Squeezed by regulation and passive investing, investment analysis is being reshaped: Financial regulations and the growth of passive funds is causing investment research to undergo radical changes, the Financial Times reports. Europe’s Mifid II regulations — a response to the global financial crisis that aims to increase transparency and protect investors — require asset managers to pay directly for analysis or make the costs transparent to their clients, instead of bundling them into transaction fees. This is causing funds to reconsider the amount of research they purchase, “changing the whole nature of investment research,” markets consultancy Tabb Group wrote in a recent report. The increasing popularity of tracker funds is posing similar problems for analysts, whose skills are irrelevant for passive investors.

Analysts are using technology and data science to extract new information and present it in a personalized way: Technology and data science have become the core tools for analysts to tailor information — and the way it is presented — to clients. Analysts increasingly scour non-traditional sources such as satellite imagery and credit card data, as well as making use of AI techniques like machine learning and natural language processing to extract insights from more traditional areas. And not only are banks seeking to capitalize on the potential offered by new technology to enhance their analysis, but several have actually set up independent businesses focusing on this process. UBS’s Evidence Lab is one example of a self-contained entity that provides “insight-ready datasets” to clients. There is both more of an emphasis on providing clients with well-organized raw data — rather than opinions — and a clear change in how the content itself is presented, with a trend towards reports being punchier, and research being presented through accessible media such as videos, podcasts, and social media.