eFront Insight

Initially, eFront was a special investment software company.

In 2019 BlackRock , she bought the company for $1.3 billion dollars in cash.

After the purchase, the developments and competencies of the company were integrated into the BlackRock structure. For 2023, the direction of AI is developing on the basis of this company.

BlackRock manages the pension savings of more than 35 million Americans. BlackRock is a leading provider of outsourced financial services to financial, investment and insurance companies.

At this time, BlackRock has 19,500 employees, of which 33% are data technicians. Put simply, a third of the company's staff are 'techies', developers and testers.

The entire structure relies on their work: BlackRock - iShares ETF - Aladdin - eFront.

iShares ETFs - More than 40 million investors worldwide use the iShares ETFs ecosystem. By this time, BlackRock had brought more than 1,300 ETFs to market. Investing in ETFs allows you to distribute risks and not analyze the fundamentals of all companies included in ETFs, providing this to BlackRock specialists. This is how the iShaes ETF ecosystem appeared. And in 2024, the pearl in BlackRock's ETF collection will be the Bitcoin ETF.

Alladin - the real-time risk assessment system evaluates more than 3000 parameters. The number of users of the Alladin system is more than 130,000. More than 400 leading insurance companies use this risk assessment system as the main one.

History

2023: Pre-screening of a generative AI pilot for the first 10 customers

In December 2023, BlackRock began a closed preview of its first generation AI pilot for ten select customers of eFront, a wholly owned software platform company under BlackRock's Aladdin. Following the pre-test phase, the'co-pilot' is expected to be introduced to all 130 eFront Insight customers in the first quarter of 2024, including large pension funds, mutual funds, insurance companies and asset managers.

Tarek Chowman, Managing Director and Global Head of Customer Business at Aladdin, and Kunal Hara, Managing Director and Head of Products at Aladdin notified this pilot program of Aladdin employees on December 14, 2023. Recall that the total amount of assets managed by BackRock at this time is more than $9.1 trillion, and its management connects the future of the company precisely with the use of AI technologies.

Tarek Chowman said that the'co-pilot' of eFront is a high-tech chatbot that converts written requests into customized data visualization. The bot was developed using Azure OpenAI services. Chowman noted that this is the first variant of the bot to be continuously perfected. Aladdin's' co-pilot 'is expected to be the company's main offering.

The closed preliminary testing was the result of extensive testing of eFront's' co-pilot 'at BlackRock. Despite internal testing, it is planned to carry out refinement before the official release based on user feedback. Ten preview participants volunteered for the program, showing interest in BlackRock's artificial intelligence capabilities.

Larry Fink, CEO of BlackRock, has consistently expressed enthusiasm for the potential of generative AI. Fink noted that the company much earlier than competitors began to develop AI. Back in 2018, the AI Labs project was launched. Then BlackRock hired 100 AI specialists to work in various departments of the company. Chowman stressed that AI is widespread in the company and all employees use AI in their workplaces.

At BlackRock Investor Day 2023, Fink gave a speech to investors in New York about the transformation opportunities that artificial intelligence opens up. He humorously expressed optimism that artificial intelligence could revolutionize long-term investing and human life, debunking the dystopian notions common in films and books.

The paradox of the financial industry in the United States today is that financial education there is extremely conservative and real experience and knowledge are concentrated in a few corporations that develop as closed eco-systems.

Just staying within the walls of even very prestigious American universities does not guarantee an understanding of the mechanism of financial markets, wrote Rybar.

Such a direction as fundamental analysis is often criticized for its low speed and isolation from the real situation in the market. There is some truth to that. But it is big companies that understand the importance of fundamental analysis in dynamics. Working with huge amounts of online data, not available to most retail investors, constitutes a competitive advantage for companies such as BlackRock, Berkshire Hathaway and others. But this requires prompt access to thousands of constantly updated market parameters and software that can quickly process this information.

From this there is a fascination of retail investors with technical analysis, where decisions are made on the basis of several dozen (sometimes hundreds) indicators. It's a very limited and 'lagging' system that doesn't give a full picture of the market. But this is the only available option for retail investors. And there are successful cases there. But the natural limitations of this approach are clear.

An extreme case of technical analysis is high frequency trading (HFT). Here, the bet is on receiving the signal and transmitting the order to the exchange in milliseconds, which allowed/allows to "overtake" most retail investors. This requires significant investments in establishing a high-speed connection with the exchange, signal transmission systems and special software.

Understanding the limitations of each approach, BlackRock management is trying to take the best from each of them and use it to make a profit.

Earlier, the market was offered an Alladin product that allowed corporate clients to access adequate online analysis of thousands of market fundamentals. This is critical for risk assessment, and the product has become in demand among insurance and investment companies around the world.

And now, on the basis of eFront, a new product is being created that takes advantage of the previous two and complements their AI. This will allow you to offer customers a solution for working with very specific software without obtaining special training. The eFront interface is familiar to most users, smartphones which creates a sense of simplicity and reliability.

On the one hand, this will greatly simplify the work of investors in the stock market, but the downside will be the absolute inaccessibility of the basic knowledge necessary to assess the market situation for both retail and corporate investors. This will allow BlackRock to make them dependent on its services and occupy a dominant position in the financial services market, Rybar wrote. In essence, BlackRock aims to become a global financial data provider and the largest broker. This is the position of an indispensable intermediary who earns on any market movement.