Page 9 - AeM_May_2022

RESEARCH, ANALYSIS & TRENDS

(BFSI), reported to have collectively led the alternative about investments, innovation, M&A and partnerships
data market in 2021 with a revenue share of more than with early-stage and private placement companies.”
15.0% during the period, there are other alternative
data early adopters. The benefits of employing alternative data are seem-
ingly innumerable. “Among the most important is its
A few notables making great strides in the space in- ability to derive proprietary real-time signals providing
clude online retailers, SaaS purveyors and hospitality. alternative viewpoints, unforeseen insights or perhaps
These and other such industries are tapping the power both,” notes Valentine. “The ability to go beyond stand-
of this alt intel for an array of projection activities, with ard financial data to understand company performance,
predictive and algorithmic modeling, demand and trend market dynamics or consumer behavior is extraordinar-
forecasting, lead generation and competitive intelli- ily valuable for companies and investors who desire to
gence among them. plan and execute in a calculated, enlightened and in-
tentional way with mitigated risk.”
“There are numerous categories of alternative data,
and the businesses who fare best are those with the Even amid the extreme upside, a number of challenges
capability to mine insights from the collected data and plague processes for incorporating alternative data into
cross reference and combine it with other types of data, the investment and risk models. “As compared to the
thus enabling investors to identify profitable trends and traditional financial data collection, alternative data as-
strategic opportunities,” notes Julia Valentine, Manag- sets are known to be unstructured, lack specific pat-
ing Partner at professional services firm AlphaMille. terns and, given its high collection frequency, require
significant storage and processing resources,” says
According to the Alternative Data Global Market Report Vita Koreneva, AlphaMille Managing Partner.
2022, North America was the largest region in the alter-
native data market in 2021. The main categories of al- “Collecting and analyzing alternative data sets certainly
ternative data—characterized as the non-traditional requires navigating any number of difficulties or outright
type from conventional sources that can serve as an obstacles,” Valentine warns. “This includes the procure-
indicator of future performance—are credit and debit ment of expert personnel and cutting-edge technolo-
card transactions, email receipts, geo-location (foot gies like analytics, fluid data architecture and data sci-
traffic) records, mobile application usage, satellite and ence platforms, as well as testing tools to actually lev-
weather data, social and sentiment data, web scraped erage meaningful insights gleaned from the data. For
data and web traffic. example, AI tools such as ML and Natural Language
Processing (NLP) are used for analyzing alternative
The driver behind this phenomenon is two-fold: inves- data, unlocking its insights and value and boosting the
tors’ appetite for using the data and the providers’ will- growth of these assets. ESG (Environmental, Social,
ingness to sell credit card transaction data,” Valentine Governance) data is a key example of alternative data
says. “Moreover, data providers have been enhancing where multiple providers in the public markets are sup-
their capabilities of sorting credit card transaction data plemented with the use of multi-modal AI to collect data
by gender, age, seller, geography and other metrics.” used by private markets that is unavailable through ex-
isting data providers.”
Of course, these types of drill down insights can make
it much easier to identify and evaluate opportunities, According to Valentine, starting or enhancing an alter-
especially when advanced analytics and data science native data platform involves multiple steps: design,
are applied to examining alternative data sets. plan, source data, integrate, transform, use ML, deploy,
support and evaluate. A shorter, five-step implementa-
According to Valentine, these offerings produce a cru- tion model is also available for entities that are ready
cial differentiator generating alpha for buy-side entities for a fast route to value creation.
like hedge funds, mutual funds, private equity funds,
pension funds, unit trusts and life insurance companies. With such specialized tools and skillsets involved with
mining and distilling alt data, many understandably out-
"It’s essential for investors to have curated alternative source the function.
data to make their teams, innovation and companies
more competitive,” said Tracy McWilliams, CEO of In- “A few key considerations for a prospective profession-
spire Global Ventures, which launched the JASPY sin- al services partner involve their ability to quickly inte-
gle source private company management system. grate new solutions with existing infrastructure; cost of
“Machine learning-enabled alternative data analytics data feeds; and proving what they deem to be optimal,
assist our clients, mid-market companies and invest- uncorrelated data sets genuinely add quantifiable value
ment firms, make faster and more informed decisions

May 2022: Security & Data Privacy in Marketing 9