Open Financial Exchange – Definition

Cite this article as:"Open Financial Exchange – Definition," in The Business Professor, updated March 26, 2019, last accessed October 27, 2020, https://thebusinessprofessor.com/lesson/open-financial-exchange-definition/.

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Open Financial Exchange (OPX) – Definition

OFX (Open Financial Exchange) is an electronic process that is known as online data streaming format that helps to exchange any financial data. This type of data emerges or gathered from Microsoft’s OFC known as (Open Financial Connectivity) and from file formats produced by IOE (Intuit’s Open Exchange). IOE is an organization that helps to prepare large scale programmes that are used to issue financial reports or documents concerning tax data. This type of information is exchanged between different parties such as financial institutions and customers. It is to note that OFX is a data-streaming process, not any financial organization.

A Little More on What is Open Financial Exchange

OFX was introduced in January 1997. Three largest global organizations, i.e. Microsoft and CheckFree along with Intuit initiated the launch of this programme focusing on its working mechanisms that allow the convergence of data that is developed independently by different organizations. The mechanism also allows evaluating application-specific extensions in a financial organization such as banks.

Support in various countries

In the USA alone, a great number of banks facilitate customers to use certain software programmes to manage PFM (Personal Financial Management). Such programmes help banking customers to download their account statements in Open Financial Exchange Format. However, the case with Canadian, British and Australian customers is different because banking sectors in these three counties do not permit customers to use OFX. It is to note that CBA exports QIF and Open Financial Exchange format for the Australian banking sector but users are not allowed to use such software.

Intuit and QFX

Intuit uses an Open Financial Exchange proprietary variant to inspect its products and this variant is known as QFX. It is to note that Open financial Exchange makes the direct connection possible while in contrast, QFX allows connection with the server. A direct connection helps the user to use FMS (Financial Management Software) for direct connection to banking OFX server. However, when a user connects with the web, he follows a certain log in mechanism to download financial records manually. This type of download file is called “QFX” that is imported into Quicken format.

QFX (file format)

Intuit uses the QFX format as it is authentic Open Financial Exchange file and Intuit allows other financial organizations to use it after paying a licensing fee. It is to note that the users can use the standard Open Financial Exchange format without paying any cost as it is an open standard. Intuit uses Quicken software to import files that have a QFX format. Intuit conducts quality checks using QFX format and receives a fee for this work. In case of non-payment, an error message is relayed showing Quicken is unable to authenticate the financial information of the organization related to the download. An individual Quicken user also receives a similar type of message for previously QFX download files.

References for Open Financial Exchange

Academic Research on Open Financial Exchange (OPX)

A taxonomy for construction terms in privatized‐infrastructure finance: supporting semantic exchange of project risk information, ElDiraby, T. A., & Gill, S. M. (2006). Construction Management and Economics, 24(3), 271-285. In this paper, the writer focusses on the need for unconstrained availability of information to all participants related to privatized-infrastructure projects. The development of a taxonomy helps the financial organization as well as construction companies to exchange the information following a certain procedure. The research presents a design for taxonomy in relation to OFX for improved information exchange procedures.

Agent trade servers in financial exchange systems, Lybäck, D., & Boman, M. (2004). ACM Transactions on Internet Technology (TOIT), 4(3), 329-339. The writer explains the role of the best-effort model in relation to EFE (Electronic Financial Exchange.) There are 4 hybrid features related to this model that can help to manage or handle data. The research suggests that improved QS (Quality of Service) would help to improve FES (Financial Exchange Systems.)

Should eBanking programs speak OFX and IFX–or both?, Orr, B. (2001). ABA Banking Journal, 93(3), 56. The research comprehensively explores information about the Open Financial Exchange (OFX) and the Interactive Financial Exchange (IFO) in the development and success of e-banking.

XML and other standards net financial services momentum, Knox, M. (2003). Technology, 21, 2750. The study throws light on using XML and some other software programmes to keep the momentum going regarding financial service. The research shows that the standard application use would keep the financial information flow uninterrupted and uncompromised.

An XML framework for agent-based E-commerce, Glushko, R. J., Tenenbaum, J. M., & Meltzer, B. (1999). Communications of the ACM, 42(3), 106-ff. The research investigates the financial documents exchange in the context of using XML tools. XML use brings more open business opportunities for organizations. The study explores the role of eCo System launched by CommerceNet company in 1996 to increase online business using agent-based infrastructure.

Component-based e-commerce: assessment of current practices and future directions, Bichler, M., Segev, A., & Zhao, J. L. (1998). ACM SIGMOD Record, 27(4), 7-14. In this research, the writer has the opinion that modern component-based technology is really significant to expand commerce activities and helps to solve e-commerce problems either related to system or with a software application. The study also suggests directions related to component-based development for future e-commerce activities.

Web data integration for e-commerce applications, Hasselbring, W. (2002). Ieee Multimedia, 9(1), 16-25. In this paper, the writer is of the view that web data needs to be used for integration purposes to develop easily useable electronic commerce application. The use of “yo-yo” approach is useful for better strategy development.

Financial Institutions and the Internet: Issues and Trends, Bauer, C. (1999). Springer, London. This research explores the significance of internet trends that are behind the growth of e-commerce and used by the financial organization. The research also highlights certain Internet-related issues that are threats to e-commerce.

Towards a financial ontology–A comparison of e-business process standards, Mäkelä, T., Rommel, K., Uskonen, J., & Wan, T. (2007). http://www. soberit. hut. Fi. This paper presents a standardized overview based on comparisons of technology tools that are used to maintain e-business protocols. The research highlights financial ontology as it helps to acquire interoperability in processes regarding financial domain.

Frontiers of on-line financial services, Kalakota, R., & Frei, F. (1998). Banking and Finance on the Internet, 605, 19-45. This research has been carried out to highlight the role of changing technology tools in relation to improving financial services in the digital banking industry. The paper sheds light on the need for aligning all online process to further improve the e-commerce system.

An integrated approach for securing electronic transactions over the web, Kolokotronis, N., Margaritis, C., Papadopoulou, P., Kanellis, P., & Martakos, D. (2002). Benchmarking: An International Journal, 9(2), 166-181. The paper explains the need for a centralized security system to provide a safeguard to online financial transactions. The author’s standpoint indicates a sheer need to use an integrated model for online commerce security.

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