Misys has unveiled a new software solution that will allow banks to engage directly in originating peer-to-peer (P2P) commercial loans and rival the burgeoning marketplace lending sector.

Misys FusionBanking CrowdLending is a cloud-based platform that is available pre-integrated with Misys FusionBanking Loan IQ for servicing resulting syndicated loans, explains Jean-Cedric Jollant, senior product officer at Misys. It can also be integrated into other existing servicing platforms.

“It means banks can match borrowers and investors on their own platform, rather than referring business to a third P2P platform because of a technical gap,” he explains to GTR. “P2P loans will be a new lending product that banks list on their website.”

Using the platform, banks can bring lenders, including individuals, asset managers and other banks, together with borrowers of all sizes. A bank can therefore maintain and expand its client base, no longer having to turn away those they otherwise wouldn’t fund, Misys says in a statement. At the same time, loans are originated off-balance sheet to diversify risk.

“FusionBanking CrowdLending will match borrowers and lenders into a syndicated loan. This loan will be serviced by whatever the bank uses as a loan servicer. If the bank is not able to service syndicated loans, the platform comes with Loan IQ embedded. Payments and exception management are processed through the bank’s existing service,” Jollant says.

“We also recommend banks to automatically recycle declined traditional loan applications into their crowdlending platform. Based on its appetite for hybrid models, the bank may take a position in the loan or leave it entirely to their high-net-worth customers.”

For borrowers, it allows access to alternative funding through a trusted bank platform, with no additional sign-up processes required. “In-house processing affords cost efficiencies which deliver borrowers competitive rates. Users also benefit from their bank’s customer network of lenders and investors, for fast loan origination,” says Misys. Investors, on the other hand, benefit from established credit risk processes and bank infrastructure, to minimise potential risk.

According to James O’Neill, senior analyst for banking at Celent, the new platform trumps the marketplace lending sector: “A key limitation to the long-term growth of the marketplace lending sector is the lack of industry standards across the various platforms competing in the market, and as a result, important metrics like credit quality and collection policies are not uniformly administered across competitors.”

He adds: “FusionBanking CrowdLending is thus a welcome addition to the marketplace lending scene as it allows traditional banks to contribute their expertise in credit management to borrowers and lenders alike. Additionally, unlike some marketplace lending platform providers who continue to operate at a loss, FusionBanking CrowdLending will enable bank-administered platforms to provide long-term financial stability to the marketplace lending sector, allowing for the acceleration of innovation in the future while plugging a funding gap that currently exists for SMEs.”