Financial Firms Awaken to Opportunity to E-Commerce Their Data
Financial institutions are waking up to the fact that they are awash with potentially valuable data generated from their core business activities. As they seek to take commercial advantage of the data they generate, firms need to gain control over their datasets, creating a foundation upon which to build a viable data sales organisation.
This was one of several key messages from a panel session on financial data marketplaces at last month’s Data Management Summit Virtual USA, hosted by A-Team Group. The panel – E-Commerce Your Data – Turn your data into successful data products – featured a group of expert speakers, including Nicolas Doyen, Head of Product at TickSmith; Andre Craig, Executive Vice President at CanDeal Data & Analytics; Samantha Campbell, Chief Executive Officer at Alqami; and Rezso Szabo, Partner at Illuminate Financial.
With digitalization impacting almost every aspect of daily life, financial institutions and corporations have seen the quantity of data they generate from their commercial activities mushroom. At the same time, emerging technologies – like cloud-based data sharing capabilities and data marketplace platforms – are opening up opportunities to define, create and deliver data products that help meet the marketplace’s growing demand for insight as organizations of all kinds seek an information advantage over their competitors.
“The world has become a lot more digitised, and this means there is more valuable data being created and collected,” Campbell told the panel’s audience of financial practitioners. At the same time, “Innovative technology has been developed that improves data collection, aggregation, and storage and distribution of that data. On the demand side, businesses are looking for data for competitor analysis and other better ways to evaluate business decisions, mitigate risk and understand consumer behaviours.”
Illuminate’s Szabo likened today’s situation to an arms race, observing that “if we look back to any point in time, from the Middle Ages onwards, there was always the conundrum where available data outstripped what is possible to transmit, use and process. Our ambition grows and grows and technology is playing catch-up. Complexity is increasing, and the opportunity is for smart data owners to derive value from their data as the transmission mechanisms get better. Ultimately, it’s a win-win that benefits the investor in the end.”
A poll conducted during the panel indicated that firms are starting to take notice of this opportunity. The poll found that 46% or respondents were starting to explore tools and technologies available to help them to monetize their potentially valuable datasets. But while many may have spotted this opportunity, the audience heard that firms need to take some essential steps before they can implement systems to enable monetization of their data.
“Organizations are realizing that they have to become masters of their own data before they can start actually taking that data to market,” said TickSmith’s Doyen. “Many organizations have started experimenting with new tools that allow them to interact with their data in new ways. They are adopting Snowflake and DataBricks’ data sharing capabilities as a first step toward processing their data and packaging it for sale.”
For power data generators, like dealers and large or complex financial institutions, part of the challenge is coming to terms with the massive amounts of data created by their activities. CanDeal’s Craig said that firms necessarily have to deal with many different data types, which may vary according to regulatory jurisdictions or the conventions of individual markets. In CanDeal’s experience as an integrator of data from major Canadian bond dealers and banks, this data extends to transaction and pricing information, as well as reference data, terms and conditions and other information sets. “This data can be opaque and very fragmented,” he said, which can make it difficult to apply the structure to the datasets before they can be productized for market. Here, he said, a marketplace approach can help firms “get better governance, better structures, better quality and improved scope of coverage.”
Firms need to put in place a viable data strategy if they are to create a viable data sales operation, the audience heard. “The data has to be good,” said Doyen. Firms need to put the effort into ensuring that their datasets are in a high-value state that makes them easy to use, so that downstream users can purchase the data and rapidly start implementing it into their platforms. They need to ensure the data is clean, and they need to provide tools that allow the data consumer to explore the data before they purchase it, he said.
Alqami’s Campbell expanded on the key attributes that make a dataset valuable. “Our hedge fund clients prefer at least a minimum of three years, in some cases five years, of history for back-testing purposes. They need securities identifiers that are relevant to the region or jurisdiction they operate in. They need a frequency of delivery that suits their purposes, whether it’s daily or weekly. And they need completeness and accuracy. Finally, uniqueness is a consideration. The data ultimately needs to have an investment use-case, so being able to present and articulate that definitely helps with a successful sale.”
Getting to this point – actually selling the data – is a journey for many. Campbell told the audience that the best approach depends on the size of the organization and the level of data maturity. The data sales function needs to align with the business objectives of the organizations. She drew a parallel with the point at which an early-stage corporation, with 20 staff and new Series A funding, finds itself in need of a formalized HR function to put in place processes that to date had been handled by the CEO and the office manager. “You really have to create new processes and procedures, and potentially deploy new technology infrastructure” to support a viable data function and sales organization, she said.
Critical to that is understanding your target market, identifying who will find your data valuable, and then developing a go-to-market strategy accordingly. “Is it worth setting up your own sales team, or will you use third-party partners to assist with distribution?” Campbell asked. “The technology infrastructure is a major consideration for improving the overall process from data collection through to distribution.”
TickSmith’s Doyen suggested that adopting a data marketplace like the TickSmith Enterprise Data Web Store can help organizations identify valuable datasets and develop them into viable data products, as well as create a store front where prospects can find, evaluate and take delivery of data they consider valuable. This kind of approach, the panel agreed, can help data sellers classify and describe their data – in terms of format, category, risk classification and other factors – so that potential buyers can easily identify products that meet their needs.
Consuming organizations, meanwhile, benefit from access to sometimes highly granular datasets that can’t be found elsewhere, and the ability to experiment with the data products before committing to a subscription. On top of that, the approach streamlines the often highly manual and time-consuming process associated with traditional high-touch data sales, which can involve extended engagements with sales teams, wasting valuable market time.
What’s clear from the panel discussion is that firms are beginning to explore how best to go about monetizing the valuable datasets they create as a byproduct of their core activities.
The spectrum of maturity is quite wide. Some organizations are just starting to assess the datasets they own in order to understand how they may be useful and to whom. Others have identified and are creating new data products, and putting in place the technology infrastructure required to support a viable go-to-market strategy. And some already have sophisticated data sales teams in place, and are considering new cloud-based marketplace technologies as a way of streamlining their sales processes and distribution mechanisms.
Wherever you are on your journey toward data monetization, TickSmith can help. Get in touch now and let’s talk about your data strategy going forward and how best to execute on it.
In the meantime, if you wanted to dive deeper into the different strategies you can take to monetize your data, you can download the white paper below:
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