In today’s digital world, data is at the heart of every business. The increased use of technology means that companies now produce and process more data than ever before. Until recently, however, that data remained dormant, only accessible to a few, centralised, top-tier decision makers.

Recently the industry has seen a shift. Data is becoming more accessible and those not so familiar with the tech world are becoming increasingly able to use the data they generate to leverage new business insights. For many, the ‘democratisation of data’ has begun.

This has particularly been the case in the financial sector. The widespread adoption of tech, and a number of significant regulatory changes, have encouraged improved data accessibility in the industry. This year saw the introduction of MiFID II, which forces manufacturers and distributors of financial products to unbundle information and reveal more to consumers. The second Payment Services Directive (PSD2) had a similar vein of transparency, forcing the biggest banks to release their data in a secure, standardised form so that it can be shared more easily between authorised organizations online.

The democratisation of data certainly has its challenges, but it also has the potential to create incredible opportunities and change the way that businesses use their data, providing key insights, improving access and encouraging collaboration.

Better business insights

Larger organisations have traditionally had the resources and manpower to be able to make sense of their data and gain informed business insights. However, for small and medium-size businesses (SMBs) such as smaller asset managers and hedge funds, data analysis can be a daunting process due to limited resources and overstretched teams.

With the democratisation of data, this has begun to change. Smaller companies now have cheaper, quicker and simpler access to their data – meaning they can benefit from the masses of information at their disposal. Open dashboards and platforms for collating and visualising data can help businesses become better informed about the decisions they’re making, from trades to communication to the products they are selling. By leveraging data to identify patterns and trends in their business firms can innovate and launch new products, understand their consumers and target market better, and even approach the market in new ways.

Improving access

Alongside data democratisation, there has been a significant rise in fintech and regtech firms who create data analysis products and services that are faster, cheaper and more transparent, removing the time and cost burden of the process. Through features such as fully open APIs and accessible, geographically flexible cloud data storage, clients are given total control and improved access to  their data. With the price of storage dramatically reducing in recent years, it is now possible for firms to store more and more data that can bring value to their firm.

Encouraging collaboration

The wave of data democratisation doesn’t just work to serve individual companies. It also facilitates improved collaboration between traditional services and technology, by increasing the interaction between advisers and technological tools to improve customers’ experience. This collaborative effect has been seen under PSD2’s ‘open banking’, with banks opening up their customer data to fintechs, and encouraging the provision of new services, platforms, and software to help customers understand their data.

Barriers facing data democratisation

However, challenges remain. There remains a tendency among industry incumbents, such as traditional market data providers, to resist change. Fear that fintech will erode the franchises of traditional financial service players has left some in the industry unwilling to embrace new technologies, and adaption has stagnated – at the consumers’ cost.

In the long run, however, with market participants coming to understand the extensive benefits of working with such companies and with ongoing customer demands for faster and more convenient services, it is likely that investment and innovation in this sector will drive continued growth. Data democratisation is here to stay.

Matt Smith
CEO
SteelEye