In some industries, sometimes a product comes along and it revolutionizes the entire market, seemingly overnight. Think of what Apple did to mobile phones or Google did to search. There are quieter, yet no less revolutionary, changes underway in the financial data and intelligence market. Nimble companies in this space have clearly chosen 2014 as the year in which they will ditch decades-long processes in favor of more data-driven, automated, impactful methods of collecting, reviewing, and acting on information. These first movers are redefining expectations for financial data analytics, and their competitors would be wise to take heed.
For companies that continue to collect and review data the same way they did 20 years ago, this year will serve as a wakeup call. This shift has been a long time coming. Even after the market meltdown in 2008 and the passage of SEC regulations for using standardized financial data disclosures, apprehensive firms clung to slow -- or no -- evolution, while their more innovative counterparts were busy investigating technologies capable of shaking up the status quo to better serve clients.
Today, rapid technological advances have made it possible for developers to scour the web or use application programming interfaces (APIs) to gather and create datasets. Because of this advancement, informed companies are no longer willing to pay exorbitant prices to access data. Firms are demanding datasets that are unique and provide value beyond the standardized data points, such as net sales, revenue, employee figures, and other information that is available in 10-Qs, 10-Ks, 8-Ks, and other filings.
Demands are changing
The conversation in the past few years has been about how to collect and access the large volume of available financial data. However, the market hasn't yet seen widespread change in how data is used or analyzed. Smart investors, financial officers, and account managers now demand more than just traditional information. They are diving into the detailed footnotes of disclosures to find items that shine a light on the inner workings of companies. There is a push to look at the outlying information contained within these databases and detailed notes that will create unique datasets and improve financial data analytics.
The companies that embrace change as the harbinger of growth are responding to that demand. They’ve been innovating along the fringes of the financial technology and data analytics market, and they’re doing the kind of analysis that could move them into leadership positions. These non-traditional companies are developing new applications to access financial disclosure data and transform it into useful analytics for running investment firms and corporations. Until now, these firms have operated under the radar, but their willingness to adopt forward-thinking data visualization and analytics technologies that address governance, risk, and compliance needs will likely propel them into the spotlight.
Meanwhile, the large market players continue to distribute data via antiquated technology and will be hard-pressed to pivot their delivery models once they realize what clients are demanding. For too long, firms have been stuck buying huge, expensive datasets and then parsing through the data for what they need. But the landscape is shifting. Thanks to the aforementioned technological advances, it’s becoming possible for firms, or even individuals, to access only the data they need for analytical purposes.
What’s next for financial data analytics?
The consumption of this data by investors, managers, and corporations will drive the evolution. Data visualization technologies will allow companies to clearly see and review the data. The next step in the evolution of financial data technology is delivering these analytics via mobile devices. Analysts predict that the product development for mobile applications will outpace the desktop computer in the coming years, and the financial technology market needs to follow suit.
The financial data analytics and technology market is poised to bring clear, valuable data to investors, analysts, and account managers. Rather than continuing with the traditional method that has dominated the last 20 years of this market, tomorrow’s top firms are demanding the unique points that yield insightful investment decisions today. While large desktop data terminals may have their place, today’s investors will demand the flexibility and detail that will provide a competitive edge over their peers. They want the instant access of logging on to a mobile device to review and analyze information -- and for a fraction of the cost they are currently paying. The mobile market is growing rapidly, and analytical technology companies that get ahead of this movement will have the opportunity to become market leaders.