Seven major global banks have partnered with financial technology (fintech) firms R3 and Finastra for the development of the Blockchain technology-based marketplace for syndicated loans, called Fusion LenderComm. Among the banks are BNP Paribas, BNY Mellon, State Street, and ING.
According to Finastra head of product management, corporate and syndicated lending, Ian Morris, they already successfully concluded the first set of pilot runs on the prototype system in August 2017, and plan to conduct more in the coming months.
“More pilots are planned in the coming month. Development sprints continue towards the final objective of go-live next year.”
To improve data sharing between banks
The Fusion LenderComm platform is designed to improve the data sharing activities between agents and lenders, with the ultimate goal of bolstering efficiency and transparency in the syndicated loan market. The system will show real-time credit agreements, position information, accrual balances, and detailed transaction data directly to lenders from agent bank loan servicing platforms like Finastra’s Fusion Banking Loan IQ.
The unalterable system will maintain all transaction history to provide each lender a personal view of deals participated in, and a time-stamped audit record. Among the benefits of the system are reduced operational cost and burden of agent-to-lender administration, and access to accurate information to lenders on demand, to maximize loan portfolios.
The platform will be underpinned by R3’s Blockchain-inspired Corda system and is scheduled to be commercially launched in 2018.
Finastra deputy chief executive officer (CEO), Simon Paris, said that the project has already attracted around 10 percent of the global syndicated lending market, with other players expected to join in the near future.
“As more participants join, we will quickly gain the critical mass to develop this into the leading marketplace for syndicated lending and loan trading. No more will lenders find themselves an underserved part of the syndicated loan value chain. Where they have struggled with a lack of transparency and speed in accessing critical deal positions, Fusion LenderComm opens up new data plains beyond position reconciliation.”
More Blockchain projects with banks
Banks have been exploring the various use cases of Blockchain technology to improve their operations, especially in lending. For example, IBM has partnered up with banks in North America and Europe to digitize some of their crucial processes.