Improve the Value of Your Information Assets in Finance

Information is one of the most important assets any company can own. Yet a lot of companies don’t see information that way. They honestly believe that information is something you cannot value as you cannot put a price tag on it.

Not directly, anyway. In the finance world, assets are divided into tangible and intangible assets. Tangible assets are items of value a company owns, a value you can measure directly. For example, a commercial building is a tangible asset as it has market value and price.

On the other hand, information is an intangible asset as you cannot really value it as you don’t know just how exactly it impacts your business. Despite all that, information can prove to be invaluable.

After all, when dealing with the right kind of information and data, companies can use those to make more strategic decisions that will improve business efficiency and performance. This certainly affects the company’s profitability and bottom line. But what if you could place value on information assets?

The data a company collects isn’t always relevant to their business operations, but that doesn’t mean it’s utterly useless. The information you collect but otherwise cannot use might be valuable to someone else, which means it can be traded. 

With that in mind, here’s how to improve the value of your information assets in finance.

  1. Evaluating information assets

The main challenge financial institutions and companies face is in evaluating information assets. As mentioned before, information is an intangible asset. It doesn’t have a physical form, so it’s basically invisible.

Such assets are difficult to evaluate. However, you can determine the value of information by determining how it’s being used. How information is used can determine its value, but every company might use information differently.

For example, another company may generate more value from your information than you could. What that means is that an information asset is pretty much unique to those who are using it and how they are using it. In other words, an information asset may not have value for your company but may prove invaluable to others.

As such, information can be traded, but it comes down to how much someone is willing to pay for it. 

There’s an issue here as companies don’t know how much value they’ll be able to generate from an information asset until they start using it. That’s why it’s important to create reports on how the information asset could be used. 

The potential implications of an information asset can turn it into a commodity much like raw data is today. Only this time, instead of trading raw data that needs to be processed, companies can trade insightful information that’s ready to be used.

  1. Defining value

When it comes to improving the value of an information asset, one must first determine what value actually is. In the finance world, value is directly related to capital, investments and profitability. In other sectors, value can mean anything from raising brand awareness to getting more organic traffic.

This comes back to how companies use information assets to begin with. However, information assets can be correlated with different types of capital if finance companies make an effort to include information assets into their reports.

With the right business information management, your analytics can show how the use of information assets is affecting a company’s profitability. 

Here are a few examples of different capitals information assets can have an impact on.

  • Financial capital – Company’s profitability and bottom line as a result of direct sales.
  • Manufacturing capital – Acquisition of liquid assets, such as buildings, infrastructure and equipment.
  • Intellectual capital – Development of systems, procedures and protocols, as well as the acquisition of intellectual property and patents.
  • Human capital – Employee training, education, expertise and competence.
  • Social capital – Partnerships, reputation, stakeholder investments and meaningful relationships.

When an information asset affects a company’s capital, it provides value to that company in one way or another. Moreover, the value of an asset increases and the information it contains can benefit the company at the same time.

  1. The longevity of information

Unlike physical assets, information cannot be depleted, nor does it have an expiration date. What that means is that information assets can be used for a prolonged time provided they are accurately updated. 

In the finance world, information assets are updated on a daily basis or by the second, depending on the circumstances.

As such, the value of the information asset continues to increase. Trading or selling such assets can prove to be quite beneficial, economically speaking. 

The main reason is that information assets aren’t competitive. In other words, if one user uses it, it doesn’t mean that others cannot do the same. As mentioned before, the value of an information asset varies depending on who uses it and how.

As long as the asset has a steady incoming flow of fresh data, its longevity can be prolonged indefinitely. Information basically becomes a self-generating value asset because the quality and potential use of information tend to improve as new data comes in.

Information has the synergistic effect that physical assets simply cannot accumulate. 

Take cash, for example. It can be kept or used, not both. However, information can be kept, updated and traded or sold over and over again as different users might find different uses for it.

  1. The effectiveness of data analysis

As you may already know, information is extracted from raw or big data. This big data is generated for the ever-growing use of various technologies, such as computers, mobile devices, sensors, IoT devices, social media platforms and other offline and online activities.

The value of data increases as techniques and technologies to analyze it improve. The same goes for information assets. As data is transformed into information, it turns into knowledge, insights and even viable actions or strategies.

While data itself may be valued differently, the information extracted from it after advanced analysis tends to change things drastically. That way, you no longer have to value unprocessed raw data but instead value actionable and insightful information that was extracted from it.

The more sophisticated the analysis process is the more valuable data can be extracted. The value of data itself varies from industry to industry. 

Still, information that can lead to innovative business models, improve the efficiency of existing models or drive innovation in one way or another is actually something companies can measure in terms of value.

Intangible assets, therefore, become more tangible as you can more or less measure their value. However, the value of such intangible assets may still vary depending on how they are being used and by whom. Nevertheless, it becomes clearer to decide whether or not an information asset is worth investing in.

Improving the value of your information assets in the finance sector is quite a challenge. There’s more than one way to use the information, and there’s more than one way it can generate value. 

That’s why it all comes down to defining the value of an information asset. 

Of course, every company has its own way of doing so.

Author bio

Travis Dillard is a business consultant and an organizational psychologist based in Arlington, Texas. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for Seoturnover.