According to a press release from London-based fintech company, Finastra, they have welcomed on board BNP Paribas, Societe Generale, Natixis, and Natwest as customers of its Fusion LenderComm blockchain-based platform.
“For lenders, Fusion LenderComm technology provides a personalized view of positions across agent banks, helping reduce operational risk in managing multiple participations. Lenders get real-time access to credit agreements, accrual balances, position information and detailed transaction data directly from agent banks’ loan servicing platforms,” according to the firms website.
The integration of the platform into these banks services is expected to provide a higher level of transparency, less emails, few phone calls, and of course, an immutable record of transactions for the entire lifecycle of the deals.
The banks that have signed up to come on board are widely regarded as some of the world’s leading financial institutions with millions of customers across all five continents.
This blockchain based network that has been created by Finastra, allows the sharing of information related to syndicated loans in a market that facilitated over $3.5 trillion last year alone. The platform, underpinned by Corda, a powerful distributed ledger technology, Fusion LenderComm aims to reduce both the cost and the burden of administration between the lender and the agent. It also hopes to allow lenders to see accurate and up-to-date information in order to help them optimise their syndicated loan portfolios.
When it comes to syndicated loans, the bank will usually manage the information which relates to the share of the money from syndicate banks. The agent bank will then communicate this data to the syndicate via email on a monthly basis. This means that the process involves a lot of reconciliations and periods of blackout where up-to-date information and data may not be accessible.
The proposed permissioned distributed ledger means that banks will be able to share credit agreements, real time balances, as well as being able to position data with lenders on-demand through direct bank integration.
Grant Jones, VP at Fusio LenderComm said in a statement: “This is an historic step that brings leading global banks together on the platform in the live Fusion LenderComm environment, for seamless and secure information exchange. But more than that, this is an important inflection point, paving the way for the whole industry to come on board, achieving even further critical mass.”
Apart from the obvious benefits in terms of automation, it seems that Finastra also has plans in place to develop a secondary trading market place for syndicated loans.
“Given Natixis’ high involvement in the lending space we have been very supportive of the Fusion LenderComm initiative since day one. R3’s Corda is the perfect technology to enable the sharing of information between agents and lenders on a need-to-know basis while being fully compliant with our stringent IT security policies,” said Frédéric Dalibard, Head of Digital for Corporate & Investment Banking at Natixis and R3 Chairman.