Two-thirds of UK financial services companies now use alternative data to improve decision making
Financial services companies in the UK are increasingly relying on web scraping alternative data sources, with almost two-thirds (63 per cent) using alternative data to improve their decision-making process. This is one of the key findings from the Oxylabs white paper: ‘The Growing Importance of Alternative Data in the Finance Industry’, which reveals a huge rise in web scraping for alternative data over the last twelve months.
252 senior data decision-makers across the UK’s thriving finance sector, including Directors of Engineering, CTOs, VPs of Engineering, Chief Data Officers, Heads of Business Intelligence and Heads of Data & Analytics, were questioned on their current approach to data management. Respondents were selected across a broad spectrum of financial service companies, including retail, commercial and private banks, investment and wealth management firms.
The findings highlight web scraping and financial transactions as the most common sources of alternative data for investors and financial services firms. This consists of ‘non-traditional’ data sources that have not previously been analysed, including app downloads and usage metrics, social media sentiment, website traffic statistics, search and other non-traditional data sources (senior staff hiring’s, corporate flight activity, supply chain).
‘Traditional’ sources such as official public data (57 per cent) and third-party data (44 per cent) are still considered valuable. However, they’ve been superseded by the rapid rise in alternative data.
Julius Černiauskas, Chief Executive Officer at Oxylabs, comments: “The huge increase in online alternative data sources has instigated a sharp spike in demand for web scraping services from financial services firms looking to overcome the challenges of the pandemic. At Oxylabs, we have experienced a threefold surge in inquiries from financial services firms over the last year, so we were keen to learn how exactly these organisations were approaching data gathering and analysis.”
Alternative data can be used to better understand business performance, market trends and future investment opportunities. Financial services firms that can convert alternative real-time data into accurate and actionable insights are three times more likely to report significant improvements in decision-making.
Černiauskas continues: “Business leaders in the finance sector are always looking for new ways of making better investment decisions and mitigating risk, so it is easy to see why the global alternative data market is predicted to grow at a compound annual growth rate (CAGR) of 40.1 per cent from 2020 to 2027.”
“Looking at the research, it is clear that financial services firms are increasingly harnessing alternative data to gain valuable, previously unseen insights into business performance, market trends and future investment opportunities. Those organisations that are data-driven will be able to quickly convert this valuable alternative data into actionable insights so they can make better strategic decisions in an uncertain post-Covid economy,” Černiauskas concludes.