National Westminster Bank (NatWest), a UK bank part of the the Royal Bank of Scotland, has announced its integration with a new blockchain-based platform to streamline communication between agent banks and lenders in the syndicated loans market.
NatWest will be leveraging Finastra’s Fusion LenderCoom, a platform underpinned by Corda, R3’s distributed ledger technology. The new system is set to go live in November 2018.
A syndicated loan is a loan offered by a group of lenders who work together to provide funds for a single borrower. The borrower could be a corporation, a large project or a sovereignty, such as a government.
Complex syndicated loan deals involving hundreds of lenders are now common, with over £3.5 trillion worth of deals being brokered globally in 2017, but the technology supporting this business has been slow to keep up and is outdated. This has resulted in a loans market that is inefficient, costly to operate and heavily reliant on manual processes.
“The syndicated lending industry relies on costly, manually-intensive processes, making it ripe for innovation with blockchain technology,” said David E. Rutter, CEO at R3.
Fusion LenderComm, a platform providing transparent and efficient agent-lender communication, intends to solve these issues and dramatically reduce the amount of time taken to set-up syndicated loan arrangements for customers, which can currently take months to finalize. It aims to deliver immediate efficiencies, improved transparency, and reduced costs for both agent banks and lenders.
The servicing portal enables lenders to see accurate information on-demand, get real-time access to credit agreements, accrual balances, position information and detailed transaction data directly from agent banks’ loan servicing platforms.
All lenders have a dedicated ledger node on LenderComm for their transactions, all data, operation and encrypted communications are wrapped into a web portal. The technology creates an immutable record of transactions during the lifecycle of deals.
Fusion LenderComm was developed in close collaboration with some of the world’s top global banks including BNP Paribas, BNY Mellon, HSBC, ING and State Street.
“NatWest will now be able to specify and publish lender-specific deal information to Fusion LenderComm in real-time, while its lenders can view this data which was previously only periodically provided by fax from agents or through telephone or email queries from lenders,” explained Grant Jones, vice president of Fusion LenderComm at Finastra. “This not only brings improved operational efficiency for NatWest and its lenders but it also brings much needed transparency to the syndicated loan market.”
Trish Arksey, director of the lending program at NatWest, said the bank was excited about the possibilities that Fusion LenderComm offered to transform the syndicated loan market.
“We are investing in cutting-edge technologies and working with our suppliers and partners to deliver first class customer service and efficiency to a market that has not changed significantly in the last 20 years,” she said.