North America Alternative Data Management Market

Market Overview

The North America alternative data management market size is estimated to reach USD 110727.79 million by 2030, with a CAGR of 57.40%.

Information acquired from non-traditional sources is referred to as alternative data. Alternative data analysis can reveal insights unavailable from traditional data sources in a specific business.

The definition of alternative data differs from one sector to another. For example, in banking, a lender may historically use an applicant's credit score to assess risk and determine the likelihood of a loan being repaid. Alternative data that demonstrates the applicant's history of meeting financial responsibilities, such as paying a cell phone bill on time each month, might be important information when the applicant has no past credit history. Suppose a bank uses alternative data sources to analyze a loan's risk. In that case, it may include the applicant's history of timely rent payments and whether or not the applicant consistently pays more than the required minimum monthly payment on credit card bills.

The growth of data from mobile devices, satellites, sensors, and websites has resulted in massive amounts of organized, semi-structured, and unstructured data, also known as big data, in recent years. All that data may be mined for information, potentially assisting people in making better data-driven decisions. Some traditional research businesses have branched out to become alt-data providers in response to the need for alternative data, selling corporate clients' data from non-traditional sources and services to evaluate that data.

Market Dynamics

Drivers

Increasing investment by hedge fund managers in alternative data management market in North America

The legislative landscape surrounding data collection, use, and dissemination has resulted in data sourcing that is constantly changing. Regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) require that all sorts of data be collected in a scientific and compliant manner. The element has significantly impacted the alternative data market's growth dynamics. Adopting alternative data analysis tools for credit card transaction data has increased demand.

The enormous attractiveness of data in anticipating sales and projecting economic signals that may direct future purchase intentions is a primary consumer proposition behind the surge in demand. As a result, hedge fund managers have increased their investment, improving the revenue potential of players in the alternative data market. Data scientists' increasing desire for enhanced platforms to make sense of non-traditional data opens up new investment opportunities for alternative data companies. Hedge funds will increasingly employ alternative datasets in the future, driving demand for new platforms in the alternative data market.

Restraints

Lack of Solution Vendor and Diversified Alternative Data Requirements

Purchasing sentiments from a data provider has some disadvantages: The sentiment value is determined by a black-box algorithm. Excess data is lost when text is converted to a number value. With so many people consuming the same information, alpha may suffer. Textual data, such as filings, research papers, and news, provides predictive and foresight information.

Sellers and buyers can use it for investment analysis, asset management, theme trading, risk management, stock selection, and other purposes. Due to the wide range of specifications and implementations, vendors face significant challenges in pre-processing and selling off-the-shelf products.

Major stable and market data solution companies produce off-the-shelf frameworks and tools for database calculation, storage, and purification. Things are different in the alternative data space. Investment banks and hedge funds exercise extreme caution when interpreting alternative data. They spend far more time and money developing technical skills before moving on to business considerations.

The proliferation of solution vendors will indicate competence for leveraging alternative data because they focus on creating standardized processing functionalities. It will save money while also expediting the development process for customers. As a result, the lack of solution vendors and diverse alternative data requirements are expected to hinder the growth of the alternative data management market during the forecast period.

Regional Analysis

The North America alternative data management market is divided into the US, Canada & Mexico, based on country.

In 2021, the market for alternative data management was dominated by North America. Over the prediction period of 2022 to 2030, the area is expected to maintain its dominance. The emergence of a slew of alternative data suppliers in the United States is a major driving force. Credit and debit card transactions, email receipts, geolocation (foot traffic) records, mobile usage, satellite, weather data, social and sentiment data, and online scraped data are examples of alternative data provided by companies such as Advan, Eagle Alpha, M Science, and YipitData. Acquisitions and collaboration initiatives by organizations like Nasdaq and S&P Global Platts are projected to boost regional market growth even more.

Segmental Analysis

The North America alternative data management market share has been segmented by data type, industry, and end-user.

Based on data type, the alternative data management market is divided into credit, and debit card transactions, email receipts, geolocation (foot travel) records, mobile application usage, satellite & weather data, social & sentiment data, web scraped data, site traffic, and others. The market is projected to be dominated by credit and debit card transaction data. It's due to the data providers' comprehensive ability to categorize customer spending by age, seller, geography, gender, and other criteria. Corporations use transaction data with data to offer previously hidden insights into consumer purchasing habits, allowing investors to invest in profitable businesses.

According to industry, the North America alternative data management market is divided into automotive, BFSI, energy, industrial, IT & telecommunications, media & entertainment, real estate & construction, retail, transportation & logistics, and others. The market is expected to be overpowered by the BFSI industry segment. The rise can be ascribed to the rising need for meaningful data from various BFSI firms, including life insurance companies, unit trusts, pension funds, private equity funds, mutual funds, and hedge funds. These entities actively seek alpha by utilizing the hidden predictive potential of such sources.

Based on end-user, the alternative data management industry has been divided into hedge fund operators, investment institutions, retail enterprises, and others. The end-user segment of retail companies is likely to dominate the industry.

Alternative data, such as sentiment data, social media, satellite, and geolocation, is being used by retailers to make strategic decisions, which has driven the rise. Geolocation data is used extensively by retailers such as Target, Gap, Walmart, and others. In an environment where internet shopping is rapidly gaining market share, it supports large retail enterprises and malls in matching foot traffic with sales numbers.

Recent Developments

• December 2021, the award-winning artificial intelligence company Yewno and Korea's leading ETF provider Samsung Asset Management shared the latest metaverse development and investment themes at a virtual regional press conference hosted by Nasdaq.
• May 2022, AlphaSense and Sentieo announced the completion of AlphaSense's acquisition of Sentieo, a financial intelligence platform designed explicitly for investors' research needs. The merger represents two strong teams joining forces to bring even more innovation to the market. Sentieo will continue to operate as a wholly-owned subsidiary of AlphaSense under its current management.
• February 2022, through its Wall Street Insights® (WSI) research collection, AlphaSense, the premier market intelligence and search platform, established a strategic agreement with Goldman Sachs, enabling its aftermarket research to be uniquely available on the AlphaSense platform.