A blockchain-powered platform for syndicated loans is now commercially available after having been successfully piloted by seven international banks, including BNP Paribas, BNY Mellon, HSBC, ING, Natixis and State Street.
The solution, called Fusion LenderComm, has been in the making since early 2017. It has been developed by Finastra together with R3, and is the first app to go live on R3’s Corda platform.
In a statement, Simon Paris, deputy CEO at Finastra, says the parties have now successfully completed pilots and are thus “able to bring this to the wider market today”.
Seven banks took part in the pilots (one of which has not been named), and, according to a Finastra spokesperson, the company is now “actively onboarding some of these pilot banks over the next few weeks and months”.
“The group of pilot banks we are working with now represents approximately 25% of the global syndicated loan agent volume,” the spokesperson adds.
In short, Fusion LenderComm streamlines and digitalises information exchange in the syndicated loan market. Through the platform, agent banks can easily publish detailed loan information, including credit agreements, accrual balances, position information and other transaction data, and extend self-service capabilities to lenders. Today, this communication is predominantly done manually, over phone, fax or email.
Fusion LenderComm is now available as an app on R3’s Corda platform, a so-called CorDapp, at “a low cost”, Finastra says in a statement. It can be accessed by agent banks using the company’s syndicated loan servicing platform Fusion Loan IQ, but the firm notes that it will “be an open utility for all institutions involved in syndicated lending, regardless of the loan servicing software in use”.
Maynard Ahner, global head of corporate and syndicated lending at Finastra, says agent banks will be able to “start publishing select deal information on Fusion LenderComm in a matter of weeks”.
As reported by GTR in October, the platform will at first be designed for participants to merely view data, but it will be expanded at a later stage.
“The initial release will allow participants to view their data, but the goal for future releases will enable the exchange of information between agents and lenders and ultimately include smart contracts,” Ian Morris, head of product management, corporate and syndicated lending at Finastra, told GTR at the time.
Meanwhile, the announcement is welcomed by market players. For one, Ellen Hefferan, executive vice-president of operations and accounting at the Loan Syndications and Trading Association (LSTA), says the launch “is a win, not only for the lenders who invest, but also the agent banks who service the loans”.
“We are pleased to see the continued momentum of a solution like Fusion LenderComm,” she says. “The availability of real-time accurate data, to include not only positions but all servicing events, will bring greater transparency and efficiency to the loan market and facilitate ease of reconciliation.”
Michael Yeo, research manager at IDC Financial Insights, adds: “The cumbersome methods of sharing information between agents and lenders has been a persistent challenge in the industry but also serves as one of the biggest areas of opportunity. IDC sees blockchain as a key tool for allowing banks to streamline their middle and back office operations, especially in areas which were previously manually driven in their process workflow. Fusion LenderComm is a great example of how blockchain architecture can be used in this way.”