AI could solve productivity crisis, says executive – 06/16/2023 – Market

BlackRock founder Larry Fink predicted that “transformative opportunities” in artificial intelligence could solve the productivity crisis, to which he attributes persistently high inflation.

Speaking at BlackRock’s Investor Day, Fink said: “The collapse of productivity has been a central issue in the global economy. AI has enormous potential to boost productivity and transform margins in every industry. It could be the technology that can solve this problem. bring down inflation”.

Fink has repeatedly warned that high inflation could force the US Federal Reserve to resume raising interest rates later this year.

Noting that he is a fan of dystopian films, Fink said the $9 trillion (about $43.3 trillion) fund manager will bring a “healthy paranoia” and “healthy enthusiasm” to his tech investments.

Meanwhile, Fink said that BlackRock, which is the world’s largest asset manager, continues to pursue acquisitions that could expand its global presence, expand its technology offering and expand its presence in private markets.

“We are reinventing our business model”, said the chief executive. “BlackRock has never been afraid to make big bets. Our willingness to disrupt ourselves and the industry (…) has laid the foundation for what BlackRock is today and will drive our growth in the future.”

Fink and other executives made no mention of the sustained criticism BlackRock has received from “anti-woke” Republican politicians in the US, except for a reiteration of the financial opportunities it sees from investing in the energy transition.

The group pledged to continue growing revenue at 5% a year with aggressive targets for its Aladdin technology business and its relatively small but high-margin private markets business.

The group announced an agreement with Avaloq, a Swiss provider of banking software owned by the Japanese NEC Corporation. BlackRock will make a minority investment and link the technology to its Aladdin offering for wealth managers.

Executives also hope to capitalize on the trend of insurers, endowments and pension funds to reduce the number of managers they work with and even outsource the entire portfolio to a single company. BlackRock has won 20 of these “mega-terms” worth at least $5 billion since 2019.

“Customers are doing more with fewer suppliers and doing more with us,” said COO Rob Goldstein.

The group aims to double its revenue in private markets in five years from the current level of $1 billion. To this end, it recently separated the leadership of private credit and multi-asset funds from traditional private equity. It has $320 billion in alternative assets, including $156 billion in private markets, with the rest in hedge funds and liquid credit.

While critics complained about BlackRock’s size and influence, several panelists argued that the asset management industry remains relatively unconsolidated.

“People keep thinking we’re big, but we’re not. If all this happens, we’ll still only have 3.1% [do mercado total]”, said Mark Wiedman, who leads the global client business.