Most, if not all, the big asset servicing firms are diversifying their offerings to fund managers and pension funds, moving from their traditional space in the backoffice through the middle office and to the front office. Northern Trust last week announced a potentially major deal with BlackRock to provide new services to its Aladdin information platform.
To put this in perspective, Aladdin provides its services to clients with about US$17 trillion in total assets. It is so influential that ‘The Economist’ newspaper once opined that if most managers were getting the same signals, as it seemed they were, doesn’t that create problems for the markets as a whole? Of course, it also creates opportunities for other managers.
As part of its strategy to provide integrated products, services and technology across the entire investment lifecycle, Northern Trust has entered into a “strategic alliance” with BlackRock, the world’s largest asset manager by a wide margin, to deliver enhanced operations, data, and servicing capabilities to mutual clients. These new capabilities, delivered through Aladdin, provide clients with increased efficiency, inter-operability and transparency across the back, middle and front office, Norther Trust says.
The relationship with BlackRock supports mutual clients and is an extension of Northern Trust’s “whole office” service, an approach that integrates the bank’s global asset servicing platform with innovative partners, facilitating client access to new technologies, services and solutions.
Pete Cherecwich, Northern’s president of corporate and institutional services and a frequent visitor to Australia and New Zealand, said: “Our ‘whole office ecosystem’ delivers global asset owners and asset managers scale, efficiency, flexibility and optionality, ultimately enabling more informed investment decision making.
“We have a long-standing relationship with BlackRock and are excited to be working with them as part of our ‘whole office’ strategy. The alliance connects Northern Trust’s fund accounting, fund administration, asset servicing, and middle office capabilities to BlackRock’s Aladdin platform, creating greater connectivity between asset manager and asset servicer.
Rob Goldstein, BlackRock COO, said: “The current climate has once again demonstrated the importance of data symmetry and streamlining communication across the investment lifecycle from the asset manager to the asset servicer… BlackRock and Northern Trust are committed to providing increased transparency, accuracy and operating model flexibility for our mutual clients, leveraging our joint capabilities through Aladdin ‘Provider’.”
The open-architecture offering delivers integrated middle-office operations alongside strategy and trading, data and digital and analytical solutions to institutional clients. The alliance with BlackRock builds on a series of Northern Trust partnerships and strategic investments to provide solutions that span the investment lifecycle, including:
- Outsourced trade execution for asset managers and owners, and a digital and service platform for global asset allocators
- Currency management and FX algorithmic trading
- Integration with industry trading platforms, and
- Collateral optimization, risk analytics and digital innovation for asset servicing.
“We are following a very clear strategic pathway. We will continue to enhance our capabilities and add future functionality through a combination of buy, build or partner with best-in-class providers to benefit our global asset manager and asset owner clients,” Cherecwich said.
Northern Trust has about $US10.9 trillion in assets under custody and administration and US$1.1 trillion in assets under management. It’s two largest clients in Australia and New Zealand are the Future Fund and NZ Super. It also has a range of other-sized industry and corporate funds throughout the region.