Alternative Data refers to non-traditional data sets that investors use to guide investment strategy, examples being credit card transactions, mobile device data, satellite imagery, social media sentiment, product reviews, weather data, web traffic, and app usage. The number of alternative-data providers is more than 20 times larger now than it was 30 years ago — with more than 400 currently active providers, compared to only 20 in 1990. A survey by the Alternative Investment Management Association (AIMA) found that 34 percent of hedge fund managers surveyed said their firms are newly investing in alternative data.1 In an educational discussion with Karla Jo (KJ) Helms, the host of the Disruption Interruption podcast, Sean Adler—a versatile leader with a solid background in international tech startups, biotech, and fintech—offers insights into the intricate world of alternative data and its burgeoning influence on financial markets and biotech sectors. “Analyzing the effectiveness of alternative data is paramount,” Adler emphasizes. “It’s not just about the data itself, but how it’s interpreted and utilized.” He alludes to the fact that, while alternative data has gained traction, it is still in the process of being integrated more deeply into financial operations.
Fintech and Alternative Data
Fintech is a combination of the words “financial technology”—a catch-all term for technology used to augment, streamline, digitize, or disrupt traditional financial services.2 It refers to software, algorithms, and applications for both desktop and mobile.
With an astute focus on fintech’s revolution, Adler and KJ navigate the complex terrain of alternative data, from satellite imagery to mobile app analytics. They unpack the challenges of defining this emerging field, emphasizing the imperative of effective utilization.
Adler sheds light on the significance of alternative data in the financial services industry and how it presents a paradigm shift in decision-making processes, drawing from diverse sources such as tweet scores and credit card data.
Reshaping FinTech through Alternative Data
With a keen eye on the future, Adler unveils the transformative potential of alternative data in reshaping the fintech landscape and revolutionizing traditional investment strategies. In discussing the tokenization of assets to the emergence of asset-backed cryptocurrencies, he hints at a future where data-driven innovation reigns supreme and becomes a cornerstone of decision-making across industries. He discusses the potential applications of alternative data beyond the financial sector, suggesting its relevance for enterprise expansion and analysis. He emphasizes the importance of understanding client needs to tailor data offerings effectively.
Reflecting on the future of his company GZI Finance, he expressed openness to exploration and collaboration, inviting feedback and engagement from interested parties with a focus on building mutually beneficial relationships. “We anticipate alternative data becoming more prevalent in the coming years,” shared Adler. “Understanding the market needs and designing products accordingly will be instrumental in this transition.”
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