AIA tie-up with BlackRock, BNY joins global trend of data management
AIA Group is enhancing its investment capabilities through a partnership with BlackRock and BNY, implementing an integrated data management system across front and back offices.
This is part of a broader trend across Asia where asset owners and managers are rethinking the operating models of their portfolio management, trying to reduce costs and optimise for future growth, noted Mark McKeon, global head of middle office services at BNY.
“Clients are recognising they can get better capabilities and better services by partnering with organisations where this is their core business,” McKeon told AsianInvestor.
“I think over the last number of years, there's been more willingness from providers to partner to deliver a more integrated solution,” he added.
The remarks came as AIA announced in July its agreement with BlackRock and BNY to outsource its data management activities from front to back offices and transform its investment capabilities.
Under the partnership, AIA will implement BlackRock’s investment management platform Aladdin, while outsourcing data management functions to BNY.
By outsourcing its data management to a consolidated platform, AIA expects it to empower its investment professionals with enhanced data and analytics capability, and more robust risk management tools.
“With the solutions we are implementing, AIA will gain a single, consistent, and timely view across all asset classes allowing us to make even more informed investments across complex market environments,” said AIA Group Chief Investment Officer Mark Konyn in an announcement.
“As we work with BlackRock and BNY to transform our platform, AIA will continue managing our growing investment portfolio at greater scale to meet our performance, risk management and sustainable investment goals,” Konyn said.
AIA operates across 18 markets in Asia Pacific. Its total assets stood at $286 billion as of end-2023.
The deal happened right after BlackRock announced its $3.2 billion acquisition of private markets data provider Preqin in early July, which will be integrated into eFront, Aladdin’s private markets solution.
“We are thrilled to engage with AIA to deliver the breadth of Aladdin across AIA’s whole portfolio, including public and private assets, along with the ability to support insurance-specific needs," said Rob Goldstein, chief operating officer, BlackRock, in the statement.
EXPANDED ALLIANCE
BlackRock and BNY formed a strategic collaboration in 2019 to synchronise data between Aladdin and BNY systems and offer more integrated solutions for their mutual clients.
In 2022, BNY entered into a similar agreement with Aviva Investors to provide data support for its front, middle and back-office activities including mandate monitoring, performance measurement, and custody.
The partnership with AIA expands BNY’s role in the insurer’s data management across its entire investment lifecycle throughout public and private investments.
“For us, this is another significant client in the region that's really driving that transformation and the future operating model in the region,” said BNY’s McKeon.
Over the last three to four years, McKeon noted that clients have been under cost pressure, and started to review what is core to their business and needed to be retained in-house and what is not cost-effective and could be outsourced.
However, many tend to approach transformation with a siloed mindset, engaging different service providers for various functions such as custody, accounting, and transfer agency.
The most effective approach is to integrate data from back, middle, and front offices into a single comprehensive platform, providing a consolidated view of the entire portfolio's operations, he said.
WHOLISTIC VIEW
It is common in the investment management industry to outsource back and middle-office functions to third parties, usually to different providers. In some cases, certain front-office operations are also handled externally.
“As clients look to transform and outsource, they are looking for providers who have experience in partnering, such as BNY and BRS (BlackRock Solutions), to deliver a new operating model,” McKeon said.
Key benefits of such integration are that the investment teams, or the front office, will be able to have a “near real-time” view of their portfolios and trading activities. One example is that portfolio managers can have access to real-time cash availabilities, he noted.
This also helps ensure there is consistency across asset owners’ corporation actions among front, middle and back offices, and eliminate data and operational gaps among different service providers, he added.
Cash availabilities are critical to portfolio managers especially in a challenging and uncertain market environment like today, as more asset owners seek to increase exposure to the private market, where data is limited, while diversifying their exposures across asset classes, themes, and geographies.
Asian asset owners face growing challenges in gaining a wholistic portfolio view across public and private investments amid the rise of alternative investments, industry experts recently told AsianInvestor.
BNY is actively collaborating with BlackRock on data transformation projects for shared clients, primarily asset managers and insurance companies.
“We would expect to see more of these similar types of transformation deals,” McKeon said, noting that BNY is working on a number of opportunities in Asia as well as in Europe and North America.
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The headline and 3rd para of this article has been updated.