NatWest has become the first bank to integrate with a new blockchain-based platform that aims to dramatically transform and streamline the global syndicated loans market. In 2017 syndicated loan deals worth over £3.5 trillion were brokered globally. The new platform is set to go live from November 2018.
A syndicated loan is where the size and risk of a loan cannot be accepted by a single lender and a ‘syndicate’ of two or more lenders is required to spread the risk. Complex syndicated loan deals involving hundreds of lenders are now common but the technology supporting this business has been slow to keep up and is outdated. This has resulted in a loans market that is inefficient, costly to operate and heavily reliant on manual processes.
The Fusion LenderComm platform aims to revolutionise communication between lenders and agents using blockchain technology to assure messages are secure and confidential. The platform has been built by Finastra and is underpinned by Corda – R3’s distributed ledger technology. The first phase has focused on real-time position reporting between lenders so all those involved can see their records at any time and there is a roadmap to transform all aspects of syndicated lending from deal set-up and syndicate building through to settlement.
The platform aims to dramatically reduce the amount of time taken to set-up syndicated loan arrangements for our customers – currently complex arrangements can take months to finalise. It also aims to achieve significant reductions in the ongoing cost of administration for lenders and a massive improvement in transparency.
Commenting, Trish Arksey, lending programme director for NatWest, said: “We are excited about the possibilities that this platform offers to transform the syndicated loan market. We are investing in cutting-edge technologies and working with our suppliers and partners to deliver first class customer service and efficiency to a market that has not changed significantly in the last 20 years.”
Commenting, Grant Jones, VP, Fusion LenderComm, Finastra said: “NatWest will now be able to specify and publish lender-specific deal information to Fusion LenderComm in real-time, while its lenders can view this data which was previously only periodically provided by fax from agents or through telephone or email queries from lenders. This not only brings improved operational efficiency for NatWest and its lenders but it also brings much needed transparency to the syndicated loan market.”
Commenting, David E. Rutter, CEO at R3, said, “The syndicated lending industry relies on costly, manually-intensive processes, making it ripe for innovation with blockchain technology. Fusion LenderComm, powered by Corda, has been proven to address these issues. The solution delivers immediate efficiencies and reduces costs for both agent banks and lenders. We have enjoyed working closely with NatWest and Finastra along with the many other leading institutions involved in this project. Now the focus shifts to the next phase as together we bring Fusion LenderComm into production.”