How Investment Bankers Can Leverage Trade Data to Evaluate Prospects

Investment banking is one of the most lucrative businesses in the world. However, in recent years, investment bankers around the world face several challenges. Investment banking was one of the worst-hit industries during the pandemic.

The Current Challenges of Investment Banking

Lack of Capital

The pandemic has led to market crashes and recessions worldwide. Inflation, being at an all-time high, makes things worse for everyone. The state of the market has led to a lack of capital at investment banking firms. Investment bankers rely on funds invested by individuals and companies. However, most are refraining from making more investments, choosing to save and hold on to what they have. Due to a slowdown in investments, bankers are left with the challenge of maximizing their profits with a lesser amount of capital.

Cost Reduction

“There are no more overheads.” Markets have become increasingly competitive. Prices around the world are more or less the same. Margins for companies are shrinking and profits for investors are following a similar trend. Investment companies as a result are trying to cut down on their expenses and costs.

The Role of Data in Investment Banking

The explosion of financial technologies under the banner of ‘fintech’ have created a new era for investment banking. The disruptions in banking caused by fintech has brought about a lot of changes to the existing structure of the financial industry.

This digital transformation in investment banking has made data one of the most important assets for the financial sector. Investment banking without the right data can be disastrous for a modern-day investment banking firm. This is why businesses need access to the right data to truly drive revenue to their business.

Alternative Data in Investment Banking

Alternative data is data gathered from non-traditional sources. In investment banking, this means gathering data from sources other than a prospective company’s reported financials & stock prices. Alternative data can include a company’s social media sentiment, market response, supply chains, infrastructure details, and more.

Alternative data has been a relatively common source of information for the investment industry since the early 2000s. However, back in the day, it was extremely expensive and prohibitive for smaller players. It was more suited to large investment banking firms that could leverage it for quick and smart profits.

However, with the current wave of digital transformation within the data industry, it has become easy for businesses to get the alternative data that they need. There are many data vendors available that will provide the alternative data you need.

How does Alternative data help?

As an investment firm, the more information you have about a business, the better it is. Alternative data can help provide a new perspective for the businesses you’re interested in helping you make better investment decisions.

When investing in a company, you are essentially betting on a company’s success. Alternative data helps you take a more informed, data-driven approach to ensure that your bets have a higher chance of paying off in the long run.

How Supply Chain & Trade Data Can Help

One of the best sources of alternative data for investment decisions is supply chain and trade data. Here’s how supply chain and trade data can help you make your investment decisions.

Supply Chain Analysis

Supply chains are the lifeblood of businesses. Any problems in the supply chain can directly affect the end customer. This is why businesses go to great lengths to ensure the smooth functioning of their supply chains and try their best to protect supply chains from disruption.

A properly functioning supply chain is a sign of a business that takes itself seriously. With proper visibility of a company’s supply chains, you can find out all their trade partners & their business dealings and gain a good view of their imports, exports, shipment volumes, and shipment values. For an investment firm, tracking historical supply chain data is an excellent way to see how efficiently the business functions. It also gives you a behind-the-scenes look at the companies you’ve invested in.

Prospecting

Continuing on the last point, supply chain and trade data can help you find a lot of new, potential businesses to invest in. For example, Trademo Intel holds a repository of 10 million+ companies globally. A single company’s supply chain can help you find tens to hundreds of other businesses involved within their supply chains.

This method can be used to populate your lead lists with potential prospects for investment. In addition, you can further analyze each company’s supply chains to help you make more data-driven decisions.

Investment Analysis

Even after you’ve invested in a company, supply chain data can help you keep accurate track of the business. Every major disruption in the supply chain of a company will potentially have a direct impact on its end customers, share prices, and more. Whenever you spot a disruption in supply chain data, you can be better prepared to protect your investments.

Risk Modeling

Trade data can be used to feed your risk management models. With years worth of supply chain and trade data, you can create more effective risk management models for your business investments.

How to Find Trade Data and Intelligence

Trademo Intel is the perfect place to find the trade data you are looking for. With data for over a billion shipments and 10 million global buyers and suppliers, it is one of the best ways for investment companies to leverage the power of the supply chain as alternative data.

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