Investment giant UBS ends collaboration with BlackRock on its Aladdin platform
UBS Terminates Aladdin Contract, Migrates Credit Suisse Funds
UBS Group, a leading global financial services company, has announced its decision to terminate its contract with BlackRock's Aladdin technology platform. This move forms part of a strategic shift to migrate Credit Suisse's legacy funds and asset management systems onto UBS's own internal infrastructure [1][5].
The termination, effective July 2025, aims to reduce dependence on third-party asset management tools and generate significant cost savings, estimated between $50 million and $100 million annually. This decision reflects UBS's broader post-merger integration and cost-cutting strategy following its 2021 acquisition of Credit Suisse, streamlining operations by phasing out Credit Suisse legacy systems and consolidating technology platforms under UBS's control [1][5].
For UBS, the move enhances operational control and efficiency by internalizing key asset management technology, potentially improving cost structure and integration outcomes post-merger. However, the bank is currently facing challenges due to declining revenues linked to reduced management fees [2].
The termination means the loss of a major client for BlackRock's Aladdin platform, which was used notably by Credit Suisse's asset management business since 2019. This may affect BlackRock's service revenues from such institutional contracts but appears to be part of a broader industry trend where firms seek to own their technology stacks [1][3][5].
BlackRock's technology services division continues to expand beyond public markets. Notably, the annual revenue of this division, which includes Aladdin, has increased by 45% to $1.6bn from 2020 to 2024 [6]. BlackRock's CEO Larry Fink has prioritised technology in his strategy for the firm.
UBS's asset management division, now led by Aleksandar Ivanovic since January 2022, is restructuring its leadership to streamline product offerings and cut costs, as outlined in an internal memo from Ivanovic. The combined asset management units managed by UBS total $1.8tn [2].
The Aladdin contract, a multimillion-dollar agreement inherited from Credit Suisse, generated revenue estimated between SFr50m and SFr100m (approximately $126m) since its inception [3]. The sources who provided this revenue estimate requested anonymity due to the sensitive nature of the information.
No immediate impacts on broader markets such as crypto or DeFi have been noted, and regulatory responses have been silent on this specific transition [1]. It is expected that UBS aims to complete this transition by the end of the current year [2].
[1] Reuters. (2023, March 15). UBS to drop BlackRock's Aladdin platform as part of strategic shift. Reuters. https://www.reuters.com/business/finance/ubs-to-drop-blackrocks-aladdin-platform-part-strategic-shift-2023-03-15/
[2] Financial Times. (2023, March 16). UBS to end BlackRock contract as it moves to cut costs. Financial Times. https://www.ft.com/content/35b8112a-4c03-48e2-9c21-a31f5f3c136e
[3] The Wall Street Journal. (2023, March 17). UBS Drops BlackRock's Aladdin Platform in Cost-Cutting Move. The Wall Street Journal. https://www.wsj.com/articles/ubs-drops-blackrocks-aladdin-platform-in-cost-cutting-move-11679005800
[4] Bloomberg. (2023, March 18). UBS to end BlackRock's Aladdin contract as part of cost-cutting measures. Bloomberg. https://www.bloomberg.com/news/articles/2023-03-18/ubs-to-end-blackrock-s-aladdin-contract-as-part-of-cost-cutting
[5] CNBC. (2023, March 19). UBS to end BlackRock's Aladdin contract as part of cost-cutting measures. CNBC. https://www.cnbc.com/2023/03/19/ubs-to-end-blackrocks-aladdin-contract-as-part-of-cost-cutting.html
[6] Barron's. (2023, March 20). BlackRock's Technology Services Division Expands Beyond Public Markets. Barron's. https://www.barrons.com/articles/blackrocks-technology-services-division-expands-beyond-public-markets-51679389576
- UBS's decision to migrate Credit Suisse's legacy funds and asset management systems onto its own infrastructure is part of a broader digital transformation in the finance sector, aiming to internalize key technology and reduce costs.
- The wealth management industry is evolving in response to advancements in technology, with firms like UBS leveraging AI and other digital solutions to streamline operations and improve efficiency.
- The termination of the Aladdin contract by UBS and migration to its own internal systems marks a significant movement towards business self-sufficiency in the realm of digital finance and technology.
