Future of Investing

What BlackRock’s Larry Fink thinks about financial technology

  • "Technology is transitioning from a competitive advantage to a competitive requirement."
  • BlackRock's Aladdin platform is used by 20,000 investment professionals around the world.
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What BlackRock’s Larry Fink thinks about financial technology

When the CEO of the largest asset manager talks about technology, you probably want to listen. BlackRock’s Larry Fink invested heavily over the years in the firm’s technology.

The company’s hosted Aladdin platform is used by 20,000 investment professionals around the world. It combines risk analytics with portfolio management, trading and operations tools on a single platform.

“BlackRock’s Aladdin technology connects our global investor community on a common platform,” Fink said on the firm’s Q2 investor conference call. “The scale of our trading and liquidity platform enables us to access market liquidity that few firms can, and we further enhance that scale through the Bank of America Global Capital Management acquisition in the quarter. Our data expertise allows us to turn large, unstructured data sets into meaningful investment insights, and our risk and quantitative analysis teams provide independent oversight to help identify both risk and opportunities.”

BlackRock also acquired software-driven portfolio manager, FutureAdvisor in 2015. It was the first time a major financial services company acquired a roboadvisor. More firms have entered the automated portfolio management space since, including Schwab and Vanguard. Goldman Sachs bought Austin-based Honest Dollar, a firm that focuses on retirement assets.

“We also believe that the evolving technology and regulatory landscape including the new DOL rule in the U.S., digital advice will play an integral role in increasing access and transparency for investors,” he said. “And we continue to see strong client interest in our FutureAdvisor platform, as clients look to new and innovative wealth management solutions. Clients not only turn to BlackRock to manage their assets, but also to help them understand the larger term impact of global events.”

Robos like FutureAdvisor are efficient distribution channels for distributing the firm’s iShares ETFs. LPL Financial is one of the first major financial institutions to use BlackRock’s software for its digital advice platform.

BlackRock makes no bones about its intentions to leverage technology to scale its business. For Fink, financial technology is no longer a differentiator. It’s now required to compete in financial services.

“Technology has always been a core component of our value proposition, and a significant differentiator for BlackRock,” Fink said. “As the investment landscape evolves, technology is transitioning from a competitive advantage to a competitive requirement. Those that do not invest in technology will not be able to meet their clients’ long-term needs. Technology remains a key area of focus and investment for BlackRock across all aspects of our business, to enhance our investment process, to enhance our client service, to create operational efficiencies, and our unifying BlackRock Aladdin technology platform.”

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