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7 Global Banks Partner Up to Develop Blockchain-based Syndicated Loan Market

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.

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Banks Back Syndicated Loan Market Built on Corda Distributed Ledger

A group of banks and financial technology providers have unveiled a new syndicated loan marketplace built on top of the Corda distributed ledger platform.

The list of banks involved includes BNP Paribas, HSBC, ING, State Street and BNY Mellon, with two other unnamed institutions also taking part in the initiative. Today’s unveiling from Finastra, which was formed by the merger of software firms D+H and Misys earlier this year, follows a previous pilot phase.

The project aims to create a new kind of syndicated loan market, where multiple lenders pool resources in order to fund single debtors. The idea is to use R3’s Corda platform (which saw its 1.0 version released on Tuesday) as a hub for administering loans and sharing key information on things like fees and interest rates in real-time during the lending process.

Philippe Boulas, head of financing solutions for BNP Paribas CIB, said in a statement:

“We believe that the distributed ledger is appropriate in syndicated lending to deliver one single position that is immediately updated when a contract is being handled. The Finastra-led utility, Fusion LenderComm, would allow us to share position data more efficiently and pave the way for a more fluid industrialization.”

The platform, dubbed Fusion LenderComm, already has its own official website, and while its launch date wasn’t disclosed in today’s announcement, the companies behind it are seeking additional backers – particularly lenders who would bring liquidity to the marketplace.

Fusion LenderComm’s unveiling is a notable one, given that the past year has seen a number of banks test applications for syndicated loan markets.

A proof-of-concept platform for issuing syndicated loans, spearheaded this past spring by Credit Suisse, saw participation from a variety of firms, including State Street. Credit Suisse said in August that it is planning a commercial-scale release for sometime next year.

Money image via Shutterstock

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