Money managers including State Street, Pimco and Amundi are pouring money into digital investment platforms in hopes of emulating BlackRock’s technology business, which is bringing in new revenue even as falling markets hit fees from their core investment clients.
BlackRock got into the business of software as a service more than two decades ago. The world’s largest money manager now makes nearly 8 per cent of its revenue from selling technology to rival asset managers and other financial institutions. Just as Amazon developed cloud technology for its own needs and then commercialised it, BlackRock built the Aladdin portfolio management system to manage its own holdings and started offering it to clients in 1999.
Now State Street and Amundi are trying to go head to head with Aladdin. All three platforms offer a package of services that can include allocating assets to the right portfolios, tracking changing values, measuring risk and linking investors to data and outside providers. That appeals to money managers trying to simplify their IT and cut the time wasted on repetitive tasks.