Could it be a coincidence that technology is so central to two of the largest asset managers in Europe – or is it more likely that it is the technology itself that explains how BlackRock and Amundi have grown to such colossal size?
Read our full FundsTech Forum 2024 roundup here
BlackRock, the largest asset manager in the world, and Amundi, the largest in Europe, both run their own portfolio management systems. BlackRock’s Aladdin sits within a dedicated risk management division, BlackRock Solutions, while Amundi’s Alto sits within Amundi’s dedicated technology business, Amundi Tech.
If the firms’ success does correlate to their spend on technology, then it shows how technology could be a decisive factor for any asset manager’s business, particularly for global expansion and scalability.
Which brings us to FundsTech Forum, a day-long conference organised by Funds Europe in April 2024. A few years ago the FT said the funds industry’s digital transformation was proceeding at a “glacial” pace. At the FundsTech Forum 2024 we sought to establish whether this was still true.
Throughout our panels, we discussed how regulation and innovation match-up to each other. We discussed to what extent automation and standardisation are possible in the arcane and opaque world of private markets. And we discussed how far the industry has come in creating utility-like frameworks to bring greater efficiencies and cost-savings.
Blockchain and tokenisation naturally got more than just a passing mention.
In this special report, we focus on two discussions: digitisation for efficiencies and growth; and we consider why the funds industry has not succeeded in creating a utility. A utility would enhance standardisation, data sharing and foster greater automation.
Fantastic speakers
FundsTech Forum also had some fantastic participants. For example, Dr Carolina Minio-Paluello, who at the time was chief executive officer of Arabesque AI, spoke with us about what it means to be an AI-powered asset manager and also how AI and data could be used to bring separately managed accounts to smaller investors.
We spoke with Belinda Souter, head of business transformation at CBRE Investment Management. On her panel, among other topics, we asked if private markets firms could ever offer a retail-like experience.
And we spoke with Karen Sands, private equity COO at Federate Hermes about strategic priorities and how technology might help.
In a series of break-out panels, audience members joined in with conversations. One of these was about the actionable steps that firms need to implement in order to achieve data standardisation. Audience members were also asked to think about how asset managers could embrace tomorrow’s investment models if their technology belongs in the past.
Technologists at board level
We polled the audience, too, throughout the event. We found that 96% of delegates who voted said they felt technologists were underrepresented at board level across the industry. This scarcity of tech senior managers highlights a gap in leadership and perhaps explains why the industry’s level of technological transition is slow.
Those leaders are needed in order to empower individuals within firms to implement digital programmes without fear of hard consequences, like losing their jobs. Fear of being sacked was also said to be a reason why few firms felt comfortable making meaningful strides with technology.
A year later, FundsTech 2025 will continue with these themes. But what about our initial question: Has the pace of digital transformation within asset management increased?
Absolutely, yes, it has. And what else has increased is the inexorable power of BlackRock to hoover up assets. In the third quarter of 2024 the firm saw $221 billion of net inflows. Any asset manager managing that kind of number for their total AUM would be considered as large, never mind the fact that this inflow helped take BlackRock’s overall AUM to a staggering $11.5 trillion.
The link between technology and growth in asset management seems certain and the firms leading are the firms where technology leadership has a prominent presence at the highest level.
