How is Alternative Data Giving Investment Managers the Edge?

Posted on : 29-03-2018 | By : richard.gale | In : Consumer behaviour, Data, data security, Finance, FinTech, Innovation

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Alternative data (or ‘Alt-Data’) refers to data that is derived from a non-traditional source covering a whole array of platforms such as social media, newsfeeds, satellite tracking and web traffic.  There is vast amount of data in cyber space which, until recently remained untouched.  Here we shall look at the role of these unstructured data sets.

Information is the key to the success of any investment manager and information that can give the investor the edge is by no means a new phenomenon.  Traditional financial data, such as stock price history and fundamentals has been the standard for determining the health of a stock. However, alternative data has the potential to reveal insights about a stock’s health before traditional financial data. This has major implications for investors.

If information is power, then unique information sourced from places not-yet-sourced is giving those players the edge in a highly competitive market. Given that we’re in what we like to call a data revolution, where nearly every move we make can be digitized, tracked, and analysed, every company is now a data company. Everyone is both producing and consuming immense amounts of data in the race to make more money. People are well connected on social media platforms and information is available to them is many different forms. Add geographical data into the mix and that’s a lot of data about whose doing what and why. Take Twitter, it is a great tool for showing what’s happening in the world and what is being talked about. Being able to capture sentiment as well as data is a major advance in the world of data analytics.

Advanced analytical procedures can pull all this data together using machine learning and cognitive computing. Using this technology, we can take the unstructured data and transform it into useable data sets at rapid speed.

Hedge funds have been the early adopters and investment managers have now seen the light are expected to spend $7bn by 2020 on alternative data.  All asset managers realise that this data can produce valuable insight and give them the edge in a highly competitive market place.

However, it could be said that if all investment managers research data in this way, then that will put them all on the same footing and the competitive advantage is lost. Commentators have suggested that given the data pool is so vast and the combinations and permutations analysis is of data complex, it is still highly likely that this data can be uncovered that has not been uncovered by someone else. It all depends on the data scientist and where they decide to look. Far from creating a level playing field, where more readily available information simply leads to greater market efficiency, the impact of the information revolution is the opposite. It is creating hard-to access pockets for long-term alpha generation for those players with the scale and resources to take advantage of it.

Which leads us to our next point. A huge amount of money and resource is required to research this data, and this will mean only the strong survive. A report last year by S&P found that 80% of asset managers plan to increase their investments in big data over the next 12 months. Only 6% of asset managers argue that it is not important. Where does this leave the 6%?

Leading hedge fund bosses have warned fund managers they will not survive if they ignore the explosion of big data that is changing the way investors beat the markets. They are

Investing a lot of time and money to develop machine learning in areas of its business where humans can no longer keep up.

There is however one crucial issue which all investors should be aware of and that is the area of privacy. Do you know where that data originates from? Did that vendor have the right to sell the information in the first place?  We have seen this illustrated over the last few weeks with the Facebook “data breach” where Facebook sold on some of its users’ data to Cambridge Analytica without the users’ knowledge. This has wiped $100bn off the Facebook value so we can see the negative impact of using data without the owner’s permission.

The key question in the use of alternative data ultimately is, does it add value? Perhaps too early to tell. Watch this space!

Data Analytics – Big in 2013…Bigger in 2014

Posted on : 31-01-2014 | By : john.vincent | In : Data

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We didn’t produce our annual predictions this year, but as we approach the end of January we thought the topic of data analytics trends deserved some attention. So, we’ve listed the Top 5 trends in this space that we believe will be prominent, or emerge stronger, during 2014. We strongly believe that the data analytics theme and driving decisions and future strategies will be at the forefront (see our other article on moving from hype to execution).

As always, we are interested in your thoughts!

1) More emphasis on Predictive Analytics

Looking back on past performance, peer groups and trends has been the traditional way of shaping and product and service strategies. However, with the improvement in predictive analytics, both from an infrastructure perspective with products like Hadoop managing unstructured data inputs, tools and a new breed of Data Scientists, technology leaders can now work closely with the business to drive decision making.

2) The Mobile Data surge continues

Seems that consumers can’t operate now with their trusty smartphone or tablet. Indeed, it is estimated that in 2014 mobile internet traffic will overtake desktop usage. With the amount of data that consumers download (and tariff limits increasing accordingly), the possibilities of companies using this information to analyse customer behaviour and adapt accordingly is huge.

3) Wearables and the “Internet of Things” revolution

For the first time we are seeing this whole subject make its way onto the CIO agenda. In 2013 we saw some activity, with the release of watches from Samsung and Sony (and the continued speculation of iWatch in 2014), smart health monitors, telematics devices and so on. For this year, expect the pace to pick up with organisations looking at new products and how to tailor the data to differentiated service offerings (such as insurance premiums).

4) Data Visualisation – Part of Business as Usual

The ability of business users to take more control of the organisational data, drive “what if” scenarios and visualise through dashboards have really taken off in the last few years. Once the data was transported out of the rigidity and control of central IT departments through to the users for agile manipulation, products like Qlikview, Tableau, Board and the like have really taken off. We expect this to become an expected part of the end user toolkit in 2014 and also see some consolidation/acquisition in the provider market.

5) On-Demand Analytics develops further

Cloud computing made great steps in 2013, with Microsoft Azure, Amazon Web Services and other providers extending the infrastructure, product sets, security and pricing to a level that is starting to entice customers away from build to buy.  We expect a further increase in shifting from on-premise infrastructure to running data compute analytics and business intelligence in the Cloud in 2014.

 

 

Innovation drives outdoor digital advertising

Posted on : 30-09-2013 | By : john.vincent | In : Innovation

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One of our current clients is in the media space and recently I took the time to visit their digital playground, where they showcased new innovations for their own clients. It was really interesting to see how new technology will change the way that we currently behave and interact in the “space between the boxes” (meaning the journey from home to work location).

Prior to visiting I, like I’m sure many people, hadn’t really though much about how I use my travelling time outside of catching up on emails, preparing for meetings and generally keeping up with events. I certainly hadn’t thought about interacting with the “digital environment”.

Traditionally, companies such as CBS, Clear Channel and JCDecaux have provided an outdoor advertising offering through street furniture, billboards and screens in with a static physical or digital display. We’ve all seen the transition from the standard posters to screens that display adverts using business intelligence to target consumers based on location, time of day, footfall etc…

As companies look to re-balance the percentage of revenue to a larger digital portfolio they are also looking at new techniques and innovation to increase business.

Firstly, in terms of the “legacy” estate, there is an opportunity to increase the mobile digital experience via smartphones through the use of NFC and QR codes with campaigns. For example, by placing these at a standard place on the outdoor furniture, advertisers can create a visual direction to it with standard posters from which customers can interact, access more content, order products, integrate with social media etc…

A recent example of this is the announcement of the partnership between Clear Channel and Metro where consumers can tap or scan the interactive tags on 10,000 of the bus shelters to access free content from the Metro site. This is a great example of the marriage of new and old technology to create a new customer experience. 

On the existing digital displays, the possibilities go further as the screen content can be changed dynamically based on interaction with the user or other variables. For example, screens can display live feed information such as events and news pushed directly from content servers. An example of this is where the latest job adverts are displayed real time from agencies, countdowns to an event launch or messages from the public through twitter #hastags responding to questions posed by companies (carefully vetted of course…).

Another example of this interaction is allowing the smartphone to display tailored content from the advertiser by scanning the a QR code and then receiving an additional user experience (basically experiencing the advert on their own terms …). There is still some way to go though, with a recent survey from CBS Outdoor  stating that only 11% of European consumers have scanned an outdoor enabled QR code.

However, the real innovations are coming through actually enabling and tailoring a direct, often multi-sensory, connection between the advertisement and the consumer. Already companies have been trialing the touchscreen and motion sensitive screens, allowing consumers to navigate as they do on tablets and smartphones, play games, select product options, take pictures of themselves to upload into adverts etc… Going forwards there needed  we expect technology to develop further to simplify the interaction between the consumer and the advert, limiting the amount of manual or prompted intervention.

What is really interesting is where technology is now emerging to accurately measure in real time the type and volume of people that see ads in any given location and at any time of the day. An example of this is with Amscreen using Quividi technology to assess who is looking at the screen, for how long, age and sex to provide accurate information from which campaigns can be tailored. Combine this with the interactive aspects, which are now including other sensory experiences such as sound or smell along with motion, and the possibilities are really interesting.

Of course, there’s a fine line in interactive advertising…if not considered carefully it can be seen as impinging on a consumer’s personal space or breaching data privacy boundaries. Whilst innovative for the provider, many consumers will still want the traditional channels of print, television and radio with which they feel more comfortable (and in control).

That said, over the coming years expect to see a  much enhanced outdoor consumer advertising experience (seems Ridley Scott was not far off with Blade Runner…). If you don’t want to partake then you may need to keep your eyes either shut or firmly on the “old fashioned” e-book reader…