Fintech Sandbox has announced the addition of a new data vendor; StockTwits. Their participation adds a new spice to the fintech initiative. As covered in the past, FinTech Sandbox is composed of a consortium of financial market data vendors and technology firms, that provide services to startups for free or at a large discount. The benefit to startups being admitted to the program is cheaper market data and technology solutions as they are developing and developing their products.
For financial vendors and technology providers, the public benefit of FinTech Sandbox is that it provides them greater exposure, as well as a foot in with startups that could become long-term customers of its services as their businesses mature. Less clear of a benefit, but potentially more important, is the ‘sandbox’ aspect of the program.
As the saying goes, “The street finds their own use for things,” this phrase fits very well with technology. While developers may have their own opinions of how their products will be used, ultimately it’s the public (AKA: giant sandbox) that figures out best the use cases for new services and solutions. Within the FinTech Sandbox, for data vendors and financial companies, allowing its products to be used by startups also provides them a close view of the needs and use cases of innovators.
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In this regard, the addition of StockTwits is an interesting one for the FinTech Sandbox. While StockTwits is known for its front-end social trading community and inventing the $TICKER cashtag, the firm is also opening up user data to third party developers as well as using it for proprietary projects. Among its proprietary products, is user sentiment, which aggregates the long and short opinions of its community for every covered stock and asset.
In their prepared remarks about the news, Justin Paterno, President of StockTwits, described that their community was generating massive amounts of data which could be analyzed by financial firms. In relation to FinTech Sandbox, Paterno added, “Now, it’s time to see what innovations FinTech Sandbox residents can build for the benefit of the global financial community using our data.”
In relation to possible use cases of their data, Pierce Crosby, Director of Business Development at StockTwits, related to Finance Magnates, “The simplest ways we’ve found to identify signal is though quantifying social sentiment and asset message volatility.” In this regard, Crosby described that just like traders follow trading volumes as it relates to price action, with their community data, there is an opportunity to create strategies that are based on analyzing the relationship between message volume and trading moves in the market.