There’s been a lot of hype recently surrounding the concept of alternative data: a booming new market in non-traditional datasets that, increasingly, is shaping how companies make decisions and how investors gain insights on the companies. Newer, niche data sources – usually collected outside the context of traditional statistical tools or otherwise outside the confines of official or industry-bound reporting networks – offer the promise of new information about firms and individuals that observers have previously overlooked The alternative data market size is projected to reach US$ 156.23 Billion by 2030 from US$ 5.55 Billion in 2022. The market is expected to register a CAGR of 51.80% during 2022–2030. The rising e-commerce industry and increasing demand for hedge funds will likely be key trends and drivers of the alternative data market.

Understanding Alternative Data

Sometimes called ‘unconventional’, ‘less-traditional’, or ‘new’, alternative data is any sort of information from non-traditional sources (as opposed to more traditional financial metrics). This can include social media sentiment, data gleaned from web scraping (scanning internet pages for consistencies and patterns), satellite imagery, credit card transactions and other forms of digital text. As ‘big data’, machine learning and artificial intelligence (AI) are increasingly used in many industries, alternative data is becoming essential for companies to gain a competitive edge in finance, retail, healthcare, technology and other sectors.

Market Dynamics and Growth Drivers

Several factors are driving the rapid expansion of the alternative data market:

Higher Demand for Insight: Companies are trying to figure out ways to make useful decisions (ie, generate insight) from large quantities of data. Often, classical data is insufficiently granular for strategic decisions.

Advances in Technology: the development of machine learning and artificial intelligence have allowed firms to analyse large and complex datasets quickly, making alternative data more accessible and valuable.

Regulatory Changes: Given that data governance and privacy laws are only evolving, firms are on the hunt for alternative ways of gathering valuable insights while meeting those requirements.

Greater Competition: It is well-documented that multiple players could enter the fray and start using alternative data in different domains, for example where hedge funds and private equity are leading.

Market Segmentation

By Data Type

·    Credit and Debit Card Transactions

·    Email Receipts

·    Geo-location Records

·    Mobile Application Usage

·    Satellite and Weather Data

By Industry

·    Automotive

·    BFSI

·    Energy Industrial