Dialogue with BlackRock CEO Larry Fink: AI and Asset Tokenization Will Reshape the Future of Investing

Chainfeeds Guide:

BlackRock's scale has reached 12.5 billions—how did they achieve this?

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ChainCatcher

Opinion:

Larry Fink: Artificial intelligence and the tokenization of financial assets. Today, during a lunch with a former finance minister and central bank governor, he candidly admitted in a personal capacity that the banking industry has already been left behind by technology in many areas. The innovative practices of Brazil's New Bank are expanding to Mexico, and digital platforms like Germany's Trade Republic are also disrupting tradition—these cases demonstrate the power of technological transformation. Understanding how AI is revolutionizing big data analysis further highlights its disruptive nature. For example, in 2017, BlackRock established an AI lab at Stanford, hiring a team of professors to develop optimization algorithms. We manage 12.5 trillions USD in assets and need to process massive volumes of transactions, and technological innovation is driving us back to our core responsibilities. Today's earnings call reiterated the importance of ongoing transformation. The 2009 acquisition of BGI (including iShares) once raised market doubts, but the "passive + active combination + full portfolio focus" strategy has now been proven successful—iShares' scale has soared from 340 billions USD to nearly 5 trillions USD. In 2023, BlackRock's private equity business saw significant growth, infrastructure investment achieved a breakthrough from zero to 50 billions USD, and private credit expanded rapidly. Surging client demand beyond expectations has prompted us to take innovative measures, accelerating the integration of public and private markets. Technological progress will drive the free allocation of public and private assets, a trend that will cover all institutional investors and even 401k plans. The acquisition of Prequin cost only one-third of industry peers, yet it is a key strategic move: by integrating the E-Front private equity analytics platform with the Aladdin public market system, we have built a full-chain risk control capability for public and private assets, supporting portfolio integration and deepening client conversations. Every investor needs to seek information not yet fully recognized by the market; traditional information (old news) can no longer generate excess returns. Artificial intelligence generates unique insights by analyzing differentiated data sets. Our systematic equity team has outperformed the market for 12 consecutive years, and its AI algorithm and big data-driven thematic investment strategies have beaten 95% of fundamental stock pickers over the past decade. But this is like baseball—maintaining a 30% batting average is already extremely difficult, and achieving it for five consecutive years is even rarer. Only a few investors can consistently win. Most fundamental investors have dismal returns after fees, which is the core reason for the decline of the active management industry. If active investing were truly effective, ETFs would never have risen. Traditional asset management companies have sluggish market caps, with many peers who went public in 2004 valued at only 5-20 billions USD, while BlackRock has reached 170 billions USD, precisely because others lack the capacity to invest in technological upgrades. The gap between us and traditional agents will continue to widen.