via Web sites and third-party software from Microsoft [Redmond, Wash.] and Intuit [Mountain View, Calif.]. They all had the same goal, but each had a distinct flavor," he recalls. "This was when we realized the potential to diverge communications. The IFX was formed to harmonize and establish these communications."

Building on an XML Platform

Over the years, the IFX has expanded its breadth. Using an XML platform, the association has set its sights on standardizing ATM messaging, bill presentment and, its most recent project, branch banking services -- or the communication messages that handle data across different business channels, according to Urban. But, "IFX is not pushing a technology standard," Urban points out. "Rather, the group strives to create a reliable content message."

The process required to reach that goal, however, takes time. According to Urban, it typically takes at least eight months and as long as two years for the IFX to complete and publish message standards.

That process is guided by the IFX's membership -- executives from the banks themselves. "Groups of bankers and technicians meet to discuss various competing technologies," explains Mark Tiggas, an SVP with Wells Fargo and treasurer of the IFX board of directors. "Then we work as a group with IFX to develop standards to resolve these issues."

A Firsthand View of Developments

Besides helping guide the direction standards will take, another benefit of membership is that "members get a first-hand view of intentions and can pilot standards before they are published," notes the IFX's Urban.

According to Tiggas, Wells Fargo ($575 billion in assets) already uses concepts developed through the forum. The newest standard being applied at the San Francisco-based bank is the IFX's foreign exchange message protocol, he relates.

"We played a pivotal role in helping IFX create the next generation of foreign exchange messaging," Tiggas says. "We have taken lessons from the original messaging protocol and worked with other banks, such as Bank of America, and IFX on creating the next generation."

Since adding the new protocol, "We are accommodating processes better," Tiggas relates. "Now we can more immediately process contracts and exchange funds with other institutions."

Foreign exchange messaging is just one of the projects on the IFX agenda, according to the organization's Urban. Currently, the association is moving the framework for its XML-based standards to a service-oriented architecture [SOA], he explains. "As the industry began adopting the Internet and online banking, there were many companies that featured their own service models to support operations. When the industry began consolidating, however, many banks and vendors realized they needed a standard for communications and data integration. This was the catalyst for a standard back-end infrastructure, such as SOA."

The IFX also works with other industry associations to improve messaging. For example, the group currently is working with the International Organization for Standardization (ISO) on creating a payment kernel message. This XML-based core payment kernel supports corporate-to-bank payment initiation and status messages between the parties, Urban says.

From project to project, though, the IFX's mission stays the same: "We define areas of overlap and create harmonization of messaging," Urban adds. "This work is what the industry needs to eliminate disparity between systems."

--Deena M. Amato-McCoy

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