Data, data management, the cloud, it’s all here in this edition of Forecast 2021. Learn what emerging trends in data are store for the capital markets. Hear the analysis of industry pros from Crux Informatics, Knoema, MayStreet, S&P Global Market Intelligence and Xignite in this article by Sam Belden of Forefront Communications.
In our Forecast 2021 series, we bring you reflections and predictions from prominent firms and thought leaders from the industry. Today, we’re highlighting perspectives from the data and data management space, with thought leaders providing their perspectives on lessons learned from 2020, the rise of the cloud and the key trends to watch as firms recalibrate their approach to market data.
A data engineering and information supply chain operator
Michael Rude, Head of Go-to-Market
Have the events of 2020 offered any lessons as to what market participants want in terms of data?
Without a doubt, 2020 has shown that market participants want consistent, reliable data provided via flexible delivery methods that meet their data architecture needs. In terms of the contents of this data, we’ve seen a significant acceleration in the demand for ESG and alternative datasets.
The cloud has obviously fundamentally changed the way data is created and consumed. What’s the next big thing for data providers who leverage the cloud?
Currently, there’s a supply and demand gap where data consumers are moving data management to the cloud, but data suppliers are not there yet. It’s not obvious that data suppliers will solve for this gap because it’s an expensive proposition to store one’s data on each of the cloud platforms and manage delivery to a client’s cloud storage. Cloud providers are introducing marketplaces where data can be procured and then delivered to the client’s cloud storage or cloud data warehouse. The problem lies in that participation is not free, and some marketplaces take a percentage of license fees.
Additionally, cloud providers today are lackluster in terms of entitlements, trial mechanisms and data operations. Data suppliers worry about data controls and “line of sight,” and are hesitant to move their important data to the cloud. Legacy data agreements never envisioned the cloud, so there will be a reckoning as use cases evolve in the cloud.
Aside from the cloud, what are the most important data trends to keep an eye on in the years ahead?
We are quickly moving into a data-driven world. Decision making is increasingly driven by data, be that internal or external. Firms are building automation, machine learning and artificial intelligence capabilities to harness and extract knowledge from data. The challenge lies in the differing structure and quality of datasets. We expect to see an increased focus on firms making data “analytics ready.” This includes data quality validations, normalizations and transformations and schema protection.
In addition to that major theme, many trends are emerging as we watch the cloud environment manifest over the coming years. First, the strengthening of data marketplaces and exchanges – as more data flows into marketplace catalogs, we’ll likely see stronger search and evaluation tools and applications. We’ll also see increasing rationalization and outsourcing of non-competitive functions at various firms. Finally, improved mapping and data curation capabilities will emerge to enable data transformations at scale.
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A data and knowledge management platform provider
Owain Morgan, Chief Product Officer
Have the events of 2020 offered any lessons as to what market participants want in terms of data?
As the pandemic continues to drive our lives into the virtual realm, we are seeing the demand for data skyrocket. The market is responding by producing more data from different sources in different formats. This presents enormous challenges to data consumers who need to find, unify and extract insight from this rapidly expanding universe. Platforms like Knoema, which directly address these issues, are starting to become mainstream, as customers realize they have neither the expertise nor the desire to be in the data wrangling business.
The cloud has obviously fundamentally changed the way data is created and consumed. What’s the next big thing for data providers who leverage the cloud?
We believe there are three key areas to watch in this space. First, with the technical and operational challenges of managing data largely overcome, the weakest links on the supply chain will move upstream to evaluating and contracting for new datasets, and the downstream focus will shift to making available data more discoverable.
Second, as the physical impediments to sharing and joining data are removed, organizations will have much greater scope to collaborate and share data assets. Just as one man’s trash is another man’s treasure, so may it be with data.
Finally, we expect the velocity of change in data markets to increase exponentially, and with it the change in value of individual data sets. It is not difficult to imagine data assets evolving, just as financial assets did, from being exchanged in coffee houses at prices determined by a few knowledgeable insiders, to being traded in real time at prices set by a vast population of interested parties.
Aside from the cloud, what are the most important data trends to keep an eye on in the years ahead?
We are already beginning to see the awesome power of data, and with great power comes great responsibility. Social and ethical concerns over the use and misuse of vast data assets, whether with good or bad intent, are likely to grow and vex the minds of philosophers and policy makers alike. We view the march towards greater collection and sharing of data, or knowledge, as having unlimited potential to elevate the human experience.
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A market data and infrastructure provider
Naftali Cohen, Chief Revenue Officer
Have the events of 2020 offered any lessons as to what market participants want in terms of data?
As hard and tragic as it’s been for far too many, I think 2020 will ultimately be seen as a catalyst event across myriad industries. For the capital markets, one result has been the acceleration of the various digital transformation initiatives that many firms have been slow to implement. This is opening the door to multitenant solutions that can address the needs of multiple parts of the organization, and that in turn is increasing demand for more granular, lossless data to feed these systems. That’s obviously been a boon for any firm in the data space, but it’s also shined a spotlight on data quality like never before.
The cloud has obviously fundamentally changed the way data is created and consumed. What’s the next big thing for data providers who leverage the cloud?
We’re seeing significantly increasing demand for hybrid cloud solutions, which allow users to reap the primary benefits that come from the cloud – accessibility, dramatically reduced on-prem storage costs, infinite scalability, etc. – but also work for firms with compliance demands that restrict the use of full public clouds. In the market data space, where client needs are often similar, these types of shared, multitenant solutions are particularly attractive. The cost benefits of outsourcing the process of capturing and storing historical data to a third-party that allows you to download only the data you need, perform your analysis and then delete if you wish are immense.
Aside from the cloud, what are the most important data trends to keep an eye on in the years ahead?
Over the last year, we’ve seen quite a few hedge funds and asset managers who weren’t traditionally considered quants start to develop quantitative strategies. There are likely quite a few reasons for this, but probably near the top of the list is the democratization of data and technology infrastructures, which has dramatically lowered the cost of entry to the space. As increasingly powerful computing and storage resources further proliferate, and innovative new ways of tapping into shared data reservoirs become available, we expect to only see this trend continue.
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S&P Global Market Intelligence
A division of S&P Global which provides essential intelligence for individuals, companies and governments
Warren Breakstone, Managing Director and Chief Product Officer
Have the events of 2020 offered any lessons as to what market participants want in terms of data?
In complex, quickly changing environments, such as the one we are living through with COVID-19, we’ve found that clients are actively searching for new sources of information to complement the traditional data they rely on. This is evident in the demand for thoughtful commentary and research, along with an increased appetite for new, alternative data sources. On the latter, it isn’t enough for providers to simply make more data available — data’s only as valuable as the completeness, accuracy and usability it provides. To add true value, data must be carefully curated, cleansed, structured, linked and delivered via user-friendly, integrated channels. Additionally, maximizing the value of an organization’s data is at the forefront of many of our clients’ minds this year. Therefore, providing data at speed, in the way clients want and can easily use, remains essential. All this is manifested with the S&P Global Marketplace as it brings together traditional and alternative data available via flexible delivery channels, complements it with research and data visualizations and provides code queries to enable the research and analysis process for clients of all sectors.
The cloud has obviously fundamentally changed the way data is created and consumed. What’s the next big thing for data providers who leverage the cloud?
The addition of cloud storage and compute has enabled clients to get more out of data while more quickly and easily applying data science approaches to their research and decision processes. At the same time, it has lowered the bar of entry for smaller clients who previously faced challenges in fully leveraging technology in their processes due to the cost and expertise required. According to a recent study by 451 Research, 59% of organizations say the cloud will be the most transformational technology for their business over the next two years, compared to 52% last year. With that, the next horizon for data providers who leverage the cloud is in offering analytical platforms to clients that utilize the compute power inherent in the cloud. In addition, we suspect providers will offer tools to enable quicker, out-of-the-box activities. There is also an opportunity for data providers to take on more of the data management process for clients over time, granting clients more time to focus on higher value activities. We recently collaborated with Snowflake to extend the S&P Global Marketplace delivery options to help our clients streamline their data management, eliminate data transformation and improve efficiencies.
Aside from the cloud, what are the most important data trends to keep an eye on in the years ahead?
We expect to see the discipline of data science becoming core to nearly all functions and organizations in some capacity. By extension, there will be an increased demand for data providers to deliver existing and new data to clients ready for machine consumption. Additionally, the type of data being created today continues to evolve — by some accounts 80% of today’s data is unstructured. The increase of data science in all facets of business, combined with the rise of AI and machine learning, allows for the application of Natural Language Processing (NLP) and other machine-driven techniques on unstructured data to unlock additional insights. We expect growing demand for textual and ESG data and these continue to be two key areas of focus for us at S&P Global. Also, I would expect the phrase “alternative data” to vanish completely, as clients’ expectations for alternative data and traditional data converge — after all, data is data.
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A provider of financial data distribution and market data management solutions
Stephane Dubois, CEO and Founder
Have the events of 2020 offered any lessons as to what market participants want in terms of data?
2020 brought several lessons. Financial retail markets have gone crazy and consumer demand has put significant pressure on the whole market data infrastructure. Many data providers and brokers experienced issues during periods of heavy market activity, showing that non-elastic, non-cloud native infrastructures have a hard time dealing with those periods of peak activities. In addition, market data quality is more important than ever before as many brokers were impacted by issues with the AAPL and TSLA splits.
The cloud has obviously fundamentally changed the way data is created and consumed. What’s the next big thing for data providers who leverage the cloud?
The cloud was at first a way to deliver data easily and efficiently, while the consumers and consuming apps remained mostly off cloud. Now most of the applications consuming market data are becoming cloud-native themselves, so delivery directly into those cloud-native applications will be the next big thing.
Aside from the cloud, what are the most important data trends to keep an eye on in the years ahead?
Markets are fueled by millennials and millennials care about the environment and social causes. This is driving demand for ESG data. In addition, COVID has beat the hell out of quant models which were never designed or tuned for major events like this. Expect a reinvention of machine trading in the years to come.
This article includes firms that are both clients and nonclients of Forefront Communications.
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