BlackRock’s Larry Fink predicts AI could solve the productivity crisis

BlackRock founder Larry Fink predicts that “transformative opportunities” in artificial intelligence could solve the productivity crisis he blames for 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 increase productivity and transform margins across sectors. This could be the technology that could reduce 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 $9tn money manager would bring “healthy paranoia” and “healthy excitement” to his investments in the technology.

Meanwhile, Fink said BlackRock, already the world’s largest wealth manager, continues to seek acquisitions that could expand its global footprint, expand its technology offerings and tap into private markets. Widen your presence.

“We’re re-imagining our business model,” Fink said. “BlackRock has never been afraid to bet big. Our desire to disrupt ourselves and the industry. , , It laid the foundation for who BlackRock is today and will drive our growth into the future.”

Fink and other officials made no mention of the continuing criticism BlackRock has received from “anti-voke” Republican politicians in the US, save for reiterating the financial opportunities that come with investing in the energy transition.

The group pledged to grow revenue by 5 percent annually, with aggressive targets for its Aladdin technology business and its relatively small but high-margin private markets business.

The group announced a deal with Avaloq, a Swiss provider of banking software owned by Japan’s NEC Corporation. BlackRock will make a minority investment and tie the technology to Aladdin’s offering for wealth managers.

Executives also hope to capitalize on a trend that has seen insurance companies, endowments and pension funds cut back on the number of managers they work with and even outsource their entire portfolios to a single firm. We do. BlackRock has won 20 such “mega-mandates” worth at least $5bn since 2019.

“Customers are doing more with fewer providers and more with us,” said Rob Goldstein, chief operating officer.

The firm aims to double its revenue from private markets in five years from the current level of $1 billion. To that end, it recently branched out from traditional private equity to lead private debt and multi-asset funds. It has $320bn in alternative assets, including $156bn in private markets, the rest in hedge funds and liquid credit.

While critics grumble about BlackRock’s size and influence, many speakers argued that the asset management industry remains relatively unconsolidated.

“People keep thinking we are big but we are not. If all this happens we will still only have 3.1 per cent (of the total market),” said Mark Widmann, who heads the global client business.