Finastra, R3 and seven banks to create DLT platform for syndicated lending
BNP Paribas, HSBC and ING among those on board
FINASTRA and seven leading banks are working together to create an online marketplace to drive transparency and efficiency in the syndicated loan market.
Underpinned by Corda, R3’s distributed ledger technology (DLT)-based platform, Fusion LenderComm exposes real-time credit agreement, accrual balances, position information and detailed transaction data to lenders, directly from agent bank loan servicing platforms such as Finastra’s Fusion Banking Loan IQ.
BNP Paribas, BNY Mellon, HSBC, ING and State Street have joined the global community, with real-time data already exchanged between agents and lenders in the pilot phase.
Ian Morris, head of product management – Corporate & Syndicated Lending at Finastra, says, “The sheer amount of manual effort that goes into information exchange in this market means that quickly accessing deal data, providing transparency into accruals, interest rates and fees, is a real challenge. DLT enables lenders to see a personalized view of positions across agent banks and reduces the operational risk involved in managing multiple participations. From day one, Fusion LenderComm will mean fewer emails and phone calls and an immutable record of transactions during the lifecycle of deals.”
The Fusion LenderComm pilot phase enabled agent banks to publish loan data to the DLT platform, to extend these self-service capabilities to lenders. Through their own portal, agents can define and then publish lender-specific deal position data to Fusion LenderComm, so individual lenders can drill down into the data without needing to query positions on the phone or via email, as is typical today. Fusion LenderComm digitizes communication with lenders – driving efficiencies in the process, saving agents time and money, and eliminating operational risk.
Data is securely transferred within Fusion LenderComm using Corda, the financial grade distributed ledger. Using the same technology that powers Blockchain networks, Corda is used to create workflows and rules for the dissemination of deal information via the Fusion LenderComm agent portal. Highly secure nodes on the network maintain all transaction history, giving every lender a personal view of deals they participate in and a time-stamped audit trail.
The Fusion LenderComm platform is expected to launch next year. It promises an open utility for all banks involved in syndicated lending, including users of Finastra’s FusionBanking Loan IQ and other loan servicing software. The long-term roadmap for the platform will transform the whole syndicated loan value chain, from bookrunning to delivering a marketplace for faster loan trading and settlement.
6 Oct 2017