Social media has swiftly morphed into a necessity of people’s lives, both personally and professionally. We are all measured by our ‘social footprint’ in many ways and the impact of this is slowly filtering down from the consumer-facing brands to the trading floor.
To demonstrate the importance of social media on traders, who can forget the Hash Crash? In April 2013, US markets suffered a sharp sell-off after a fake tweet from the hacked Twitter account of newswire AP announcing an attack on the White House. The tweet sent the Dow Jones down 150 points in just two minutes.
As Michael Versace, global research director of IDC Financial Insights says, “There won’t be any turning back on the growth on social media…not just for describing where you are or what your behaviour is, but there will be a slow gravitation towards services delivered in the channel.” This is becoming more and more relevant to traders who can tap into social activity and footprints to trade smarter.
Here are three trends in social data that we predict will make an impact on financial services businesses in 2014:
1. Outside data will be as important as inside data
Social businesses will begin to tap behavioural data to drive decision making. Over 60% of trading decisions are already made through algorithms, incorporating social data is a natural step forward for traders. Think of it like an early heads up. Currently, smart traders use Twitter and Bloomberg feeds to get real-time data on market activity, but this is time consuming and limited. The velocity with which social behaviour and data is moving, tapping into the social pulse is going to be an essential tool to for trading businesses to invest in.
2. Smart platforms will help traders make faster decisions
￼￼As the use of industry specific SaaS and indexes becomes more commonplace, there will be great demand for analytical skills to work alongside other teams to help them make sense of the data. Those skills may be bought in, or outsourced using platforms which are very specific to the financial services industry.
3. Financial services firms are hiring Chief Data Officers and Scientists to interpret data alongside analysts
If 2013 was all about “what is big data?”, 2014 will be about “what do we do with data?”. Analytics skills will rise to board-level, as companies will need expertise to help them implement the smartest platforms and indexes to support traders and help them make ever faster decisions based on the data provided. IBM say that 2013 had double the amount of CDO’s than in 2012.
As these trends come to life, a dashboard showing an at-a-glance snapshot of social data both internal and external. Platforms like Trendensity provides a single point to view aggregated data within their dashboard. This provides real-time insight into what is happening right now and what might happen in the future.