Nanalyze

A Bloomberg Terminal Alternative That Uses AI

Going to business school is a great time to “pivot” your present career into something more exciting and more lucrative. Among the target jobs that freshly minted MBAs pursue, careers in finance top the list when it comes to something that will impress your family and get you laid dates. Business schools often have a department called “career services” which is supposed to help prepare you for your future career in finance. Practicing interview skills, networking with alumni, and learning about the tools of the trade, are all great ways to prepare yourself for your 10-year stint in the big leagues before you get burned out and go off to “do something on your own” – which usually means you then turn right when you get on a plane instead of left. One tool that you’ll inevitably come across during your illustrious career in finance is the insufferable Bloomberg terminal. If you don’t know what that is, we’ll help enlighten you.

An Intro to Bloomberg Terminals

Imagine if you will, that you took some completely archaic technology – like Windows 3.1 – and then created an entire financial data platform around it, along with a custom keyboard that required a complex set of key presses to do even the simplest thing. In order to design the keyboard, imagine that you hired a bunch of colorblind Bangladeshi high school kids with only a basic command of the English language and asked them to create the user interface (UI) from scratch in 24 hours, making sure to include lots of cryptic color-coded keys. The end result would be a UI that even people with some of the highest IQs on the planet would struggle to use. Once that’s been accomplished, you can then move on to screwing up all visual aspects of your data platform next.

Beautiful, crisp, clean, high-definition graphics? Absolutely not. Go with 256-colors max, and design the whole thing using ASCI characters with lots of annoying text highlights like this and text colors like this and then suddenly just start changing the colors as you go along for absolutely no reason at all. Make sure it’s as painful to look at as it is to use. The end result would look something like a Bloomberg terminal does today. Here’s what one looks like in all its glory:

Fugly as sin and as intuitive as the female brain – Source: Brown University

Ask anyone who uses one of these things if they enjoy using it and people might say they do but inside they’re seething with rage every time they place their hands on that lego-looking keyboard. As David Friedman says on a Quora response:

The Bloomberg Terminal interface looks terrible, but it allows traders and other users to pretend you need to be experienced and knowledgeable to use it.

Exactly. Of course, once you get used to using it – which only happens after you digest the 86-page manual and practice for weeks on end – “you’ll never look back.” But what if we took this horrible contraption that hasn’t been redesigned since Michael Jackson was beating it back in the early ’80s and completely sidelined it in favor of some other solution? Perhaps, we might even consider using some of today’s advanced technologies – like machine learning – to create a Bloomberg terminal alternative that was actually usable and allowed someone to perform at higher levels with a minimal learning curve. That’s what a company called Sentieo claims to be doing.

Sentieo – A Bloomberg Terminal Alternative

Founded in 2012, San Francisco startup Sentieo has taken in $25 million in funding so far to develop a “modern financial research platform” that’s powered by artificial intelligence. Founded by former hedge fund analysts, the tool is already being used by over 700 buy-side, corporate, and sell-side clients, and utilizes machine learning and natural language processing to “instantly surface textual and financial insights.” Their product launched in 2015, and just a few months ago they closed the lion’s share of their funding in the form of a $19 million Series A round.

The finance industry is often slow to adopt new technologies, and there are firms out there today with teams of analysts that to do nothing but pore over financial filings (10Qs, 10Ks, and the like) searching for certain bits of data. For example, they may be tasked with looking at a firm’s revenue streams so that they can classify it into a particular industry. These types of abstract data points can now be retrieved using Natural Language Processing (NLP). They’ve also expanded beyond traditional sources of data and opened up the platform to alternative data sets that can be used to generate alpha:

By tracking, scrubbing, and visualizing key company/brand data such as website traffic, search volumes, Twitter mentions, app downloads and more, Mosaic allows analysts to correlate web interest to revenue growth and price performance, driving a significant alpha generation edge

They’re not just using NLP for screen-scraping, but also enabling users with the ability to ask the platform questions using natural language:

A Bloomberg terminal alternative with NLP querying

Source: Sentieo

Pricing and Competition

When it comes to pricing, Sentieo claims to be “aggressively priced” versus their competitors. An article by TechCrunch around the time of their last funding round put pricing at $500 to $1,000 per month, per seat. That means they’re somewhere around half of Bloomberg’s “$21,000 per seat” annual price tag. They also need to compete with other large financial data providers in addition to Bloomberg. Thomson Reuters Eikon is said to be the closest competitor to Bloomberg. An article on Investopedia cites the below numbers from 2013:

In 2013, Bloomberg Terminal’s 315,000 users accounted for 57% of the market. By comparison, Eikon had 190,000 users who accounted for 34% of the market, and FactSet, S&P Capital IQ and Morningstar Direct comprise the rest.

Then, an article by the FT this year titled Bloomberg and Reuters lose data share to smaller rivals shed some light on how both of the aforementioned firms have been losing market share:

Bloomberg’s market share contracted to 33.2% last year from 33.4% in 2016, while Reuters share fell to 22.5% from 23.1%. By contrast, smaller rival FactSet grew its market share to 4.5% from 4.2%.

That means that smaller rivals like Sentieo are having success at penetrating the $28.5 billion market for financial market data, analysis and news (number taken from the FT article mentioned above).

Conclusions

The rate at which technology is changing the world around us slows to a crawl in some industries like finance where “we’ve always done it this way” and people are resistant to change. Sentieo has their work cut out for them trying to displace the more than 320,000 Bloomberg terminal users out there, but they could focus on getting the universities to adopt their solution and hope that over time, things will move towards the better platform. Then there’s the cost advantage of Sentieo, something that every firm is trying to control, especially as the purse strings tighten with lower fees being the flavor of the day. With $28.5 billion dollars in spend to target, what we can be certain of is that there will never be a shortage of Bloomberg terminal alternatives trying to land grab in the coming years.

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