Alternative Data Market Size, Share, & Trends Analysis Report By Data Type (Card Transactions, Mobile Application Usage, Social & Sentiment Data), By Industry, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global alternative data market size was valued at USD 2.7 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 54.4% from 2022 to 2030. The key drivers attributed to market expansion include the significant increase in the types of alternative information sources over the last decade. While web scraping and financial transactions are the most common sources, the emerging sources, including mobile devices, social media, satellites, sensors, IoT-enabled devices, and others, are gaining wider popularity. As such, the companies are actively expanding their offering by gathering information from all such sources.

The rising demand from hedge funds is expected to boost market growth significantly. More than half of hedge fund managers are now using it to gain a competitive edge by generating outperformance and supporting the risk management processes. More than 400 companies are engaged in selling alternative data to hedge funds, thereby contributing significantly to market revenue. Alternative data refers to the undiscovered which is not within the traditional sources such as SEC filings, financial statements, press releases, and management presentations. It is compiled from various sources such as e-commerce portals, public records, social media, financial transactions, web traffic, mobile devices, sensors, satellites, etc.

Applying specific analytics to this compiled set yields additional insights that were previously unknown, and are used by investors to evaluate investment opportunities. As this new information is a crucial differentiator that contributes to the alpha (market outperformance), the buy-side entities, such as hedge funds, mutual funds, private equity funds, pension funds, unit trusts, and life insurance companies, are actively using it to build fundamental investment models to outperform the market.

Alternative data, compared to the usual financials gathered from traditional sources, is difficult to utilize in strategic plans. It is often unstructured, lacks specific patterns, and is collected very frequently. Thus, the investors need expert personnel and various technologies, including analytics platforms, fluid data architecture, data science, and testing tools, to leverage the meaningful information from it. Further, Artificial Intelligence (AI) tools, such as machine learning and Natural Language Processing (NLP) are gaining popularity for analysis. AI-enabled processing increases information generation and helps to extract hidden patterns. As such, AI-based analytics tools are anticipated to boost the growth of the market for alternative data over the forecast period.

While most companies utilize various sources and tools to gain insights and predictive capabilities, regulatory constraints are expected to be the primary challenges for the market players. The increasing emphasis on regulations such as California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR), along with other privacy regulations, pose threats to some of the alternative data sources. For instance, sources such as mobile devices, social media, and mobile application usage often conflict with consumer privacy issues. Any dataset that companies analyze needs to be completely free from Personal Identifiable Information (PII). Therefore, the providers’ compliance with privacy policies is a crucial factor for sustaining the market.

Data Type Insights

The credit and debit card transactions segment led the market for alternative data and accounted for revenue share of more than 15.0% in 2021. This high share is attributable to the high demand for this type of data from investors, coupled with the presence of numerous providers of credit card transaction data. This segment is also expected to register the highest growth rate over the forecast period from 2022 to 2030 due to the advanced capabilities of the data providers, such as sorting customer expenditure based on gender, age, seller, geography, and other metrics. The companies are co-relating transaction data with different types of data to extract hidden insights on consumer expenditure patterns, thereby enabling investors to invest in profitable businesses.

The social and sentiment data and mobile application usage segments are estimated to witness a significant growth rate over the forecast period. The growth is attributed to the rising demand for smartphone usage from the retail industry. Retail companies utilize it to analyze the user’s e-commerce application usage patterns. Further, the retailers are increasingly using sentiment data from social media websites to understand user interests from various groups and regions. The geolocation (foot traffic) from satellite images is also gaining popularity to analyze the customer store visits on a particular time and days, thereby framing the operational strategies for operating the stores. Although these sources have low accuracy compared to transaction data, the companies are finding ways to connect the dots to derive insights.

End-user Insights

The hedge fund operators segment dominated the market for alternative data and accounted for a revenue share of around 70.0% in 2021. This high share is attributable to the high demand from hedge fund companies. The hedge fund operators, such as Blackrock Advisors, AQR Capital Management, Bridgewater Associates, among others, highly utilize alternative data to generate alpha. This segment is also expected to register a steady growth rate over the forecast period from 2022 to 2030 due to the increasing need for various sources to analyze the industries and find lucrative investment opportunities. Following this, the investment institutions segment also held a significant market share in 2021 due to institutional investors' increasing demand to gain a competitive edge.

The retail companies’ segment is expected to register the highest CAGR from 2022 to 2030. The growth is attributed to novel use cases of alternative data, such as geo-location, satellite, social media, and sentiment data by retail companies to take strategic decisions. E.g., Retail firms, such as Walmart, Target, Gap, and others, prominently procure geo-location data. In an environment where online shopping is rapidly capturing the market share, it helps major retail shops and malls co-relate foot traffic and actual sales. Further, it also supports the stores to decide locations for the new shops.

Industry Insights

The Banking, Financial Services, and Insurance (BFSI) industry led the market for alternative data and accounted for a revenue share of more than 15.0% in 2021. The growth can be attributed to the increasing demand for insightful data from various BFSI entities, including hedge funds, mutual funds, private equity funds, pension funds, unit trusts, and life insurance companies. These entities actively aim at gaining alpha by utilizing the hidden predictive capabilities of such sources. The retail industry segment is projected to exhibit a significant CAGR of more than 56.3% from 2022 to 2030. Some of the highest growing segments include energy, real estate, and construction, and transportation and logistics.

Based on industry, the market has been further segmented into automotive, industrial, IT and telecommunications, media and entertainment, and others. The IT and telecommunications industry also held a significant revenue share of the market in 2021. Low bandwidth, dropped calls, and poor network are crucial issues for telecom companies. Therefore, operators increasingly emphasize optimizing their services with equipment monitoring, capacity planning, and preventive maintenance by using alternative data. Further, these companies are using demographic, social and sentiment, and browsing behavior data for targeted ads and region-specific marketing strategies.

Regional Insights

North America dominated the alternative data market and accounted for revenue share of around 68.0% in 2021 and is anticipated to maintain its dominance over the forecast period. The high share of the region is attributed to the presence of numerous players in the market, such as Advan, Eagle Alpha, M Science, and UBS Evidence Lab. The early adoption of alternative data from different industry verticals in the country also results in a high market share. Currently, more than 70% of the asset managers in the U.S. are inclined towards the use of alternative data in their investment process.

In Europe, the market for alternative data held a significant revenue share in 2021, owing to substantial alternative Assets under Management (AUM). These assets are primarily distributed across various classes, including private equity, hedge funds, real estate, and natural resources. The asset management companies are increasingly leveraging alternative data to frame profitable strategies to gain alpha. The Asia Pacific region is expected to emerge as one of the fastest-growing regional market because of the increasing use of data-driven research by investors. The regional market is anticipated to open significant growth opportunities for companies from emerging economies, such as India, Singapore, Thailand, and China.

Key Companies & Market Share Insights

The market for alternative data is highly fragmented with the presence of numerous companies; especially the providers of web scraped and credit/debit card transaction data. Some market players are engaged in acquisitions and partnerships to expand their capabilities. For instance, NASDAQ’s alternative data platform Quandl, that builds investment models by identifying datasets from local firms, has partnered with numerous insurance companies in the U.S. Through this partnership, Quandl gets access to insurance policy information on new car purchases. The company sorts vehicle sales data by buyer demographics, vehicle manufacturer, vehicle model, and region. Such sales estimates insights allow manufacturers and investors to focus on profitable areas of business. Some of the prominent players in the alternative data market include:

• 1010Data

• Advan

• Dataminr

• Earnest Research

• M Science

• Preqin

• RavenPack

• Thinknum Alternative Data

• UBS Evidence Lab

• YipitData 

Alternative Data Market Report Scope 

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the global alternative data market report based on data type, industry, end-users, and region:

• Data Type Outlook (Revenue, USD Million, 2017 - 2030)

  • Credit & Debit Card Transactions

  • Email Receipts

  • Geo-location (Foot Traffic) Records

  • Mobile Application Usage

  • Satellite & Weather Data

  • Social & Sentiment Data

  • Web Scraped Data

  • Web Traffic

  • Other Data Types

• Industry Outlook (Revenue, USD Million, 2017 - 2030)

  • Automotive

  • BFSI

  • Energy

  • Industrial

  • IT & Telecommunications

  • Media & Entertainment

  • Real Estate & Construction

  • Retail

  • Transportation & Logistics

  • Other Industries

• End-user Outlook (Revenue, USD Million, 2017 - 2030)

  • Hedge Fund Operators

  • Investment Institutions

  • Retail Companies

  • Other End-users

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • South America

    • Brazil

  • Middle East & Africa