A consortium of fintechs and banks has developed a distributed ledger technology (DLT) platform for the syndicated lending market.
The online marketplace, named Fusion LenderComm, is designed to bring more transparency and efficiency to he heavily manual loan market, claim those involved. It will also roughly 10% of ther global syndicated loan market upon launch.
The consortium comprises seven global banks including State Street, BNP Paribas, BNY Mellon, HSBC and ING as well as banking loan software company Finastra and R3 which is providing the DLT part of the project via its Corda platform.
Fusion LenderComm will display real-time credit agreements, accrual balances, detailed transaction data and position information taken directly from loan servicing platforms. It is hoped that the service will drastically reduce the cost and burden of agent/lender administration by enabling self-service capabilities.
The project is currently in pilot phase, although real-time data has been exchanged between the agents and lenders involved.
“Exchange of information in the syndication lending market is predominantly done manually," said Ivar Wiersma, Head of Innovation at ING Wholesale Banking. "This means that accessing deal data, including transparency into accruals and interest rates, can be a time consuming process. The initial focus of Fusion LenderComm is to automate the predominantly manual process of information sharing and to offer better insight in deal data. Further along the line, Fusion LenderComm will ensure a further increase in speed and cost reductions which may lead to smaller participations in syndicated deals and new investment opportunities for our clients.”
"Fusion LenderComm has the potential to solve a problem whose solution has eluded the loan market since inception: distribution of loan information in a structured, timely, transparent manner that comes directly from the content creators – the agent banks," said Robert Waddell, global head of Syndicated Loan Products for State Street. "As a consumer of large amounts of this information, the prospect of eliminating labor-intensive exercises, combined with the additional benefits of increasing efficiency, data accuracy and reducing operational risks, is not only very important for State Street, but all market participants and regulators as well.”
“Syndicated lending is exactly the type of market that will derive huge benefits from DLT," added David E Rutter, chief executive at R3. "Transparency, efficiency and risk are major concerns with current systems and processes. We built Corda specifically to tackle issues such as these, whilst meeting the unique privacy and security requirements of regulated financial institutions."