Yesterday, Larry Fink, the CEO of BlackRock announced that BlackRock is going to acquire eFront, a risk management platform called for USD1.3bn. I gasped. Late last year, State Street announced that it will acquire Charles River, eFront’s competitor, for USD2.6bn. I think the acquisition of the latter has been completed. In 2017, GIC invested 30% stake in Mergermarket (now known as Acuris), a core provider of data, research and analysis particularly on M&A.
What does this tell you? What do they have in common? What are the motives of these asset managers?
All longing for more data and better technology/systems to provide more sophisticated solutions for the clients or stakeholders. This is definitely a growing trend and I only mentioned a few, albeit the major ones. BlackRock and State Street are already trillion dollar companies (by AUM) and yet they want to make sure they continue to be at the fore front, as AI, computers and machines take over our lives. Well it makes sense, they are big and they have a lot of cash that they can just buy a company that has been collecting data and selling platforms/softwares to clients in the financial industry and by BlackRock and State Street acquiring eFront and Charles River, they are both going to have access to all clients data. That’s the main beauty of the acquisitions.
This also tells you that as an employee, you have to learn how to use these systems and be able to swim across the ocean of data to provide valuable insights in a timely manner. And that is a challenge. In Malaysia, let’s not talk about asset managers acquiring platforms/systems, we tend to just outsource and sign a contract with the vendors. eFront and Charles River are both names that are not new to me. They are vendors that I have dealt with, either at proposal levels or execution levels.
Malaysia has still a long way to go. If you keep outsourcing, you will rely mostly on the external capabilities which is fine at the beginning but over time, our capability cannot be just limited to storing the data in the systems and then generate output. We need to learn how to control the systems/models so that we can customize according to our needs, mostly to make our daily work more efficient.
It’s not just the technical capability that we need to address, but it is also the culture and mindset. Employees are always bogged down with day-to-day work that they do not carve out time to innovate – improve productivity and learn the new way to do things. This needs to be addressed, otherwise we will be left behind. And this is applicable to all other industries. When you have proper systems, you are able to play with your data in timely manner and generate insights to make better decisions.