Leveraging Spending and Payroll Data to Generate Alpha Opportunities from Envestnet | Yodlee and Snowflake

In the race to gain a competitive advantage, investment managers and business decision-makers are using data analytics tools, data science, and data clouds together to leverage data from their internal sources and external third parties to generate alpha opportunities and gain corporate insights.

This was the subject of a recent webinar titled, “Driving Investment and Business Strategies with Intelligent Data Analytics Tools from Envestnet® | Yodlee® and Snowflake.” In this webinar, we explored how de-identified consumer spend and payroll data from Envestnet | Yodlee available via Snowflake’s Data Cloud Marketplace, can deliver business insights quickly and securely, using recent real-world case studies. This webinar featured:

Alex Izydorczyk, Former Head of Data Science at Coature
Tom Gray, Principal Business Development Financial Services, Snowflake Data Marketplace
Vinay Prasannakumar, Director of Data Products, Envestnet | Yodlee

Key Case Study Takeaways

Uncovering potential revenue signals and market trends based on de-identified consumer spending data

Case Study #1: Wayfair
In May 2022, e-commerce furniture retailer Wayfair reported softer revenue growth through Q1 2022, including a negative 10% growth rate in the U.S. These results fit with the consensus view of a decelerating growth trend¹.

Near-real-time spending data in April pointed to an even weaker growth trend with 600bps of softness in revenue growth. Wayfair highlighted this softer performance during their earnings call, noting the firm was trending down in the high mid-teens, versus the consensus expectation of a negative 10% for Q2. This disappointment led to a substantial stock sell-off that day, which continued throughout Q2².

The bottom line: Investors can use spending data to capitalize on inflections.
Using de-identified spending and payroll data can be helpful in understanding individual company performance, as well as macro themes, such as inflation and labor trends

Case Study #2: Travel Employment Trends
While labor shortages persist in discretionary industries such as:
- airlines;
- hotels, restaurants, and leisure;
- specialty retail

De-identified payroll data from Envestnet | Yodlee’s Aggregate Payroll showed these industries are recovering much faster than the others, albeit at different rates. Additionally, when this same payroll data was aggregated and examined over a two-year basis, it shows that none of these sectors have returned to pre-COVID hiring levels.

The bottom line: Investors can use aggregated payroll data to formulate a macro view. (This is not very informative)

Case Study #3: Wage Inflation
This ability to overlay spending data with payroll data from Envestnet | Yodlee gives insight into the hidden cost of churn. For example, Starbucks posted strong sales for Q1 and Q2 this year³. However, it has had to reduce its annual earnings guidance due to inflationary pressure from labor shortages and the subsequent wage increases. This fact wasn’t surprising. What is eye-opening, however, is that wage growth for new employees was substantially higher year over year than their existing employees. One can infer that onboarding new employees is proving to be very costly.

The bottom line: Inflation, such as wage inflation, is impacting company outlooks.
Accelerating investment decisions with use of external data There is growing demand for third party data for a variety of uses. Among these are corporate enterprises which are starting to incorporate external data sets into their decision-making, risk analysis and control processes to augment their own internal data to further optimize their business. The reasons for this growth include the increasing digitalization of the economy as there are more sources of data with greater coverage and granularity than ever before, while reduced technology costs and more “plug and play” data ecosystem options make it easier to integrate these third-party sources with internal analysis systems as needed.

The bottom line: an external data strategy can help companies see around the corner to make better decisions.

Data That Means Business

Founded in 1999, Envestnet | Yodlee is recognized as a pioneer in financial data aggregation. By combining data with state-of-the-art analytics and machine learning, Envestnet | Yodlee enables building insights into an entire set of transaction pattern and merchant behaviors, both online and in-store.

The scale of Envestnet | Yodlee’s Data Analytics Aggregate Product allows customers to make meaningful data-driven business decisions ranging from interim sales activity, and event-driven activity, to business seasonality, and beyond.

Envestnet | Yodlee Income and Spending Trends utilize de-identified transaction data from a diverse and dynamic set of data from millions of accounts to identify patterns and context to inform spending and income trends. The trends reflect analysis and insights from the Envestnet | Yodlee data analysis team.

For more details and additional insights, we invite you to view this 40-minute webinar in its entirely.

Sources

Leveraging Spending and Payroll Data to Generate Alpha Opportunities from Envestnet | Yodlee and Snowflake

Key Case Study Takeaways

Data That Means Business

Pumped Up or Pared Down? Unpacking America’s Gasoline Spending Trends

The Business Case for Data Aggregation

Transforming Bank Transaction Data Into Personalized Insights

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