In uncertain times, trustworthiness comes from accurate, actionable, and timely data. And data-driven insights can power a forward-looking approach to accounting, according to executives at BlackRock®.
Especially for insurers, data is key, as it acts as the “raw material for competitive innovation, risk management, and decision-making power,” said Griff Norquist, U.S. Head of Financial Institutions for the Aladdin® Business, in BlackRock’s 2023 Global Insurance Report.
He argues that for insurance companies, there’s an opportunity to leverage an ecosystem like BlackRock’s Aladdin platform to streamline investment operations, better manage change, acutely and overall, and deliver unique (and more informed) investment outcomes.
“There are still opportunities for growth and differentiation,” explained Norquist, “but to make decisions with confidence, insurers need to have an ecosystem that they can trust.”
This theme also underscored a discussion at Aladdin’s recent Framing the Future of Accounting event—part of the organization’s broader series of executive forums. As institutional investors, the first thing to get right is being a fiduciary to the entity you’re supporting, said Marc Comerchero, BlackRock’s Chief Accounting Officer & Global Controller. With that posture, an asset manager can eventually become something beyond just a fiduciary to what might be considered a “storyteller.”
“Ultimately, managers want to be the storyteller of what’s going on with the data,” he said. “So, we’re going up that value chain, and that storyteller could be to internal stakeholders, it could be to regulators, or other external people, it could be to a whole host of people, who want the analysis and the story.
“Once you’re able to do that, then it brings you to what I call the nirvana, and that is the business partner piece. And being that trusted business partner allows you to have that seat at the table to provide those insights on trends, or anomalies, things that you’re seeing well before what other people are seeing,” said Comerchero.
“There is tons of data out there; we’re in a data-driven world. People can look at data and people can analyse, ‘Okay it went from A to B’—but how do you take that data and actually create information around that?
“A lot of people think accounting is backwards looking…but, I think accounting can be very much forward looking. We are seeing trends in the data. We can spot those anomalies to help provide advice to our business partners to help make better decision-making,” he continued.
According to Norquist, decision-making power is not only dependent on the confidence you have in the data, but also the strength of your Investment Book of Record (IBOR), how it aligns with your Accounting Book of Record (ABOR), and the overarching ability to report.
These are all areas where artificial intelligence (AI) has the potential to play a meaningful role, but many are ill-positioned to take advantage of AI and other emerging technologies as they lack an efficient ecosystem that is scalable and able to evolve.
To that end, Comerchero also noted that tools powered by generative AI are intended to augment, not replace. These tools are a copilot, not an “autopilot,” he added, and intended to make our lives easier and be a springboard for further efficiencies and innovation.
In December, Aladdin launched eFront Copilot, a gen AI feature for BlackRock’s private markets investment technology platform. With this copilot, users will be communicating with an AI-powered chatbot. The tool unlocks new efficiencies and transforms data into usable investment intelligence.
The executives’ comments underscore the importance of timely and actionable data in the current market environment, characterised by elevated volatility and risk of recession, leading to a risk point of view across entire organisations.
“It’s a necessary view, made even more pressing when combined with the need to see public and private markets assets together with a healthy underpinning of accounting capabilities, along with the increasing complexity of portfolios at large,” said Norquist.
In a recent survey as part of the Global Insurance Report, 89% of respondents said they plan to increase allocations to private markets.
“In order to successfully implement this, insurers need a common data language, from public markets to private markets and from the front office through to operational processes—embedded in a trusted tech ecosystem—that liberates decision-making from the weight of outdated legacy systems, enables a more productive investment organization, and ultimately, unifies the investment management process.
“It’s there that opportunities exist for insurers,” he concluded. “To streamline their investment operations and better manage change. The decision-making power for both is in the data.”
BlackRock’s Aladdin® and eFront® platforms are financial technology platforms designed for institutional use only and are not intended for end investor use.
