THE FOCUS IS ON DATA AND RESEARCH The data and analytics niche is one of sometimes deployed on top of the largest for CM fintechs: approxi- existing data silos to meet short-term mately 150 companies are active goals, with few improvements in the within the space, and they have underlying core data architecture. To received $670 million in funding. avoid amassing an ever greater Another 950 companies, with technological burden within the $11 billion in funding, offer solutions organization, therefore, deployment to CM players as well as to the wider must be accompanied by efforts to financial services market. Such improve data governance standards. proliferation of fintech firms is not surprising, considering that the The value migration happening today efficient processing and exchange of has been aided by a reduction of information underpins the CM information asymmetry, as exchanges, industry. Moreover, the explosion of information service providers, and the available data means that the larger buy-side players hold informa- opportunity for harnessing it is both tion that is comparable to that of urgent and critical. broker-dealers. Moreover, the regula- tory drive for unbundling is causing Historically, broker-dealers were the providers to price research on a principal accumulators and gatekeep- standalone basis and to find new ers of data, deriving power from their ways of monetization. The intellectual market-making role in the order flow. property within research can be used But poor data governance and too to launch indices and systematic many silos have led to significant strategies, in line with the move of underutilization and undervaluation investors toward low-cost index funds of this asset. and smart beta investing. Today, the financial services industry When it comes to distribution, some treats data management as a primary fintechs, such as the research aggrega- function. And while the role of the tor Visible Alpha, can enable the chief data officer has become relative- delivery of research in new ways. This ly established, the position will includes access to the underlying ana- continue to evolve as data begins to lytical models, semantic search, and be monetized. This increase in sentiment scoring capabilities, so that importance has been enabled partly research consumers can mine the by the regulatory push for transparen- large daily output in unique ways. cy and standardization in the mar- Also, licensing agreements can kets, as well as by recent technologi- provide revenue sharing opportunities cal advancements in aggregating and from the rise of alternative data. The analyzing both structured and Chicago Board Options Exchange, for unstructured data. example, has partnered with Social Market Analytics to launch dynamic Despite this progress, however, issues indices that track stocks with high with data management are far from sentiment scores and facilitate resolved. Big data solutions are options trading based on social media. 10 Fintech in Capital Markets