Data is the Future and You Will Be Able to Generate, Control, and Monetize it

Data is the Future and You Will Be Able to Generate, Control, and Monetize it

Data is considered the world’s most valuable resource. How will data change investment behaviors? Who owns the data? What infrastructure is needed? Our white paper on «Data, the Future of Financial Information» provides possible answers to these questions, and many more. Here I would like to summarize the most likely scenario.

“90% of all data in the world was created in the prior two years.” This quote appears prominently in almost every presentation. However, what isn’t highlighted is the fact that this finding from a Norwegian think tank is already more than six years old. Global data volume has since continued to grow exponentially. “Peak data” seems far from having been reached. The term “peak” originates from the extractive industry — The Economist already described data in a cover story in 2017 as the new oil, even noting that data had become the “world’s most valuable resource”.

It therefore comes as little surprise that data is the future of financial information. But our White Paper «Data, the Future of Financial Information» shows that there will be profound changes surrounding this constant. Besides the centrality of data, it looks as if nothing will look like the past.

In the following I will summarize the most likely of five possible scenarios for the year 2030. People have greater freedom, rights, and ability in their capacity as asset owners, data owners, and investors:

  1. Asset Owners: Anyone can transform their assets into investable assets by creating rights to them.

    The number of investable assets has exploded and ranges from seats at a restaurant, usage rights to a parking spot, rights to a share of a student’s future income, rights to use a room in an apartment, and usage rights to your data. New types of assets may necessitate new types of data for valuation.

    Digitalization and automation have simplified the process of defining/describing digital and non-digital assets, and of creating rights to these assets — thus reducing monetary and time costs of making an asset investable. Digital platforms have also permitted reaching a global market, thus rendering it substantially more attractive for asset owners to make their assets investable.

  2. Data Owners: Anyone can control usage of their data and create rights to it.

    Governments have taken substantial action to enforce property rights and competition in the digital sphere. Users of digital services can prevent service providers from processing their data and can provide third parties with access to their data — data which may not have been accessible to third parties before, as service providers may have kept it for themselves.

    Everything we do produces digital data. Social interactions take place in the virtual sphere (chat, VR). Real world experiences are augmented with a digital layer (voice interfaces and/or AR). Everyday objects let appliances know how to interact with them (e.g., clothes tell washing machines how to treat them).

    Data privacy calls for the raw data to be decentrally stored where it is produced, always encrypted, and that the raw data never moves. Secure and privacy-preserving systems are a foundational technology of the financial information infrastructure. They have promoted data owners’ willingness to share access to their (sensitive) data and monetize it. This further increased the amount of data that is accessible for processing by third parties.

  3. Investors: Anyone can invest in perfect alignment with what matters to them.

    Driven by the explosion in new (accessible) digital data, alternative data has established itself alongside traditional financial information as key input for investment decision. There is data allowing investors to evaluate investable assets in any dimension, helping them to better tailor their investments to their preferences.

    As new types of assets become investable, further data types and sources may become relevant inputs for investment decision-making. Social impact and sustainability considerations (ESG Data) already play an important role in investment decisions. Investors continue to take some decisions themselves, but delegate most of their investment decisions to professional asset managers (e.g., funds, collective or individual mandates). Tailored robo-funds, where algorithms automatically take investment decisions, have increased in popularity.