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Northern Trust (NTRS) to Acquire Stake in Essentia Analytics

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Northern Trust Corporation (NTRS - Free Report) has signed a deal to snap up a minority stake in Essentia Analytics, Ltd., a pioneer in using leading-edge cloud-based platform, to help active asset managers and locators get a handle on their behavioral biases and muster improved alpha.

By banking on historical data and behavioral science, the Essentia platform will operate as an annex of Northern Trust’s Whole Office, a program that simplifies client access to new technologies, services and solutions across the investment lifecycle.

Essentia infuses data analytics, client-driven “nudges” and specialised behavioral mentorship to impart a robust feedback loop for active investment decisions. It also helps investment teams understand where and why they get to the top and where their deficiencies lie, thus, helping implement a cycle of unfaltering growth.

As part of the deal, Northern Trust’s asset servicing division will provide the services of Essentia Analytics to its clients and will be able to conveniently interface managers’ historical trade and other data directly to the research and consulting firm. The company will also provide working capital to Essentia that will facilitate its expansion.

Working with the foundational investment portfolio data from Northern Trust, exuded via Essentia’s proprietary process, investors can attain acumen about their adept and less successful investment patterns to refine decision making revolving around stock picking, sizing, adding/trimming, entry/exit timing, as well as scaling in/scaling out.

Pete Cherecwich, president of Corporate & Institutional Services at Northern Trust, remarked, "Essentia’s next generation data analytics technology allows institutional investors – both asset managers and asset allocators – to embed data-driven feedback into their investment process. Through our Whole Office partnerships, Northern Trust clients across the globe can access advanced technology, skills and services designed to help them make repeatable and measurable decisions in the quest to deliver alpha."

Clare Flynn Levy, founder and CEO of Essentia Analytics, said, “As asset managers and allocators seek to maximize alpha, it is crucial that they are able to identify behavioral biases and decision-making deficiencies and adjust their approach accordingly.”

Northern Trust has been focusing on initiating new businesses for the past few years amid the macroeconomic headwinds. Additionally, the company’s innovative technology-driven hedge fund administration capabilities provide attractive propositions to the clients.

Also, the company continues to benefit from its solid wealth management operations with diversified products. Further, the latest acquisition of Parilux Investment Technology, LLC will boost its growth prospects.

The stock has gained 6.8% in the past six months, outperforming the 4.8% gain of the industry it belongs to.

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Northern Trust currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Steps by Other Banks

A growing number of financial services organizations, including banks, are resorting to convenient, frictionless digital services for their customers and clients.

Earlier this month, JPMorgan Chase (JPM - Free Report) signed a deal with Volkswagen AG’s (VWAGY - Free Report) subsidiary, Volkswagen Financial Services, in a bid to enter into the automotive industry and bolster its digital payment competencies. Per the deal, the bank will take a controlling stake of almost 75% in the automaker’s payments platform, Volkswagen Payments S.A.

In July, Sterling Bancorp announced its investment in the parent company of BrightFi, Verdigris Holdings, Inc., to expand Sterling’s digital offerings, and facilitate innovation in the banking and financial industry. Sterling had also announced Banking as a Service (BaaS) partnership with BrightFi this April.


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