An investment management technology thesis for the next six months

By Tarek Chouman, Managing Director, BlackRock Aladdin

We’re halfway through this year—and we’ve already seen a number of adverse events impact the health of institutional and retail portfolios alike: a late-stage global pandemic, new inflationary pressures, myriad and evolving supply-chain challenges, and geopolitical tensions that continue to permutate and metastasize an overarching feeling of uncertainty. This feeling is sustained and pervasive. 

But, it is not the only feeling.

In my conversations with current and potential clients, despite this backdrop, there is also a feeling of determination. They are determined to navigate evolving market dynamics. They are determined to remain competitive. And they are determined to work on behalf of their various constituencies—including the end investor—the teachers and firefighters and pensioners and the many many other working people whose money they are managing. People who deserve dignity—now more than ever.

Each of these conversations have shared a common theme. In them, these business leaders know they need to drive change; they are on the hunt for more scale and accelerated growth—through large, transformational projects.

Growth—itself—is fundamentally about enabling new activities.

For asset managers, asset owners, and private markets players, that growth has to map back to what’s best for their clients. Similarly, enabling those new activities at a scalable rate requires conscious efficiencies that keep operations tight and positioned for longevity; the quintessential lean machine. A machine that is based on clarity—with eyes on an achievable target operating model, combined with the confidence that your infrastructure, your people, and your operations are working together toward that model—with the appropriate speed.

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Technology underpins all of this. It is the instrument of change for any investment manager.

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And the ecosystem, connectivity, and true partnerships that technology brings, are, in fact, what will help determine success during a continued period of market volatility—especially now, where there are seemingly more unknowns than knowns.

But, it will be up to leaders across public and private markets–the chiefs: viz. CEOs, CIOs, COOs, CTOs, and CROs; portfolio and wealth managers; heads of trading; and the whole choir of acronyms and asset classes, across geographies and firm types—to leverage a common data language, while pursuing controlled profitable scale (and growth) that benefits the end investor.

But how?


Technology within the broader financial services industry remains highly fractured, inconsistent, and is not always “fit for purpose.” In most cases, it consists of too many legacy systems and outdated business processes. (Ultimately, this cost is passed down to investors.)

At client organizations, we’re seeing an increased appetite for undertaking large technology transformation projects.

And if anything, COVID has accelerated this appetite as organizations look to technology to prepare their business for the future. Winning solutions must be open architecture and interoperable to support connectivity, convenience, and a persona-driven user experience (everything in one place—tailored for each user). More than ever, investors and advisors are choosing a small number of scaled platforms that offer everything in their ecosystem—in one place.

Since our early days at BlackRock, we have been on a mission to redefine investing through technology. This has led to a 30+ year journey to build and continuously refine Aladdin® as a tech platform that unifies the investment management process.

Today, the Aladdin® platform is a whole portfolio solution that delivers scale by supporting the full investment process—risk management, portfolio management, trading, compliance, operations, and accounting. Aladdin’s open architecture enables clients and partners to “plug in”—in a way that gives our clients flexibility, optionality, and interoperability—where Aladdin® works seamlessly alongside other aspects of a client’s investment process and tech stack. This model, where Aladdin® serves as the foundation—while providing flexibility for clients to create custom solutions to meet their specific needs—is one of the reasons clients trust us with a growing number of portfolios. To get here, we have also forged deep integrations with custodial banks, fund accountants, broker-dealers, and other leading ecosystem partners (boutique, start-up, and Fortune 500) like Microsoft.

And those integrations are bidirectional. Twenty years ago, Microsoft Treasury tapped us to streamline their investment infrastructure—empowering them to invest with clarity. Meanwhile, we began the process of migrating the Aladdin® infrastructure to the Microsoft Azure cloud platform—a venture that will unlock more innovation and capabilities. As a result, firms can now work with their clients directly in their Aladdin® environments to provide a more seamless, integrated experience.


Clients continually tell us that they are focused on doing more with data—from supporting alpha generation to delivering customized digital advice at scale. They need a platform that supports this goal and ties their portfolio to other key business data.

And the challenge is staggering. Since inception, BlackRock has had the view that asset management is an information processing business.

Today, the amount of data that is considered relevant to the investment process has exploded in recent years. Compounding this, the complexity involved in sourcing, cleaning, and making disparate data sources “speak the same language” is cumbersome. By making this leap from a sequential model to a model that understands in the two dimensions of the page, we created an NLP model that can process any document the same way. It doesn’t require extensive training and onerous tweaking for every document type. 

Simultaneously, the demographic of people using data within an investment firm is changing and getting increasingly technical.

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Investment managers (including BlackRock) have a growing number of employees with coding skills. They want to interact with technology to program, innovate, and differentiate themselves. 

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Of course, these “citizen developers” can be engineers, but many more are traders, portfolio managers, compliance officers, and operations professionals. Organizations are increasingly recognizing the importance of enabling this group to innovate—not as “shadow IT” coders but as an integrated part of the investment process with proper governance and controls in place.

This is a very modern use of resources.

We have focused on delivering technology solutions that blend traditional investment data with the increasingly large amounts of “non-investment” data to generate unique analytics and insights—in both a controlled and governed manner. This was the ethos behind moving Aladdin from an operating system to a true platform that is open and extensible to new sources of data, making Aladdin the data destination of choice for market practitioners—with solutions like Aladdin® Data Cloud. What’s more, our partnership with Snowflake has accelerated the pace at which we make new data available through Aladdin, backed by a rich product roadmap that will make more data, developer tools, and APIs available through the Aladdin® platform to help our clients innovate further.


Meanwhile, within portfolios—investors are increasing their allocation in private markets to seek higher returns than those generated in liquid markets. The historical outperformance of private markets is typically attributed to active ownership, longer investment horizons, and more direct corporate governance. Once considered a ‘nice to have’, the ability to support public and private assets on a single platform is becoming a ‘must-have’. To meet the trend in private markets, both Aladdin® and eFront® clients are demanding technology solutions that cover the whole portfolio, across asset classes.

But investors at large, who are accustomed to public markets, find that—by comparison—private markets are less standardized, with limited automation, and less frequent transaction data, creating a technological challenge in unifying public and private investment management on a single platform.

The scarcity and low frequency of private market data, combined with diverse reporting standards, makes it challenging for investors to consistently capture and correlate investment exposures across assets.

The management of private and public investments is often siloed within organizations. Dealing with separate teams, processes, and data creates significant inefficiencies. For an investment manager, a single source of data for both private and public markets enables the seamless production of portfolio-wide insights and performance reports. 

The Aladdin® platform delivers a whole portfolio solution that supports investors’ portfolio and risk management operations, allowing full look-through reporting across both public and private markets.

A whole portfolio solution fuels organizational transformation by unifying the teams that manage different asset classes. Clients are beginning to shift from having a whole risk-and-performance portfolio view to a fulsome solution that includes operational workflows across asset classes. But unifying asset classes is not enough. 

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As clients add asset classes to their portfolios, efficiency is crucial.

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To meet this demand, we architected the Aladdin® platform to efficiently support the full operational investment lifecycle across the markets. 


As private markets gain steam for portfolio construction among non-traditional players, general partners are looking for better ways to manage operational scale, adopt ESG within mutually agreed standards and new regulatory frameworks, streamline business processes, and meet the evolving demands of investors.​

​ At the beginning of the client relationship, private equity and venture capital firms that we work with—and are in growth mode—are often looking to replace spreadsheets or other manual operations with a turn-key solution that helps them make data-driven investment decisions—faster, at scale, and with greater transparency.​

​ ​But the long-running obscurity and decentralized operations of the private markets ecosystem have meant their technology needs haven’t been addressed to the degree that the public markets have. We are helping to close that gap with off-the-shelf solutions like GP Suite, eFront® Insight, and our own private-markets-flavor of natural language processing. In this way, PE and VC funds can raise more capital, make better investment decisions, increase runway and margin, while being more transparent with their investors and ultimately deepening their attractiveness as an asset class.


Across portfolios, there has been a tectonic shift of capital towards sustainable assets. More and more investors are agreeing that sustainability—and climate-related risks—are investment risks. And they want that conviction expressed in their portfolios. This is transforming the way institutions and individuals invest, which has significant implications for risk and return.

As this shift in market preferences unfolds and sustainable investing becomes the new standard, investors need access to high-quality data, analytics, and tools to help them understand, report and act on both risks and opportunities related to sustainability.

This is particularly true in the context of the risks and opportunities presented by the transition to decarbonize the global economy.

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As the world has begun to transition toward a net-zero future, investors want to know what this transformation means for their portfolios and long-term goals.

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And because the shape and speed of the transition is so uncertain, technology will play a key role by providing the analytics that help investors better understand and navigate that transition.

We’re continuously developing new sustainability-focused capabilities within the Aladdin® platform, by integrating climate and ESG metrics, analytics, and functionality into investors’ daily workflows to drive more informed decisions. We launched Aladdin® Climate and eFront® ESG Outreach to do just that. And just over the past year we have added over 2,000 new ESG-related data elements that support public and/or private markets investing. 


​In the second half of this year, these priorities, along with the need to dynamically navigate market forces must be backed by thoughtful, informed decisions. Those decisions will require a technological backbone that is not only purpose-built but offers innovative solutions (the instruments of change) that anticipate priorities—with institutional-grade support, consistent research and development, and a decades-long track record that is public, proven, and purpose-driven.