Sep 22, 2020|
JDD Leaders Series: Dr. Yeren Xu: From Wall Street to JD to Build a China-tailored Asset Management Platform
by Yuchuan Wang
When Yeren Xu, JD Digits vice president and head of asset management technology, was studying for a Ph.D in mathematics at the University of Washington in Seattle in the 1980s, he realized he didn’t want to be a professor. He told himself that where there was a will, there was a way. He began studying computer science and financial modeling in his spare time, painstakingly teaching himself the advanced concepts.
Thirty years later, Dr. Xu is a seasoned finance expert, overseeing asset management department at JD Digits, one of the world’s leading digital technology providers and an innovator in fintech, defined as new technology that improves and automates financial services. Fintech is expected to bring disruptive transformation to the rapidly evolving financial industry.
From a mathematics lover to a Wall Street alum
Born in Shanghai, Xu studied mathematics at Fudan University as part of the first waves of students admitted to university after Deng Xiaoping was back to power again in the late 1970s. Not long after graduation, inspired by a friend, he decided to go to the US for further study.
At that time, there were very limited applications for mathematics domestically, and Dr. Xu believed that a stint in the US might open up opportunities for him—but little did he know that it would lead him to the Wall Street.
After receiving his Ph.D, Dr. Xu worked as an assistant professor for three years, but it was his self-taught mastership of financial modeling that later landed him a job at Lehman Brothers, the fourth largest investment bank in the United States at that time.
Since then Dr. Xu has accumulated extensive expertise and experience, serving as a managing director at Nomura (a Japanese financial service group with a global footprint) and CTO of China Renaissance Group and the General Manager of CITIC Information and Quantitative Service Company, a subsidiary of the largest securities house in China.
Building a China-tailored asset management platform
In April 2018, China released new guidelines regulating asset management businesses of financial institutions. In the same year, JD Digits founded its own asset management technology department and launched an intelligent asset management technology platform, called JT2, in 2019.
The new rules herald major, positive changes in how financial institutions operate in the longer term, with significant positive implications for the financial industry and related services, according to Aidan Shevin, head of Asia liquidity fund management for J.P. Morgan.
Under the new regulations, Dr. Xu believes JD Digits will be even better positioned to be a first mover on innovative technologies in this sector.
“To date, in China, we do not have an integrated platform that can provide all the technical support needed by investment transactions,” Dr. Xu explained. “There is no Chinese fintech company that can run its name through all transaction nodes yet.”
As an example, he points to the operating platform Aladdin, developed by the US company BlackRock. Aladdin is seen as a pioneer and model in the industry, providing clients with a common language across the investment lifecycle in both public and private assets, enabling a culture of risk transparency. Aladdin currently holds more than $20 trillion worth of assets on the platform, with more than 25,000 investment managers using the platform every day.
Dr. Xu believes JT² has enormous potential as well. With over 100 employees, it serves more than 1000 institutions including banks, security firms, funds, trusts and more.
The JT² asset management technology platform offers services related to risk management, efficient transaction, intelligent investment, and an intelligent information module led by the former editor-in-chief of Reuters China, designed to provide useful insights based on analysis of big data and AI algorithms.
Last year, JT² partnered with the Agricultural Bank of China to launch a one-click, integrated and comprehensive custody platform that covers the whole investment process. The intelligent custody platform saw a transaction volume of over RMB 100 million yuan in the first week after its launch.
Dr. Xu and JD Digits CEO Shengqiang Chen have clear goals for JT2, which means ‘JD Technology Trust,’ Xu said. “We share the same vision for helping traditional financial institutions transform by providing the necessary digital tools.”
Dr. Xu admires Chen’s way of thinking, he said. “It’s very advanced, and talking with him about our plans for the company is both challenging and exciting.”
“Together I hope we can establish a unique asset management platform which is highly based on China’s actual capital market environment,” Dr. Xu said. “We are focused on building the technology infrastructure for asset management covering transaction, risk control, data analysis and more. It will not only provide asset management institutions with an intelligent transaction and technological system but also save at least 50% of time for a common dealer collecting and researching relevant data.”
In order to achieve these goals, Dr. Xu’s plans for developing the platform include:
- China’s capital and asset management market is highly unique and requires a tailored approach, Dr. Xu said. For example, non-standard assets typically account for a higher percentage of a product portfolio. Strategies that work overseas may not be appropriate in China. “There are many products that only work in the Chinese market,” he said.
- Intelligent solutions. “We happen to be in a time when technology is developing so quickly and is becoming so advanced that big data and AI are becoming commonplace in everyday life,” Dr. Xu said. JT² utilizes AI to improve the efficiency of investment and research processes. JT² provides “alternative data” services in which it can provide customized data-mining analysis of industrial data, market data, public opinion, macro data and even climate data, saving significant time for companies that are eager to see the larger picture.
- An open platform: Xu wants to develop JT2 to become a global platform that connects technology, capital and assets across markets.
Dr. Xu is confident that new technologies will usher in huge improvements for the domestic asset management industry, and that JT² is ready to tackle that transformation.
“We are focused on building the technology infrastructure for asset management covering across transaction, risk control, data analysis and more for China’s actual capital market environment,” he said.
“We want to help financial institutions better manage the money of their clients.”