The saying might be true for other sectors, but it’s nothing new for the financial industry. The hunger for data is only increasing as the global spend on financial information grew by 3.57% last year, reaching a record $28.48 billion. This growth rate is the highest since 2011 and is largely driven by risk & compliance requirements as well as an increased need for quality pricing, reference and valuation data to power investment strategies.
The Market Data business is dominated by Bloomberg (33%) and Thomson Reuters (26%), however specialised data vendors can achieve good margins and prize realization by offering data sets for specific asset classes, geographies and job roles.
The intrinsic value of data is driven by the following key factors:
- Uniqueness – Exclusivity of the data source
- Coverage – Completeness of e.g. regional or asset class coverage
- Timeliness – Update rates/latency
- Data quality – Reliability, normalization and comprehensiveness of data model
The final value driver consists of value add services such as delivery mechanism, user interface and workflow tools. As a general rule, the ability to reduce costs or increase profits will determine the value of the combined data and value-added service.
In its most basic form, a data delivery mechanism consists of normalized data sets being transferred via batch delivery (e.g. FTP) for use in clients’ spread sheets and other desktop analysis tools.
The next step from there would be to offer API access that allows applications to directly import data. If content updates frequently and timeliness is of value to the end-user, the delivery can be shifted to push updates to publish individual updates to users as soon as they become available.
Finally, by building data visualization, analysis and investment tools directly in a cloud platform, the vendor can offer the user a complete workflow tool that allows them to visualize data, analyse it and collaborate across the investment community.