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IFX is ready for liftoff

After eight years of development, the XML-based financial messaging format should soon have all FI channels speaking the same language.

December 27, 2005

A collective of vendors and financial institutions has been working on an XML-based universal messaging format since 1997 that will allow various financial delivery channels to speak the same language. It now appears that the wait for Interactive Financial eXchange, or IFX, may soon be over.

"Within 12 months we will have a number of our clients going live on their ATM channel," said Mark Elson, manager of product development for London, Ont.-based Phoenix Interactive Design Inc.

Elson said more FIs are realizing the potential advantages to creating a single messaging format for all delivery channels. "Historically in the self-service channel, it has been a very closed environment with proprietary hardware and software. Now we will have a convergence of the different silos - ATM, POS, Web and branch communications. The benefit from the industry perspective is that it removes some of the redundancy. Maintaining different silos has a cost associated with it."

Rick DuVall, a senior project manager for ATM products at Omaha, Neb.-based ACI Worldwide Inc., agreed, adding, "If a bank's staff is only concerned with one standard, there has to be a cost savings. It is hard to quantify what that savings might be, but intuitively it would have to save banks money."

DuVall points to major undertakings in the financial industry in recent years, such as Y2K upgrades, Americans with Disabilities Act compliance and meeting Triple DES standards. "I just think of the amount of effort that went into those projects because you are dealing with different flavors or types of software," he said. "If there had been just one standard in place at the time, there would have been significantly less effort needed to make those things happen."

What's Important Since 1997, the IFX forum has worked to develop an XML-based messaging format called Interactive Financial eXchange. IFX allows FIs to use the same messaging standard for ATM, POS, Web and branch communications. Officials involved with IFX say it will enable FIs to quickly add new feature functions and reduce redundancy of work.

Larger FIs take the lead

Both Elson and DuVall say that larger FIs are expected to take the lead in converting to IFX. "I think the industry is conservative by nature, but some of the larger FIs will be the leaders," Elson said.

DuVall said the idea of an open, universal standard may be easier for larger FIs to grasp.

"It seems that the larger banks see the advantage (of IFX) more readily than maybe the smaller banks do," DuVall said. "I think part of that is they are looking for multivendor solutions so they can run the same software on all of their machines regardless of the hardware. This seems to really play into that same type of thinking."

DuVall said ATMs must be Windows-based in order to support IFX. "There is an ongoing migration in the industry to Windows machines and we think IFX will kind of get caught up in that migration process," he said. "We think that this will become part of overall planning for banks."

With the software standards essentially in place for IFX and the IFX Forum demonstrating the technology at several tradeshows, DuVall said, the benefits are becoming more apparent to FIs.

"There are some banks that really do see the benefits of an open standard," he said. "They know the benefits that exist and they know what the future is like for these standards."

Likewise, DuVall said his company is working with several clients to create ATMs that operate using the IFX format. "We expect to have some live ATMs late this year or early next year," he said.

Among those benefits are enabling banks to add feature functionality more quickly because they do not have to wait for software protocol updates. "It will allow an increased speed to market for functionality in the ATM channel," said Elson, pointing out that functions previously available on one channel, such as bill payment and online banking, could now be made available at ATMs or other channels.

"Overall, the ATM channel hasn't been leveraged as much as possible, and it is a critical touchpoint for the customer and the FI," he said.

Changes in attitudes …

Both DuVall and Elson say they expect IFX to become the accepted communications standard within five years.

"Will all 1.2 million ATMs in the world be running IFX in five years? Probably not," DuVall said. "To me, it is not so important how many ATMs are running IFX - it's that everybody is planning to move to IFX. What we are looking for is that IFX becomes part of everyone's planning process."

Since his company became involved with IFX more than three years ago, DuVall has noticed a steady shift in attitudes about the standard.

"I remember when the question used to start with 'If IFX becomes the predominant standard,'" DuVall said. "I think we are now over that hump, because it is no longer 'if' a bank will go to IFX. The conversation is now turning to 'When is the best time to go to IFX?' Now it is more of a 'how' question than an 'if' question."

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