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RESEARCH, ANALYSIS & TRENDS

Alternative data-driving extreme market

research disruption

Numerous indicators make clear that the next native data sets are being compiled from wide ranging
five years will usher in extreme transformation and disparate sources. Everything from financial trans-
for a multitude of industries and sectors as well actions, satellites, sensors, and IoT-enabled devices to
as the global economy at large. This begs the e-commerce portals, public records, mobile devices,
question: what is driving such significant and social media, web traffic, and more. However, web
rapid change? This big question just might be scraping and financial transactions are, by far, the most
common methods of alternative data procurement.
answered in two words: alternative data.
So lucrative is the economic upside of alternative data
Companies that are slow to incorporate alternative data assets, the category is experiencing a veritable gold
into their R&D, marketing, investment, risk analysis and rush mentality that is driving extreme growth worldwide
other key processes expose themselves to extreme across practically every industry sector. This, as the
opportunity loss at best and operational peril at worst. global alternative data market size is expected to reach

USD $143.31 billion by 2030—a staggering increase
As one prime example, active investment management
firms—including hedge funds and even private equity from $2.7 billion in 2021—with the category forecasted
funds—incur the strategic risk of being outmaneuvered to expand at a compound annual growth rate (CAGR)
by competitors leveraging alternative data in their secu- of 54.4% from 2022 to 2030, according to Grand View
rities valuation and trading signal process. This as alter- Research.
native data has emerged as an essential tool for invest- As one industry case in point, investment firms are ac-
ment management firms seeking market outperfor- tively expanding their informational advantage by incor-
mance, known as “alpha.”
porating alternative data into their investment and risk
processes. An EY Global Alternative Fund survey found
As an ever-evolving methodology, the last decade has
ushered in a myriad of new types and sources of alter- that the vast majority (a full 70%) of hedge fund manag-
native data. Unlike traditional data, made available by ers and over half (56%) of private equity funds currently
financial exchanges and indexes, SEC filings, financial use, or plan on using, alternative data to support their
statements, corporate filings, analyst predictions, press investment process.
releases, management presentations and other well- Beyond banking and financial services and insurance
entrenched mainstream sources, today’s breed of alter-

8 May 2022: Security & Data Privacy in Marketing