Alternative Data Industry 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.
Gather more insights about the market drivers, restrains and growth of the Global Alternative Data Market
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.
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Alternative Data Market Segmentation
Grand View Research has segmented the global alternative data market based on data type, industry, end-users, and region:
- Alternative 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
- Alternative Data Industry Outlook (Revenue, USD Million, 2017 - 2030)
- Automotive
- BFSI
- Energy
- Industrial
- IT & Telecommunications
- Media & Entertainment
- Real Estate & Construction
- Retail
- Transportation & Logistics
- Other Industries
- Alternative Data End-user Outlook (Revenue, USD Million, 2017 - 2030)
- Hedge Fund Operators
- Investment Institutions
- Retail Companies
- Other End-users
- Alternative Data Regional Outlook (Revenue, USD Million, 2017 - 2030)
- North America
- Europe
- Asia Pacific
- South America
- Middle East & Africa
Market Share Insights
- 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.
Key Companies profiled:
Some prominent players in the Alternative Data market include
- 1010Data
- Advan
- Dataminr
- Earnest Research
- M Science
- Preqin
- RavenPack
- Thinknum Alternative Data
- UBS Evidence Lab
- YipitData
Order a free sample PDF of the Alternative Data Market Intelligence Study, published by Grand View Research.
