Dear Commissioner Kara M. Stein of the SEC,
Recently you spoke about the need to bring financial disclosure into the digital age. idaciti couldn’t agree more. And here’s what companies like idaciti are doing to reimagine how companies and investors use financial data.
Commissioner Stein, one of the most insightful points you made in your speech for the Rocky Mountain Securities Conference in Denver was how EDGAR no longer fits the landscape of modern technology.
You said, “While technology has been evolving, EDGAR has not changed much. EDGAR needs a redesign to catch up to the new digital world. However, even the redesign needs to be part of a larger, more holistic effort.”
It’s true. And it’s no big surprise. EDGAR hasn’t kept pace with technology. It’s not mobile-friendly, responsive or light. It’s not device-neutral, nor is it flexible, scalable or easy to use. But the problem isn’t confined to EDGAR. We believe it’s part of a bigger, fundamental problem with financial data.
Here we'll address your concerns and talk about how the market is responding with a new vision of financial data delivery and analysis.
Commissioner Stein, let’s start with your key points on EDGAR:
EDGAR has not changed much since its launch over two decades ago.
“As most of you know, the Commission launched EDGAR over two decades ago. EDGAR brought monumental change to the way investors obtained information about companies. Paper documents were replaced with electronic documents that could be immediately accessed from anywhere in the world.
EDGAR now serves as the Commission’s central data repository. It receives over 700,000 disclosure documents every year from companies, investment companies, and individuals. When EDGAR rolled out in 1995, we were accessing the Internet on large desktop computers using a dial-up connection. Back then less than 1% of the world's population had Internet connectivity.”
We can’t think of another public-facing platform that currently exists just as it had 20 years ago. When EDGAR was originally launched, its primary role was to replace paper documentation with electronic. It saved companies many hours in paper filing, faxing and manual entry. The platform has improved since its inception, providing more interactive data than ever, with tagged, structured XBRL data and a recently-released inline XBRL viewer.
Here’s a mock inline XBRL document rendered on the Commission's website:
We applaud the improvements EDGAR continues to make, however, user expectation is still light years ahead of what it provides. Users place much greater demands on technology, including more mobility, responsiveness, visualization and searchability.
The market has responded to these user demands, delivering data in a much more elegant and usable format. Here is what idaciti's company profiles look like:
Much different, wouldn’t you say?
2) Other ways of reporting financial data aren’t truly built for the modern business.
“Disclosure, and our concept release, are both still stuck in the paper world. Sure, you can view the reporting forms on the Internet, and you can pull up the individual filings on EDGAR. But, fundamentally, the reporting requirements are still focused on making the reporting format match the viewing format. How it is reported and how it is viewed is exactly the same.
In the digital world, this need to match formats no longer applies.”
Because of EDGAR’s liabilities, companies have turned to other platforms to manage, track and analyze financial data. Yet these platforms still fall short when it comes to the needs to business.
For example, Excel:
How many hours has your team spent managing unruly spreadsheets, rebuilding formulas, tracking data or linking spreadsheets into layers that connect like a house of cards? It’s a popular tool that’s often overcomplicated for true reporting or analysis.
More advanced analysts also often use more powerful platforms, like the investment banker’s favorite, Bloomberg:
(This keyboard costs $24,000 a year!)
Bloomberg terminals are among the most expensive options and also require special training for users. In today’s collaborative workplaces, it makes little sense for the data resources to be “owned” by a singular subject matter expert. True usable data should be accessible by any analyst, strategist or business unit specialist.
Other platforms, like idaciti, make it easy to source, manage and analyze data but without the complexity of Excel or Bloomberg. Here's how users can access data on a company (Pfizer) against its competitors (large pharmaceutical companies).:
And unlike other platforms, idaciti is browser-based and completely responsive across all desktop and mobile devices:
3) Modern financial data analysis should be interactive and story-driven.
“Finally, what should disclosure look like? Technology opens up new possibilities for innovative visual display. But it’s not just about technology. It’s also about learning styles and investor literacy. Can a company tell its story best with a graph or a video? Can graphic design help investors navigate layered information? Maybe the first thing I see is a company dashboard. Then, with a click, I look behind the dashboard and see the financial statements.”
Commissioner Stein is dreaming of a day when data comes alive. When it empowers users, consumers and investors to make more decisions in real-time. The platforms like Excel and Bloomberg are simply too inflexible to provide this functionality.
Solutions like idaciti, conversely, offers any user the opportunity to string visualizations together for side-by-side comparisons or narrative stories on industries, companies, segments or markets:
Financial data isn’t being used by nearly as many companies as it should be for analysis, strategy and decision-making. And it’s probably because until now, companies have relied on old systems (EDGAR), expensive systems (Bloomberg) or complicated systems (Excel) for reporting. The SEC is campaigning to make this financial data usable. And it starts with platforms like idaciti.
To read our first blog on updating disclosure for the digital age, click here.
To read our second blog on how to improve 10-K/10-Q and proxy statements, click here.
To schedule a customized demo for your business, contact us here.