Transaction-level credit and debit card payment data has been available for some years and is employed by a variety of asset managers to predict a firm’s revenues and profitability. Relying on this card data allows analysts to get far closer to real time.
Opimas estimates that about US$130 million are spent on card data annually by asset managers. This figure has seen only modest growth in recent years, as new entrants with additional card data sources have increased the supply of data faster than demand has grown.
There are two basic types of provider in this market: first, data aggregators who assemble the raw card data and make it available. Secondly, firms focused on the analysis of this data and provide company-level forecasts regarding revenues and profits.
Quantitative investors make intense usage of card data, combining multiple sources of card with other types of alternative and traditional data. More traditional investors, on the other hand, have often struggled to derive value from card data and, frequently, institutional investors attempt to use card data for several months only to abandon the effort.
There are 4 main processing steps: Data Collection, Standardisation, Analysis, and Investment. In order to produce of full image of the consumer landscape, investors need to consider both the diversity and quantity of their data. Sometimes it is necessary to string multiple providers together to get a more accurate view since different sources of card data will have their own inherent biases.
Previously, the hope for many data providers was to expand beyond the US. However, investors in Europe and Asia are more sceptical of the value of card data, limiting growth in these markets.