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, 2020 - 2027

Report Overview

The global alternative data market size was valued at USD 1.06 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 40.1% from 2020 to 2027. The key drivers attributed to the market expansion include the significant increase in the types of alternative data sources over the last decade. While web scraping and financial transactions are the most common sources of alt data, 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 data from all such sources. The rising demand for alternative data from hedge funds is expected to boost market growth significantly. More than half of hedge fund managers are now using alternative data 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 (Alt-data) refers to undiscovered data which is not within the traditional data sources such as SEC filings, financial statements, press releases, and management presentations. An alternative data set is compiled from various sources such as e-commerce portals, public records, social media, financial transactions, web traffic, mobile devices, sensors, satellites, etc. On applying specific analytics on this compiled data, it 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.

Alt-data, compared to the usual financial data gathered from traditional sources, is difficult to utilize in strategic plans. It is often unstructured, lack 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 this data. Further, Artificial Intelligence (AI) tools, such as machine learning and Natural Language Processing (NLP) are gaining popularity for analyzing the data. AI-enabled data processing increases the information generation and helps to extract hidden patterns in the data. As such, AI-based data analytics tools are anticipated to boost the market growth over the forecast period.

While most companies utilize various data sources and tools to gain data-driven insights and predictive capabilities, the 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, data sources such as mobile devices, social media, and mobile application usage often conflict with consumer privacy issues. Any dataset that the companies analyze needs to be completely free from Personal Identifiable Information (PII). Therefore, the data providers’ compliance with privacy policies is a crucial factor for sustaining in the market.

Data Type Insights

The credit and debit card transactions segment led the alternative data market and accounted for more than 14% of the global revenue in 2019. 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 2020 to 2027 due to the advanced capabilities of the data providers, such as sorting customer expenditure data 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 data from the retail industry. The retail companies utilize such data 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) data from satellite images are 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 data sources have low accuracy compared to transaction data, the companies are finding ways to connect various datasets to derive insights.

Industry Insights

The Banking, Financial Services, and Insurance (BFSI) industry led the market and accounted for more than 15% of the global revenue in 2019. 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 data sources. The retail industry segment is projected to exhibit a significant CAGR of around 42% from 2020 to 2027. 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. 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 data, social and sentiment data, and browsing behavior data for targeted ads and region-specific marketing strategies.

Regional Insights

North America dominated the market and accounted for over 33% share of global revenue in 2019 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, Dataminr, Eagle Alpha, M Science, and UBS Evidence Lab. The early adoption of alt-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 non-traditional data such as alternative data in their investment process.

The European market also held a significant revenue share in 2019, 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 the fastest-growing regional market because of the increasing use of data-driven research by the 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 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global alternative data market report based on data type, industry, and region:

• Data Type Outlook (Revenue, USD Million, 2016 - 2027)

  • 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, 2016 - 2027)

  • Automotive

  • BFSI

  • Energy

  • Industrial

  • IT & Telecommunications

  • Media & Entertainment

  • Real Estate & Construction

  • Retail

  • Transportation & Logistics

  • Other Industries

• Regional Outlook (Revenue, USD Million, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

    • Mexico

  • Europe

    • The U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • South America

    • Brazil

  • The Middle East & Africa