The need to transform financial research into a strategic tool

Research is the bedrock of decision-making in the financial markets, but all too often, the material provided may not highlight useful details that are buried inside. The huge number of daily reports published, coupled with outdated methods of sifting through the mass, means that key items may be missed, and this makes discovering real insights difficult.

If a user is only able to gain a partial view of what is actually happening, resulting decisions will always be deficient. What is needed is an innovative new approach to transform research into a real strategic tool, say Limeglass’s co-founders Simon Gregory and Rowland Park.

Spending on trading data and analytics continues to break records year after year, with the biggest institutions competing to produce the most sophisticated technology to best leverage those facts. Yet, when it comes to modernisation, progress in the dissemination and consumption of financial research has lagged far behind other sectors of the industry. Innovation is needed.

The problem of information overload

Financial institutions produce and receive thousands of pages of research each day on everything from the global economy and geopolitics to company share prices. This mass of documentation can lead to information overload. Traditional search methods, such as scrolling through an email inbox or using the ‘Control+F’ function are slow, and the facility of searching for specific keywords can result in the omission of synonyms and associated phrases.

These rudimentary search methods are made more problematic by their lack of ability to account for context. If we take ‘UK inflation’ as an example, a basic text search is only ever able to present cases of those exact words in that order, and will miss important references to the consumer price index (CPI) and other phrases regarding price rises. This means that a report mentioning ‘inflation’ in the broader context of information about the UK would not be surfaced, and an article mentioning the Bank of England and CPI would not be found either.

As such, incomprehensive results amount to a flaw in the process and consequently represent a systematic loss of value for readers who will miss key insights. For firms that produce the research, it also means that their content is not being fully utilised.

A solution that hopes to replace these outdated retrieval methods must be able to identify themes by viewing the document as a whole, rather than isolating single words, out of context.

Document atomisation

Market participants need and want relevant information at the right time to make the best decisions. For publishers, the facility to disseminate research that is used fittingly will lead to customer satisfaction. So how can we ensure that more research is used fully, and less key information is missed? 

One way of achieving this is ‘document atomisation’. In essence, this means breaking down reports into their constituent parts so that crucial elements are identified and highlighted according to the user’s needs. When words, phrases and their synonyms are tagged and linked, this ensures that a search is not restricted simply to verbatim language results. 

Rich natural language processing (NLP) is an integral part of the solution; applying this linguistic branch of artificial intelligence to a report assimilates alternating phrases that people use in conversation and takes into account the context of the piece. 

The atomisation and tagging processes turn unstructured reports into usefully structured material. As such, this unlocks the power to surface relevant topics from a multitude of documents, whether the user is considering a corporation’s M&A activities, global foreign exchange volatility or a specific company’s ESG strategy.

How does this help market participants?

Such a methodology not only offers a relevant, detailed and convenient manner of consuming reports but also means that the results are – by their nature – personalised to the user. It’s a logical conclusion that a personalised provision of material will better equip any trader or investor to quickly assess reports and discover the information they actually need to make the best decisions. 

Consequently, customer satisfaction should follow.

Moreover, where technology provides the research publisher with metrics to ascertain how much of their report was deemed relevant, it enables refinement of what to include in future publications.

Such accurate, relevant and timely information provides real insights for market participants and makes financial research a real strategic tool. Consequently, the ability to act upon this intelligence provides a competitive edge and is, therefore, a key factor to customer loyalty and business success.

Rowland Park and Simon Gregory are co-founders of Limeglass.