Lucy Nicholson/Reuters
Citi CEO Michael Corbat.
- Citigroup is one of the first large Wall Street banks giving clients access to so-called alternative data sets through startup Thinknum.
- Thinknum sources and presents data that it collects across the Internet, such as social media traffic around a brand's reputation, the number of job postings, and the pricing and availability of products sold online.
- Some banks have been reluctant to get into the game of giving access to these types of data series because of privacy concerns and perceptions that they're giving hedge fund clients access to data unavailable to the broader investing public.
Alternative data sets aren't so alternative anymore.
At least according to Citigroup, which last week started giving clients access to data collected and analyzed by Thinknum, a four-year old startup which provides iinsights into a company's health that aren't readily available from conventional sources like financial reports and economic indicators.
The banking giant becomes one of the first on Wall Street to give its clients access to one of the myriad vendors that have sprung up in the last few years selling obscure data sets.
Thinknum primarily sources and presents data that it collects across the Internet, such as social media traffic around a brand's reputation, the number of job postings, and the pricing and availability of products sold online.
Other alternative data providers offer satellite imagery of shopping mall parking lots, credit card transactions or location-based mobile tracking. Hedge funds and asset managers use the data to make smarter investing decisions, in most cases working directly with the data providers.
Citigroup last week sent an email to clients about its new Thinknum offering that was reviewed by Business Insider. A Citi spokesman declined to comment further.
Some banks have been reluctant to get into the game of giving access to these types of data series because of privacy concerns and perceptions that they're giving hedge fund clients access to data unavailable to the broader investing public. Wall Street research analysts, however, began using the data as parts of their models a few years ago.
As the buy-side increasingly relies on alternative data, Wall Street banks are trying to find new ways to keep their clients on their own trading platforms. For decades, asset managers looking to Wall Street for company insight, and as that information takes on new forms, banks are trying to adapt.
Investors have long sought an information edge when making investment decisions. Middlemen such as Bloomberg LP, Factset and Nasdaq, among others, have started offering the data sets on their platforms, in some cases building dashboards to make it easier for clients to find the data. Some banks such as Goldman Sachs are even plumbing the depths of their own data to see if there are investing signals they can surface and provide to clients.
JPMorgan estimates that asset managers are collectively spending from $2 billion to $3 billion annually on such data, and that spending is estimated to grow 10% to 20% each year.
"As companies move their operations online, new data trails are being created that can be leveraged to obtain real time insights into business performance," Citigroup's email reads. "Thinknum tracks thousands of websites capturing and indexing vast amounts of data, a subset of which is now available on Citi Velocity."
As more of the world has gone digital, savvy players have discovered new sources and looked to monetize them. Thinknum is one of those players. The closely held firm's last funding round was in 2014, when it raised $1 million.