BlackRock’s Aladdin operating system for investment professionals manages a whopping $21.6 trillion of client assets as of 2020. No wonder that competitors are trying to take it on.
State Street, an asset servicing giant with the Charles River portfolio-management system has thrown its hat into the ring, as have quant fund Two Sigma and Nasdaq-backed vendor Solovis.
But BlackRock hasn’t met a competitor quite like Amundi, Europe’s biggest asset manager, which has formally announced its Amundi Technology platform.
Amundi Tech is not just backed by a rival investment firm, but it’s got a broader remit, serving a variety of client types. That doesn’t mean it will automatically prevail – there’s the risk of being too diversified and not focused enough. But it could suggest that technology is making it easier for large players to scale multiple services.
Guillaume Lesage, Amundi’s chief operating officer in Paris and the person responsible for the Amundi Tech business, says the new line is an offering for asset managers, institutional investors, financial advisors and asset servicers.
“We are targeting the entire financial industry that deals with savings and investment,” he said.
Amundi’s assets under management have reached €1.7 trillion ($2 trillion) as of December 31. That’s big, but BlackRock’s $8.7 trillion still puts it in the shade.
Tête à tête
Asked by DigFin to compare Amundi Tech to Aladdin, Lesage said, first, Amundi Tech competes with both Aladdin and with vendors in other domains. He cited SimCorp, a vendor providing investment software and services to banks, and Temenos, which supports the middle and back offices of private banks.
“We cover the full range of the savings industry, not just asset management,” he said. “We compete with BlackRock for asset management, but when you go to employee savings and retirement, or discretionary portfolio management, or asset servicing, then we are [exposed] to other competitors.”
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Second, and more importantly, Lesage says Amundi Tech is built on a newer tech stack and ethos. “It is a fresh type of offer, based on open source and cloud.” (BlackRock has recently partnered with Snowflake to offer cloud-based services.)
This offer means the platform is a services company as well as a software provider, allowing customers to choose products à la carte. “Clients have to cope with margin pressures, increasing regulation, and a rising cost base, while adapting to their clients who want digital solutions and customized solutions. Many firms do not have the skills or the financial capability to invest in the necessary technology. With the COVID crisis, there is a need to move to even more quickly to digital, artificial intelligence, cloud and mobile applications.”
Joseph El Gharib, head of business development at Amundi Tech, says the range of services sets it apart. The business supports the dealing desk through to middle offices, data services, to reporting.
Aux armes, citoyens
BlackRock’s Aladdin was developed as a portfolio, trading and risk solution for the firm and then expanded to manage third-party assets, making it the default tech for many asset managers. Amundi is relying partly on its internal capabilities but also with partners to provide a broader offering.
These partners include BNY Mellon for custody and CASEIS for fund administration; and with MSCI Risk Metrics, Bloomberg, IHS Markit and other companies for analytics or specialist asset-class support.
But like BlackRock, Amundi has developed a lot of the technology initially to serve its own needs, supporting its move into a variety of products, from passive funds, to real assets, to ESG strategies.
“Many financial companies have lost control of their information technology,” said Arnaud Fricaudet, head of Amundi Technology. “The complexity of artificial intelligence is not about hiring data scientists, but building the infrastructure to manage data.”
Part of the business case is to aggregate data from multiple vendors and venues, he said.
Amundi Tech has been operating without fanfare and now has 24 clients, including asset managers, family offices, insurers and financial advisors.