The world’s largest asset management company is realizing technological innovation in asset management through a growing team of artificial intelligence.
BlackRock founded an organization called AI Labs in Palo Alto, Calif., last year, led by Stanford University professor Stephen Boyd. The $6.5 trillion asset management company will use the artificial intelligence lab to research new capabilities ranging from automation platforms to alternative data to risk management.
The latest public recruitment information shows that the 30-person team is working on a series of projects such as next-generation ticketing platforms and human task automation. According to the recruitment disclosure materials, BlackRock’s current projects include a platform for dynamic pricing and automatic bidding for the securities lending business. BlackRock has been cultivating this $1.7 trillion securities lending business since 1981.
In addition, employees of the Artificial Intelligence Lab are using alternative data sets to find useful signals. According to industry insiders, despite the emergence of new suppliers, the booming data business is difficult to produce effective returns, which has always been a major problem in asset management.
BlackRock chief engineer Koczynski stressed in a blog post last year that artificial intelligence technology is already helping to deal with a lot of “chaotic unconventional data.” Machine learning and artificial intelligence technology enable it to quickly sort through the data, and when combined with millions of other data points, these factors help fund managers make smarter investment decisions.
The Artificial Intelligence Lab also processes natural language in financial reporting, news, and contracts, and automates repetitive tasks, trying to free employees from these trivialities, improving efficiency, reducing errors, and freeing up valuable human resources. Capital allows fund managers to pay more attention to the needs of investors. Fund managers are seeing artificial intelligence as a means of improving fund performance.
Currently, BlackRock has begun to deploy and actually apply artificial intelligence in many aspects. The above-mentioned treatment of big data, the construction of automated trading platforms, etc., is also a way to reduce costs through automation when investors have fled the active funds with higher incomes and switched to cheaper passive strategies.
Technology investment beyond imagination
In a sense, BlackRock is not like a traditional asset management company, and its emphasis on technology is beyond the imagination of many people. A senior data scientist recently said in a blog post: “Data scientists and engineers have a lot of space in all areas of the business, including investment, sales, marketing, operations, products, user experience, etc., which may result in Very big impact.”
BlackRock has long been committed to becoming a financial technology innovation, especially its investment management platform Aladdin has become a relatively mature and leading asset management platform in the industry, which is another area where BlackRock focuses on the application of artificial intelligence. The cornerstone of artificial intelligence – applied mathematics and data science – has been embedded in Aladdin and is being applied on the platform in innovative ways.
It is understood that Aladdin is a risk management-based trading, asset management and risk control platform developed by BlackRock. Aladdin combines the information, people and technology needed to manage funds in real time during the investment process, combining sophisticated risk analysis with comprehensive portfolio management, trading and operations tools on a single platform.
In order to further develop, BlackRock is still hiring technical engineers. BlackRock has a lot of needs for technical engineers, and even thinks that this is an IT company. The latest recruitment technology information shows that as an engineer in the BlackRock Quality and Development Tools team, he is committed to developing tools and processes to help his existing 3,000 developer community build, test, and deploy code.
At present, one of BlackRock’s development priorities is the continuous investment in financial technology innovation, hoping to become a technological leader in the entire asset management value chain. According to the annual report, financial technology-related revenue currently accounts for 6% of the company’s total revenue, but it is one of the fastest growing sectors. In 2018, technology services revenue increased by 19% due to strong market demand for investment management platform Aladdin and digital wealth related technologies.
According to the reporter, BlackRock is not the only asset management company that considers how to use artificial intelligence in its asset management business. Veteran fund managers such as Franklin Templeton are embedding data scientists in their investment teams, while startups such as Pagaya are using artificial intelligence to reshape their investment strategies.