BlackRock Hackathon: a green experience!

Milano Digital Week (MDW) is a social initiative hosted every year by the City Council of Milan to inform the public about challenges and issues in the digital environment. Among keynotes, roundtables and workshops, the organizational committee launches initiatives aimed at engaging companies and citizens in shaping the future of digital. The BlackRock Hackathon is an example of such public involvement.

At the beginning of 2020, Larry Fink, BlackRock’s CEO, announced that environmental sustainability would be at the core of the company’s investment strategy. This was a bold decision made by a global leader in the industry. Following the news, the company decided to launch a challenge aligned with UN SDG (United Nations Sustainable Development Goal) #13: Climate action. The goal of BlackRock’s Hackathon was to create a tool, leveraging big data and analytics, to support investment professionals in taking environmentally informed decisions for their clients.

Hackathons are generally demanding, as participants are asked to develop a thorough, innovative solution in an incredibly short amount of time. Personally, I found this one even more challenging for two reasons.
I signed up to the event as an individual. I was reluctant, at first. Building something with people you have never met before in just 36 hours is not an easy task: you need to create a common ground of communication style and understand how to push your ideas, among other things. Then I remembered something I had learnt some years ago: if you wish to grow and achieve great things, you need to exit your comfort zone ̶ so that is what I did. Luckily, I got along quite well from the start with Mattia and Stefano, my teammates, and, since the team is the key, everything was downhill from then on. And, despite the struggles and the little sleep, we managed to have fun and achieve our goal: winning the hackathon.

Furthermore, the contest addressed a quite complex issue. Despite improved willingness from companies to disclose their environmental impact, the greatest obstacle remains data availability. Whichever solution you want to design, you need to take this into account. Another crucial element was the type of product to present. How are users going to benefit? Which channels to use?

Throughout the competition, teams were supported by BlackRock professionals: in our case, the mentoring was extremely useful. Mentors helped us reason better with regard to the choices we were making by questioning them constantly. In the end, when we prepared the pitch for the jury, Mattia, Stefano and I had motivated our choices so many times that we were confident about the idea, and it only took us a few minutes to find the right words to describe it.

After an initial, long brainstorming session, where ideas seemed to pop up from everywhere, we decided to focus our attention on something that could easily be implemented by an incumbent and whose usage could possibly be sold: an algorithm optimizing the environmental performance of investment portfolios. The name? (re)Balance!

Our starting point was the Paris agreement and its stated goal to contain any increase in global temperatures within 2°C by 2030. Upon that, we built a mechanism that allocates money by picking the most environmentally virtuous emitters and securities from among a predefined set of categories (best-in-class approach). Moreover, as a team, we wanted something visual that could communicate to investors how much they are contributing to the goal: something socially valuable; a thermometer, showing how much investors’ portfolios are helping limit global warming.

I am a student of the International Master in Fintech. One could say the competition was basically my bread and butter, as it addressed innovation in the financial industry. Looking at the specificity of the challenge, especially, one could equally add that mastering financial and technological concepts was pivotal to performing well. This is not completely true. First, because the environmental component was relevant. Second, because innovation does not result just from knowing things. You need to analyse, understand and take decisions in an unexplored environment. In other words, you need to exercise critical thinking ̶ and I believe that’s where the Master was a game-changer for me: it taught me to think about what I know and use it in unconventional ways.


About the author
Lorenzo D’Auria 
I am 24 and grew up in Cagliari, Italy. I am a student of the International Master in Fintech at MIP and I hold a BSc in Economics and Management from the University of Trento. My professional interests revolve around the investment management industry and the impact new technologies have on it.

The frontiers of Fintech

You can’t do without Fintech. The figures make it clear: in 2018, M&A (merger and acquisition) transactions tied to this sector at a global level generated a value of nine billion dollars, up 25% on the year earlier.  Affirming this is an analysis carried out by the Mind the Bridge startup school. In other words, Fintech startups attract an increasing amount of capital and investments. And the trend is growing, because a rising number of users choose to manage their finances online.

Whether its mobile payments, InsurTech or Robo Advisors, financial transactions are increasingly managed online, bypassing the traditional intermediation, until recently indispensable, of banks and insurance companies. Confirming this is Professor Emilio Barucci, director of Politecnico di Milano’s International Master in FinTech, Finance and Digital Innovation. «Disintermediation is a key factor. It allows us to carry out numerous operations much more quickly with the tools made available via new technologies. We no longer go to the bank once a month like we used to».

Banks themselves aren’t standing by and watching: «Right now they are moving in two directions. On one hand they’re trying to appropriate the ways of operating typical of Fintech companies, increasingly developing home banking and fast payment channels. On the other they’re trying to cope with the growth of non-traditional channels, that are eroding a large part of their market.  The startups that launched Robo Advisors, for example, provide the user with personalised financial advice, cutting out banks, fund managers and financial advisers», explains Professor Barucci.

The convenience and opportunities offered by Fintech are particularly attractive, even in a market a little bit less receptive to digital transactions like the Italian one. The issue of cybersecurity remains crucial: «The risks for those who use digital tools today are not bigger than those we already faced years ago, like the classic “theft” of credit card data – stresses Professor Barucci –. But it’s also true that the issue of security is perhaps the one on which the actors involved concentrate most and invest more. A single crack is enough to destroy the credibility of a service, and as a result sink the business».

The advantages of FinTech aren’t only for private users, but also for companies. According to Professor Barucci, «they will materialise in important cost reductions. Furthermore, there will be the possibility to interact with more subjects and the non-banking channel will grow». Some technologies, to the contrary, will remain confined to a more restricted area of use, far from the general public. That’s the case, for example, of Blockchain: «Personally I’m not convinced that Bitcoin is the currency of the future – says Barucci –. But it must be recognized that cryptocurrencies based on blockchain have led to extensive studies on this technology, generating a great legacy in terms of knowledge: it won’t be the solution for all problems, but in some areas it will represent an interesting solution». Something similar can be said about Artificial Intelligence: «Machines won’t substitute man, let alone in the financial world. But thanks to AI and to big data we’ll have the possibility to better understand the dynamics of some financial phenomena».

In short, cutting-edge technologies can’t do without the mastery of underlying digital phenomena. The International Master in Fintech, Finance and Digital Innovation of Politecnico di Milano’s School of Management has the objective of training professionals with these skills: «The process of change triggered by Fintech is irreversible – concludes Barucci –. Our master’s provides suitable skills, focusing on a complete education: no other university offers the same combination of method, technology and business».