For years, the industry has anticipated that the two dissonant technology frameworks for transmitting financial information over the Internet - known by their acronyms, IFX and OFX - would be fused into one.
But that hasn't happened, and it doesn't look like it will any time soon. One question now is whether the industry's support of two specifications, which overlap in some areas but differ directionally, will become a costly problem or remain a minor inconvenience.
When the Interactive Financial Exchange specification was introduced, in 1999, many in the industry assumed that in time it would merge with a predecessor spec, the Open Financial Exchange. But instead it became a broader and separate standard, and the momentum to marry it to OFX flagged. IFX owes its heritage to OFX, but as a next-generation protocol, its design has diverged considerably from the more focused OFX.
Most everyone agrees that having overlapping standards is not an ideal situation. But the degree to which multiple standards are a problem seems debatable. Some executives in the industry contend that differing standards are a drain on resources, while others say OFX and IFX target different enough areas that it does not matter if they remain separate.
"Overlapping standards cost money to support and are logistically a pain," said Gary Roboff, a senior consultant at Banking Industry Technology Secretariat, or BITS, the bank-driven group that spearheaded the effort to develop IFX.
The economic impact includes having to deploy personnel to support multiple systems interfaces, Mr. Roboff said. In addition, too many standards could minimize the financial industry's contribution to their development, he said.
"Financial industry support in standards organizations is very thin relative to what it could be if the standards environment were more rationally structured," Mr. Roboff said. "That leaves the door open for technology vendors to come in and play a role."
But in at least one big bank that uses both IFX and OFX - Citigroup Inc. - tolerance for a dual structure is high. The specifications have developed along different tracks, said Dan Schutzer, a vice president in Citi's emerging technologies group who works with OFX. Because of that, there is less reason than perhaps there was a couple years ago to merge them, he said.
Leonard D. Schwartz, a vice president in Citi's global transaction services group who works with IFX, said he is confident IFX and OFX could be quickly integrated if ever the need arose. "At the moment, we haven't had a real request for this, but we'll figure it out if our clients want us to," he said.
Mr. Schwartz has been involved in developing standards for 11 years. In his view, the consolidation of competing standards is not the goal - interoperability is. "I don't see nirvana as having IFX everywhere. Nirvana is about … interoperating with other standards."
On both sides of the debate there is agreement that the explosion of standards based on XML is potentially problematic. Dozens of organizations are at work developing standards revolving around this "extensible markup language," which lets institutions better communicate electronically. IFX has its origins in XML, while OFX became compliant with the language in its 2.0 version, launched in 2000.
The OFX/IFX debate points to "the larger problem of rationalizing the entire standards environment," Mr. Roboff said. BITS is working with organizations to help bring standards into alignment as much as possible, Mr. Roboff said. It is also investigating the usefulness of various technology tools to help institutions better handle overlapping standards, he said.
Of the subject of the numerous XML standards being developed, Citi's Mr. Schwartz said, "There's no question in my mind that a very important piece of what has to happen is an ability to interoperate." He said the IFX working group has been in contact with other organizations to ensure interoperability between industry and business processes.
For that reason, Mr. Schwartz said he is hopeful that IFX can succeed in streamlining the corporate payments business in a way that electronic data interchange still has not. Proponents of EDI have struggled for years and have yet to create data connections that could easily transmit payment and related data between financial institutions and their corporate customers, he said.
In the new wave of XML standards development, one big benefit appears to be the technologies' flexibility. Mr. Schwartz gave credit to existing EDI standards - X.12 and its international counterpart, EDIfact - for automating in the 1960s what was largely done on paper. But the legacy standards have only taken the industry so far. "They evolved as much as they could," Mr. Schwartz said.
When industry-specific needs began to arise, such as the need to address the transport of a message separately from its content, the legacy standards fell short. XML "much more elegantly" handles the interoperability of the pieces that make up, say, a corporate trade, Mr. Schwartz said.
Even as XML emerges to smooth over entrenched ways of doing things, IFX and OFX continue going their separate ways. OFX focuses on consumer banking needs, such as the downloading of account information into personal financial management packages. Recently the spec was modified so that it could handle more tax-related information, Mr. Schutzer said. "All additions to the spec have been evaluated with primary consideration given to not disrupting the existing client base," he said.
The IFX Forum, meanwhile, announced last month the publication of IFX version 1.4, which incorporates support for automated teller machine and point of sale channels - widening the scope of IFX, which had focused mainly on business-to-business. Mr. Schwartz said he expects the Forum to continue to upgrade the standard promptly as business needs change. "One year is a long time in the XML standards world," he said.
