The groundswell of attention that alternative data has garnered among investors stems from the growing role of these non-traditional data sources in evaluating the health of a company or the return on investment. These comprise data points that are obtained outside of traditional sources that are typically present in financial statements, management presentations, press releases, and SEC filings. The interest in the alternative data is relatively a recent phenomenon, but in recent years have gathered incredible steam.
The growth of the alternative data has pivoted on the growing business proposition of vast volumes of data sitting on personal devices waiting to be exploited for informing financial decisions. Companies are growing their stakes in offering products and services that enable end users to collect, clean, analyze, and offer helpful insights for guiding decisions on investment, fund trading, and risk management. Preliminary sources of alternative data comprised of credit card transactions, geolocation data from mobiles, satellite images, web scraped data, and weather forecasts.
The regulatory landscape pertaining to obtaining of data, its use, and its dissemination has led to sourcing of data has been constantly evolving. Regulations such as GDPR and California Consumer Privacy Act (CCPA) mandates that all types of data are obtained in a scientific manner and that complies with privacy regulations. The factor has enormously shared the growth dynamics of the alternative data market. The demand has witnessed an uptick from the adoption of alternative data analysis platforms for credit card transaction data.
A major consumer proposition underlying the rise in demand is the significant attractiveness of data in predicting sales and predicting economic signals that may guide future purchase intentions. This has fueled investment by hedge fund managers, thereby boosting the revenue potential of players in the alternative data market. Growing demand for advanced platforms by data scientists to make sense of non-traditional data is opening up new investment avenues for players in the alternative data market. Over the coming years, hedge funds will witness growing use cases of alternative datasets, thereby fueling demand for new platforms in the alternative data market.
A growing number of players are offering platforms that may glean through data residing in IoT devices, satellite imagery, and social media sentiment. Companies have been enamoured of the vast promise alternative data holds for getting insights into environmental, social and corporate governance data.
Players aspiring for sizable stakes in the alternative data market are keen on offering platforms that help end users leveraging machine learning tools and NLP for analysis of alternative data. Top players are fervently tapping into AI-enabled data analytics tools.
Some of the key players in the alternative data market are VisibleAlpha, ICEYE, Enigma, Slice Intelligence, Affinity Solutions, UnionPay, Second Measure, American Trucking Association, JWN Energy, Quandl, Thinknum, RavenPack, Quest Mobile, and Orbital Insights.
North America is a highly lucrative alternative data market, with growth being propelled by the rise in use cases of alternative data generated from credit card usage, web receipts, web traffic, web data, and email receipts. The prospects in the regional market are increasingly fueled by growing attractiveness of alternative data among hedge fund managers. Extensive research in data science models has opened up incredible avenues in Asia Pacific alternative data market. Europe has also been a promising market. The rise in use of alternative data for ascertaining the health of economy in developing countries of the region will also boost the prospects of the market. The evolving data privacy regulations in Europe, however, have hampered the prospects to an extent.