Alternative Data is the latest buzzword in the big data industry and it’s no surprise.
With technology evolving at the speed of light, heavily-regulated industries, such as finance and banking, are struggling to keep up.
The high level of dematerialisation enhanced by digital services and products has accelerated the widespread integration of technology. The challenge? To collect and manage mass amounts of information and data while evaluating the complexity of human interaction online.
Diving into this subject is Alberto Mussinatto, who manages Strategy & Business Development at Fabrick, an innovative, open banking platform and partner of The Data Appeal Company. On July 15th, Mussianatoo led the webinar, “The open ecosystem of Fintech: from open banking to open finance” to reveal the benefits of leveraging data in the finance industry.
Among the featured expert guests was, Mirko Lalli, CEO & Founder of Data Appeal. As partners, it was the perfect opportunity to demonstrate the endless advantages offered by data analysis and alternative data within the financial sector.
The Untapped Potential of Alternative Data in the World of Finance
“We’re a data provider, specializing in alternative data”, explains Lalli, “meaning that we collect and evaluate data and information aiding professionals and businesses to analyze clients, products, services and territories – in real time – and help them make more strategic decisions. Our company was born within the hospitality and tourism sector, because this was the first sector impacted by the feedback economy. However, we soon realized that this dynamic has spread massively across all industries, especially finance, as customer reviews, social content and a brand’s reputation influence business decisions – both online and offline.”
Today, Data Appeal has built next-generation proprietary technology and APIs to enable companies, of any sector, access invaluable data and insights on customer behaviour, business reputation, external impacts and any territory as a whole.
“We map the territory, collect information on all points of interest, connect the POIs with the surplus of online review channels, trace the pieces of content, analyze them through a semantic analysis system and elaborate value indicators”, reveals Lalli when describing the Data Appeal methodology.
Alternative Data is the latest buzzword in the big data industry and it’s no surprise. Alternative Data is the secret weapon for the enhancement of traditional financial information, as it provides a more holistic and comprehensive overview of any business or set of decision-making information. Above all, it’s rapidly gaining the approval of the fintech industry at an international level.
The alternative data market, which is estimated to reach a turnover of 1.7 billion by the end of 2020 and will double in value each year, has a high potential as it enables decision makers to make more precise strategies, in real time, to define data-driven investments.
“The data we offer”, shares Lalli, “is both raw, accurate and comprehensive. It has infinite applications, which is why we’ve been exploring opportunities to work with banking institutions, especially within business banking, underwriting and risk management divisions. If a company has excellent reviews and there’s a positive customer perception, statistics reveal that those businesses will increase revenues and attract more clientele”.
When enhancing financial data that a bank already has at their disposal – bank statements, credit scores, tax returns, etc. – with alternative data, such as a brand’s reputation and customer perception, underwriters and risk analysts have the full picture available at their fingertips to make the most strategic decisions and investments.
Seamlessly Enhance Your Underwritting and Risk Assessment Criteria
“A few years ago, a large bank asked us to provide them with sentiment data for accommodations and restaurants, allowing them make better assessments and understand if reputational data was linked to revenue and therefore strategic to include in their ratings”, recalls Lalli when describing how Data Appeal first emerged into the finance industry. “Today, of course, we know there’s a strong correlation between the two. There’s infinite amounts of sources highlighting the fact that “online” reputation affects “offline” performance”. Businesses across all customer-facing industries must keep in mind that reviews impact revenues. As Harvard Business School reveals, “a one-star increase can lead to as much as a 9% increase in a business’ revenue”.
“Currently, Data Appeal provides this service for two of the largest Italian banks. We validate and enrich customer profiles already present in a bank’s database to provide performance indicators linked to what happens in the digital world. Sentiment scores, ratings and the amount of reviews and content all influence customer choice. Real-time predictive algorithms that integrate into traditional rating models have proven successful for banks and credit unions.”
Alternative Data to Optimize the User Experience
Having access to alternative data is not only functional to risk assessment, it also provides banks and other entities with the opportunity to enrich the offer for the end user. For example, alternative data makes customers’ mobile applications more comprehensive, with quantitative and qualitative data on any POI (Point of Interest) in the area.
“Our data lake can be queried both for each individual POI and for entire territories. This has generated a great deal of interest within the real estate sector, which can leverage our data to obtain information and insights on specific territories, and better construct investment and expansion strategies”, shares Lalli.
JLL, the first real estate company in the world, is following this model with Data Appeal’s data. They leverage both data enrichment packages and reports on specific areas to plan development strategies, make timely decisions and mitigate risk.
“The banks we work with also want to take advantage of our data lake to make their mobile applications more complete and competitive. With a more user-friendly application, customers feel more involved thus solidifying their relationship with the bank”, concludes Lalli.
To watch the full Italian webinar, click below to access the recording:
Data Enrichment is the secret weapon for the Finance and Banking Industry. See it in action, download the free report below.