25/1/2024
A common project for both companies: to transform the ESEF regulatory obligation into a financial communication opportunity for all players.
Fundamental financial analysis has yet to unlock the potential of Big Data
The digital transformation of the world has generated a colossal amount of data, providing businesses with anessential resource to track, analyse and harness. Data is the new digital gold – and the number of industries benefiting from data science keeps growing.
Financial services are no exception and are already exploiting data for some specific applications, e.g. fraud detection to mitigate risks in banking operations, or investment experts using satellite imagery for quantitative analysis. As far as fundamental financial analysis is concerned, however, no significant contribution has yet been made. Granted, companies' financial data is publicly available, but it is still communicated through PDF formats that are easy to read for humans… not for machines.
There are several reasons for this. In their publications, listed companies prioritize marketing and graphics overdata structure. They also take a great deal of freedom in the metrics they choose to disclose and the way they disclose them. In addition, the quantity of data is much larger than in most areas, amounting to thousands of data broken down by sector and accounting standards.
Financial professionals pay a heavy price
Without technology, investment professionals are forced to source data from PDF documents in order to value or compare companies. These tasks are time-consuming, error-prone and, in such a fast-paced environment, they ultimately weigh heavily on the whole industry. Companies could certainly put this valuable time to better use, for instance to understand their competitive environment. And instead of wasting hours reviewing PDF files, analysts could screen more companies, integrate new indicators or engage more with executives.
Moreover, in a context of multiple crises, European markets must remain attractive and encourage investment by leveraging any tools at their disposal. In that regard, data science seems tohold the greatest potential to improve market efficiency.
Open data thus opens the door to tremendous progress for the financial sector and the European economy. Since the key to better financial decision-making lies in a better understanding ofthe market and its players, the advent of an actual open data ecosystem would necessarily be good news.
Yet in spite of this, the European Union does not currently provide an official database of its companies. Thisputs the European market at a disadvantage, especially if you compare it with the United States, where a database of detailed corporate publications (Edgar) was made available... more than a decade ago.
Business data digitisation is on its way, but…
Overall, the European Union did grasp the stakes of using data to support its economy and finance green and digital transitions. The European authorities understand that the digitisation of issuers’ information promotes transparency and thus boosts sustainable investor confidence.
This observation led to the Transparency Directive, which aims to facilitate access to the publications of listed companies. With around 5,000 companies now required to publish their annual reports in an electronic format (ESEF - European Single Electronic Format), the digital information is out there.
But to actually be useful, these data must be readily available and thus centralized in a single database. That is not yet the case. The idea has been discussed for years, but the European Single Access Point (ESAP) is still in the draft stage.
There is still a gap between the dream of European Open Data and the reality experienced by financial actors. Fortunately, in order to relieve analysts from the tedious task of inspecting miles of PDF for this valuable data, private initiatives are providing the solution.
Don’t wait any longer to access business information in Open Data!
Such a database exists, and it isalready accessible. Corporatings has built a platform which centralizes and makes all company data available, LENS by Corporatings, the ONE solution: Open, Neutral, European.
As Europe's leading source of business data, LENS is currently implementing the dream of a European common data space. Hundreds of millions of data on nearly 15,000 European and US companies are already available and usable.
Thanks to the power of Artificial Intelligence, this data is also easier to exploit than in the past. Depending on your needs, you can manipulate raw company data, download it or benchmark it.
Benefiting from such agility is all the more important at a time when companies have to disclose an increasing amount of information, especially with the emergence of extra-financial reporting (CSRD directive - Corporate Sustainability Reporting Directive),which will apply to approximately 50,000 European companies.
Contact us now for a Lens demo and early adopter access.