The Alternative Data Interface Conundrum

 

With more investors embracing Alternative Data as a core part of their investment process, vendors are adding analytical interfaces and GUIs on top of their data. It seems like a logical move to make their data more consumable and accessible. But while it’s a value-add for any investor using only a single data source, this trend is quickly becoming burdensome. Many investors rely on multiple data sources, and navigating the growing array of online portals poses a problem for time-strapped investors. As a result, what was designed to make Alternative Data consumption easier – with no need for an internal data science and technology resources – has in effect caused frustration for investors managing multiple passwords, logins, alerts, batch files, and scheduled reports.

 

Alternative Data Goes Mainstream

 

Recall, the first big consumers of Alternative Data were quantitative funds. This makes sense, as they had the technical resources and prowess to deal with messy data feeds, back when data science was a small niche in the buyside. Over the last ten years, tooling and knowledge have proliferated across fundamental firms, and so has Alternative Data.

 

As the industry matured, many data providers have focused on UX, morphing their offerings from a simple data feed into SAAS solutions accessible through portals that allow for visualization, reporting, and analysis. This broadens the pool of addressable buyers: from data black belts all the way to data beginners. But as we mentioned above, this trend also has associated costs.

 

Data Ubiquity Brought Unintended Consequences

 

The unintended consequence of each data vendor building their own unique UX has been a hodgepodge of logins, interfaces, alerts, and reports. Investors quickly learned that even with a pretty UX, each dataset must be supplemented by raw data feeds for some names where the UX doesn’t quite do what the investors need. The feeds are often downloaded as flat files or worse, formatted spreadsheets. They must then be analyzed in a coding environment or in an unwieldy excel model that needs to be updated and maintained regularly.

 

At Maiden Century, our clients on average, subscribe to between five to seven datasets, most of which carry subscription fees from vendors (the remainder being free sources of Alternative Data). Handling each of these individually creates operational inefficiencies. Search, navigation, scheduling of reports and managing alerts all cost time for investors and these costs add up quickly.

 

Buyside investors are time-constrained and dread altering their workflows to learn new, sometimes complex interfaces. The current solution to a multi-vendor setup is toggling between multiple portals, downloading certain files to excel, accessing others via sFTP and S3 buckets, all while learning how to navigate the nuances of each interface separately. Because investors tend to focus on the pressing need at hand, they usually do not get the full value from each interface (and dataset) they pay to access.

 

Security is another concern. Managing multiple passwords, files, and reports across different teams leaves lots of room for error. Accidentally sending the wrong file to an unintended recipient or saving it in the wrong place can be a costly mistake. Some larger firms resort to building their own centralized repository and front-end reporting and analytics, driven by back-end entitlements.  This is costly and effort intensive. Not every fund has the resources required to build scalable technology.

 

The Value of Alternative Data Aggregation

 

Research has shown that the performance of predictive models improves as you add more datasets. As the number of datasets goes up, so does the value of centralizing them all in one place. At Maiden Century, we aggregate nearly 150 different alternative data sources with roughly 50 new datasets added each year. Our Alternative Data platform, called IDEA, tracks well over 7,000 KPIs across several thousand tickers (and private companies) on a single, centralized, and user intuitive platform. But isn’t this just another interface, the problem we were lamenting over earlier?

 

What’s Different about IDEA, the ultimate Alternative Data Platform

 

Well, not exactly. In this case, the functionality of IDEA is robust enough to cover most if not all of the front-end analytics and reporting that other providers have built as add-ons to their data. It is a true platform because it supports dozens of very different data types and models on top of all that data. More importantly for investors, it brings all the datasets together, securely accessible in one place.  It also handles the back-end heavy lifting around data management: cleaning, mapping, tagging, staging, and modeling.

 

This alleviates the competing demands placed on investors in navigating multiple logins, handling entitlements, and mastering different user interfaces in an attempt to extract value out of their data subscriptions. One UX, one central repository, one analytics engine across your entire coverage universe.

 

Besides making the actual underwriting and analysis of multiple Alternative Data sources easier, Maiden Century’s IDEA harmonizes the decentralized nature of disparate data feeds that do not share the same format, frequency, delivery process, or lag. This means investors spend less time learning how to navigate multiple platforms and normalizing data trying to make it all fit together. It also means having access to all your data that has been standardized, made compatible and analyzable. In effect, you have a single source of truth for all of your Alternative Data. All on one platform.

 

You’ve got Data, Now what?

 

Centralized data is a great concept but what you do with it determines its real organizational value-add. The IDEA platform sits on top of all your data, allowing you to gain synergistic insight through its models that combine multiple datasets on the fly. It finds the best possible data ensemble for each investment in your portfolio, depending on the unique set of alternative datasets you’re entitled to. This not only maximizes the ROI on each data asset but it also creates something new: the additional value you get by combining them all together. This means better performing predictive models, more context around consumer behavior, and a much needed sanity check when one of your datasets shows a questionable inflection. No matter how robust, a platform built on top of a single dataset is not capable of producing models anywhere near the kind of accuracy you get when you combine multiple datasets together.

 

This is not to suggest that individual data platforms don’t provide value. They often do, with subject-matter specific visualization and analyses for niche datasets. There is great value in that, and for investors who wish to dive into that minutia, many of our data partners provide valuable tooling.

 

But time is an essential part of the investing equation, and tools that get the investor into the red zone in less time lead to more points on the board. This is another core benefit of the Maiden Century IDEA platform beyond increasing your data ROI: accelerating time to insight.

 

A Single Centralized Source of Truth, Built for Collaboration

 

The IDEA platform centralizes your data into a single source of truth, accessible to anyone on your team, with robust entitlements to make sure everyone has access to only the data they need. This is helpful when collaborating across a large team or multiple teams. If a dataset is being analyzed in an excel model by one analyst, on a platform by another, and in a coding environment by a third, data is siloed within the organization, creating conflicting interpretations (or conflicting methods of analysis).

 

Why Maiden Century’s IDEA Platform

Maiden Century’s IDEA platform seeks to alleviate these pain points, delivering a single navigable source of truth for all of your alternative datasets paired with a powerful reporting and visualization engine. Our platform gets more synergies out of multiple datasets, allowing you to instantly analyze thousands of KPIs across thousands of tickers. But we’re not stopping here. Every day, we are striving to push the innovation frontier. Today, we are in the process of adding profitability forecasting to our analytics engine: a green field in the forecasting space. The goal is to allow investors to get more from their data spend, while investing less time.

 

Want to learn more about the benefits of aggregating your Alternative Data on the Maiden Century platform?

Find out how it can help you amplify your edge in a live demo: contact us.