- BlackRock has been betting big on artificial intelligence in finance in recent years.
- But President Rob Kapito said he believes the future “will be human and machines.”
- A.I. is “just a way to make us much more efficient,” Kapito said at a conference in London.
LONDON — The cofounder and president of asset management giant BlackRock believes artificial intelligence will never fully replace humans in the investment world.
Rob Kapito said on Thursday: “We’re moving into an era — probably half of you here have look at your iPhone 15 times since I walked up on stage — where everyone is using technology. Why shouldn’t technology play a very big role in the financial services?”
Earlier this year BlackRock announced plans to consolidate some actively managed mutual funds into more automated funds, with 36 people leaving the company as a result. The New York Times headlined the news: “At BlackRock, Machines Are Rising Over Managers to Pick Stocks.”
But Kapito said on Thursday: “It’s not going to replace humans. I believe it will be human and machines.”
Kapito was speaking at the Barclays New Frontier conference in London on Thursday, discussing how technology is changing and influencing financial services.
BlackRock has moved quickly and decisively to invest in artificial intelligence and its applications in finance over recent years. The asset manager, which handles $US5.7 trillion globally, acquired automated investment platform FutureAdvisor in 2015 and invested £60 million into early-stage UK venture capital fund Forward Partners, which plans to invest the money into “applied” A.I.
“Everybody seems to be talking about artificial intelligence and big data,” Kapito said on Thursday, adding that many people did not seem to fully understand it.
He said artificial intelligence technology is “just a way to make us much more efficient in how we handle all that data,” rather than a way to cut out humans.
“There are two and a half quantile bytes of data that are created every day,” he said. “We didn’t have this data. All of a sudden we have mega amounts of data. What are you going to do with it? How do you know if it has any significance? We have to build ways to bring all this data in, analyse it, and see if it has any significance. “
Kaptio was being interviewed on stage by Barclays CEO Jes Staley and the BlackRock president told him: “Your industry issues 4,000 broker reports a week — who are supposed to read those? That’s 53 different languages, 36,000 pages.
“At BlackRock, we could read those because we’re picking out certain keywords that we think will have a significance for the companies that we own. That’s how we would read it.”
Kaptio added: “In designing the portfolio for the future, you have to have both active and passive strategies. We were analysing the performance of our actively managed strategies and various strategies did not perform their benchmark for 10 to 15 years. So we said, well you should be expressing that portion of your portfolio in a passive way.”
Kapito cofounded BlackRock in New York in 1988 along with a group of others.
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