With a focus on providing customers access to its team of senior analysts and offering unsurpassed coverage of global debt market insights and macro-intelligence, Fitch has landed the Best Research Provider award. Inside Data Management speaks to Ranjit Tinaikar, president of Fitch Solutions, about the future of the market following a year in which research has been hitting the headlines.
Is there an overriding trend currently shaping the research industry?
The word “research” is being redefined. Research was traditionally a piece of paper that people read, but what we are now witnessing is a war for insight as passive exchange-traded funds put pressure on active managers to beat market benchmarks. Linear documents are inefficient for getting to insights quickly, and for financial markets the speed at which you get this insight can play a crucial role in value propositions.
What external factors are driving the agenda in the research space?
Even as the bar for insight is raised, the first force affecting the research space is regulation, including Europe’s revised Markets in Financial Instruments Directive (Mifid II) and the unbundling of research costs from the sell side.
The second force is technology disruption and the opportunity to have machines instead of humans sift through research. Increasingly, research will not be produced in linear documents, but in a series of components—such as text, data tables and charts.
The third force is a shift in competitors. As a result of the changing market, there has been significant consolidation of research providers. At the same time, there has been greater demand for insights and on-demand expertise—thus, new companies providing networks of experts and analysts for customers to tap into are entering the space. Broad-based research providers are finding it more difficult to survive as the buy side has to be more thoughtful about what it spends on research in a post-Mifid II environment, but this is playing to our strengths.
The fourth force affecting the space is changing consumption patterns, as requirements are evolving and some buy-side firms are attempting to circumvent traditional research providers and do their own research in-house.
How is new technology affecting the research space?
Technology is fundamentally transforming how research is produced and consumed. Now, machines also read research, and customers have requested our research be made available via an application programming interface, which allows machines to pick up on signals in the insights. The result is that we now have a Fitch Connect platform that not only services humans but also machines. I think there will be a very different research industry five years from now.
What technology functions are on your shopping list?
What customers will see going forward is more and more search partnerships with intelligent search engines. We are looking at how to train machines to go through all the companies, and that is the type of technology we will increasingly be building into Fitch Connect. It is no longer only about showing investors documents, as professionals are now short of time.
What can customers expect to see from Fitch Solutions in terms of content in the coming year?
Fitch Solutions has taken a strategic stand that content is king, and delivery of content is queen. Customers will continue to see the introduction of more and more capabilities, including the integration of BMI Research’s macro-research and macro-data analytics into Fitch Connect over the next few months. It is also important to ensure customers are able to talk to analysts—analyst access is a big differentiator for Fitch.
From a content perspective, Fitch has recently started including financial institutions not covered by Fitch Ratings because they do not issue bonds—but they are relevant to the market because there is still counterparty risk associated with them.