BlackRock and Microsoft have struck a partnership that will move the money manager's Aladdin investment management and operations platform to the technology company's Azure cloud platform.
BlackRock now uses a network of data centers it owns or leases to host Aladdin. But "this decision reflects BlackRock's ongoing commitment to continuous innovation and scalable operating solutions," said Robert Goldstein, senior managing director, chief operating officer and head of BlackRock Solutions, in a news release.
BlackRock also will rely on Microsoft's network of global data centers to support the local needs of Aladdin clients worldwide "while maintaining Aladdin's highest standards for resiliency and security," the release said.
Moving Aladdin clients to Microsoft's cloud-based system will happen over the next two to three years, beginning with institutional investors including pension funds, money managers, insurance companies and corporate treasurers. Aladdin wealth management users will follow, BlackRock spokesman Logan Koffler said.
Aladdin's contribution to BlackRock's revenue is becoming increasingly important to the company, said a source who asked not to be named.
The bulk of the $974 million of technology revenues BlackRock reported for the year ended Dec. 31 was from Aladdin fees. Tech revenues were up 24.1% from the previous year. Technology revenues represented about 6.7% of the firm's total revenue of $14.5 billion in 2019, BlackRock's fourth quarter earnings report showed.
Both BlackRock and Microsoft have committed to foster sustainability within their businesses and will "work together on initiatives that leverage technology to improve and expand sustainability data and analytics" in relation to their cloud-based tech partnership, the news release said.
The firms will seek collaboration from external organizations and academics on sustainability-related data, analytics and technology and implementation and will offer challenge grants to support this work. Further details about the grant program were not available.
The Aladdin partnership between BlackRock and Microsoft is the second for the two firms. In 2018 began a collaboration to develop next-generation workplace savings programs.
BlackRock managed $7.43 trillion as of Dec. 31.
