Big Data is presently the poster boy mainly across the marketing industry; however, the applications of big data is growing at an exponential rate with the finance industry, particularly hedge funds, coming into the limelight.
The ever-growing thriving of hedge funds for better information to beat the market or benchmark returns is inclining the hedge funds toward big data, which contains the immense potential to shape the way money managers analyse the economy, sector, industry, and stocks.
Now the question arrives, what is Big Data?
Big data is a collective term used to define large volumes of data, which is so large, fast or complex that it makes it really challenging or nearly impossible, to process using traditional methods. Big data is broadly classified into two-parent categories, namely, structured and unstructured.
The structured big data could be defined as the large data that is located in fixed fields within a defined record or file such as spreadsheets or related databases, while unstructured (semi-structured) is defined as the data that is not, or only partially located in fixed fields or within a defined record or file such as image, text, documents, social media posts.
Importance of Big Data?
The businesses across the globe are incorporating big data in decision making on various fronts such as cost analysing, consumer spending trends, new product development, to name a few. For example, in the banking industry, consumer spending habits are getting deeply analysed by banks to deliver consumer specific product. We are all familiar with the reward points we get on our spending, which is nothing but a product of deep data mining and analysis.
Likewise, big data is now spreading its wings to broaden the understanding of the natural disaster, risk management, credit analysis, and into many day-to-day activities of a business and consumers.
Who is Presently Using Big Data?
Pay Attention! You Must Have Experienced This
Walmart- one of the largest retail chain handles over a million customers transaction an hour and imports those into databases. The supermarket with the help of technology is now able to combine data with a variety of sources such as mobile phone location data.
If you have recently bought any BBQ-related goods from the retail outlets of Walmart, and on a sunny day if you are to be within the 3-mile radius of a Walmart store that has a BBQ cleaner in stock, you might receive a voucher for money off a BBQ cleaner, delivered to your smartphone!
How are Companies Using Big Data?
Different industries are responding to big data emergence in different ways. For example, while retail and sales are seeking to collect as much information about their customer’s spending and lifestyle to cater to the changing needs, the manufacturing industry is seeking to streamline operations. For them, equipment calibration settings could be recorded and refined, and product storage environments monitored to determine the optimum conditions that could lead to control or mitigate the spoilage and waste.
How is Investing Community Responding to the Change?
For investing community an everlasting thrust to dig for additional data in order to gain superior returns is opening the arms wide for big data and its wide applications.
Investing community is an all-time penchant of adopting a change in the technology sector, with machine learning (element of artificial intelligence) already extending deep roots with its adaptability and application in algorithm trading and forecasting.
In recent events, hedge funds have emerged as a potential buyer of big data. For example, while the recent poor earnings of Under Armour- the sportswear mammoth in the United States was a shock to most of the people.
It was reported by many media houses that for many hedge funds across the United States, it was not a surprise, later it was known that the hedge funds fed with the bespoke data remained unparalleled. For them, the self-evident data feed such as a decline in job listings on their website, the internal rating of its chief executive by employees on Glassdoor, and a dip in the average price of clothes on their website, could have been the early signs of the fall.
However, this presumed data feed is just the surface of the big data ocean, and the early indication concerning poor earnings of Under Armour gained by few hedge funds across the United States is just one application of the field, containing immense potential and wide range applications.
Big Data Backlash
As with any new frontier, the frontier of Big Data is also under attack, and there are those that believe that it’s a storm in a teacup and the theory of big data is so far removed from the reality for many businesses that it would never yield much for them.
Certainly, there are some companies that already have these huge data sets; however, many businesses might not have access to volume and variety of data that Amazon, eBay or Facebook already have.
There are other areas of attack as well, including consumer data and privacy.
The reputation of big data has already suffered from the revelation of whistle-blower Edward Snowden, that the United States National Security Agency has been systematically using big data analytics to `spy’ on global communications and performs targeted surveillance of individuals and companies.
While it might sound like a science fiction movie, but the reality could be that the United States NSA could not be the only government agency in the world to collect and use big data, and it could be evident from the former French foreign minister- Bernard Kouchner statement.
`Let’s be honest, we eavesdrop too, everyone is listening to everyone else. But we do not have the same means as the United States, which makes us jealous’.
Such backlashes on big data are continuously attracting the interest of regulators and prosecutors, and the emerging gold is yet to fully shine, and there are hurdles.