Two-thirds of UK financial services companies are now using alternative data to improve decision making, according to research by online data specialist Oxylabs, which reports non-traditional information is most commonly obtained via “web scraping” new sources of information such as social media and website traffic.
For Oxylabs’ survey 252 senior data decision-makers across the UK’s finance sector were questioned on their current approach to data management. Respondents were selected across a broad spectrum of financial service companies, including retail, commercial and private banks, investment and wealth management firms.
The responses show that while “traditional” sources such as official public data (57%) and third-party data (44%) are still considered valuable, they have been overtaken by the rapid rise in alternative data. Almost two-thirds (63%) of those polled are using alternative data to improve their decision-making process.
Alternative data can be used to better understand business performance, market trends and future investment opportunities. Financial services firms that can convert alternative real-time data into accurate and actionable insights are three times more likely to report significant improvements in decision-making, according to PwC research.
Oxylabs’ findings highlight web scraping and financial transactions as the most common sources of alternative data for investors and financial services firms. This consists of “non-traditional” data sources that have not previously been analysed, including app downloads and usage metrics, social media sentiment, website traffic statistics, search and other non-traditional data sources such as senior staff hirings, corporate flight activity, and supply chain news.
Julius Černiauskas, CEO at Oxylabs, commented: “The huge increase in online alternative data sources has instigated a sharp spike in demand for web scraping services from financial services firms looking to overcome the challenges of the pandemic. At Oxylabs, we have experienced a threefold surge in inquiries from financial services firms over the last year, so we were keen to learn how exactly these organisations were approaching data gathering and analysis.” India and US-based market research and consulting company Grand View Research has predicted that the global alternative data market is predicted to grow at a compound annual growth rate (CAGR) of 40.1% from 2020 to 2027.
Černiauskas said: “Looking at the research, it is clear that financial services firms are increasingly harnessing alternative data to gain valuable, previously unseen insights into business performance, market trends and future investment opportunities. Those organisations that are data-driven will be able to quickly convert this valuable alternative data into actionable insights so they can make better strategic decisions in an uncertain post-Covid economy.”
Oxylabs’ white paper ‘The Growing Importance of Alternative Data in the Finance Industry’ is available here.