A Bloomberg Professional Services Offering

BQuant

BQuant simplifies
large-scale dataprocessing, analysis,
and visualization

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Case study

Case study

A company promoting innovation

Sumitomo Life Insurance’s Special
Account Investment Department
wins the Most Popular App award.
On February 21, 2020, thesecond BQuant Hackathon
for insurance companies washeld at the Bloomberg office inMarunouchi, Tokyo. The objective
was to solve asset-management
issues faced by each company
using Bquant applications —Bloomberg’s next-generation
quantitative analytical platform.
The 11 teams of 28 people fromseven insurance companies
across Japan presented anddiscussed their ideas and app
development capabilities.
Participants cast their votes for
the Most Popular App, which waswon by a team from Sumitomo
Life Insurance’s Special AccountInvestment Department.
Portfolio managers have to makebetter and timely asset allocation
decisions. The Sumitomo Life
Insurance team developed three
tools to support this process.
We were fortunate to have achance to ask them about thehackathon and what changes theyexperienced following the event.
Click here to see our event
report for the secondBQuant Hackathon.

What kind of app did you create and what problems did it solve?
We created an app with three functions. The first is a tool to analyze Japanesecompanies’ financials. Since TOPIX consists of more than 2,000 stocks, extracting
each company’s financial data for each period in Excel placed a huge burden
on the system. With BQuant, we are able to request and populate the entire
dataset for all securities simultaneously. The second feature is a Lasso regression
model, which can’t be done in Excel. Lasso regression automatically chooses
highly correlated variables. Given the period, cycle, explanatory variables, and adependent variable, Lasso generates results like “a high correlation between theS&P stock index and the U.S. two-year treasury yield” and the app displays theresults as a graph. This information helps portfolio managers to consider factors
they should look at. The third feature is a Correlation Heatmap. The heatmap
visualizes highly correlated asset classes within the current portfolio. Users cancustomize focus assets and heat map parameters.

What did you gain from the hackathon?
By seeing other teams’ BQuant apps, we were able to learn issues they wereworking on. That helped us broaden our insights. In addition, we were able topresent that BQuant enabled us to develop apps that are easy to understandfor users with limited IT background.

What do you think is particularly effective about BQuant andthe way it operates?
BQuant is extremely convenient because it has a quick access to Bloomberg’s
huge database and processing / visualization capabilities. It also provides
advanced statistical methods through various Python libraries. Another strength
is that new apps are easy to use once published.

Did you feel any change in awareness within your company
after the hackathon?
With BQuant, anyone can quickly create an easy-to-use app for high-speed
analysis with an intuitive interface, even without specialized training inprogramming or system development. Our managers who participated in
the hackathon understood the benefits as well.

BQuant simplifies large-scale data processing, analysis, and visualization“If you don’t try, you’ll never see what’s out there —so give it a shot!”Special interview with Iwao Matsumoto, Managing Executive Officer
What are your thoughts on introducing technology
to enhance asset management capabilities?
How can BQuant and the hackathon help with that?
Matsumoto: A big wave of digitalization is affecting not just theinsurance business but the asset management business as well.
As low interest rates continue globally, insurers, banks, and asset
management companies have to manage investment risks betterto generate profits in order to survive. They have to analyze
larger amounts of data faster. In asset management, information
technologies to monitor portfolios, manage risks, and to test
investment ideas, are becoming one of their most vital capabilities.
BQuant is the perfect infrastructure for that. With BQuant,
we are able to create significant values by processing andanalyzing the Bloomberg data — including stock prices, FX,interest rates, company fundamentals, and environmental data
including climate change.
Before we started to use BQuant, we implemented AIM to
streamline post-trade operations and PORT+ to better analyze
and manage portfolios. Then I listened to a BQuant presentationfrom Bloomberg, I felt that BQuant also could create synergies
between the huge amounts of Bloomberg data and new analytics,
so we made a big pivot towards promoting it.

What kind of discussions took place within yourcompany about promoting new technologies
like BQuant? In addition, what is the appeal ofa hackathon for you?
Matsumoto: Employees realized they could develop moreadvanced portfolio and investment analytics by using Python
and the big data. Also, each group had the opportunity to present
their applications, which motivated them more. The hackathon
has dramatically increased enthusiasm for BQuant right acrossthe company.
Each fund manager has their own investment methodologies;
they would like to look at different data items and to analyze themin different ways. If we can’t find the right off-the-shelf applications,then we have to develop them, which can be expensive andtime consuming. BQuant offers an environment to develop andput together applications easily without reaching out to the IT
Department or an external systems vendor. Someday we hopeto apply AI technology to it as well.

Many of your asset management staff participated inthis hackathon, and a lot of resources were spent on
creating apps and managing the event. How do you
make the decision to embark on something like that?
Matsumoto: Through hackathon, employees recognize thatthey could use Python to analyze the big data involved in assetmanagement. In addition, each group having the opportunity topresent the specifics of their applications motivated them more.
The hackathon has dramatically increased enthusiasm for
BQuant right across the company.
People gain skills by doing, not just by listening to lectures.
Developing an app would be time consuming since those withno programming experience would have to learn from scratch.
Nonetheless I encouraged them saying, “If you don’t try, you’ll
never see what’s out there — so give it a shot.” Once we decided
to do it, each team brainstormed what application to create, andheld lively discussions for their presentation. Ideas came pouringout, and the applications were incredibly innovative. Even after thehackathon, they are still coming up with ideas for new applications.
Seeing such changes, I’m confident that we’re on the right track
to improving our asset management capabilities.
Driving forces like this are crucial to create innovations within ourorganization. A lot of effort were required to make the hackathon
happen, but the benefit goes far beyond the investment —advancing the application of IT. We intend to participate in future
hackathon events and continue to build on the momentum for
IT utilization in the Asset Management Division.

What is your outlook on enhancing asset
management capabilities?
Matsumoto: I would like to share our expertise within our company
and emphasize that anyone can easily use BQuant — and make it
the go-to infrastructure for creating applications. To do that,
we also need to enhance our skill set while allowing junior staff
in the Asset Management Department to learn how to use
BQuant and Python.

A Short Bio ofIwao Matsumoto
Managing Executive Officer
After working as manager of the Fixed Income Investment
Department, manager of the Management and Planning
Department, and senior executive officer, he waspromoted to the position of managing executive officer
in July of 2018.

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