NatWest readies blockchain syndicated loan platform
NatWest claims it’s the first bank to integrate a new blockchain-based platform – Fusion LenderComm. NatWest says its new system could “dramatically transform” the global syndicated loans market which in 2017 was worth a massive £3.5trn.
The NatWest platform has been built by Finastra and underpinned by Corda, R3’s distributed ledger technology. Practically, the new tech should help NatWest streamline communication between agent banks and lenders across the syndicated loan market environment. It goes live this month.
NatWest jump-starts loan market
“The first phase,” says NatWest, “has focused on real-time position reporting between lenders so all those involved can see their records at any time and there is a roadmap to transform all aspects of syndicated lending from deal set-up and syndicate building through to settlement.”
Syndicated loans are where the size and risk of a loan is usually too big for a single lender so a ‘syndicate’ of two or more is deployed to lower the risk.
More complex syndicated loan deals can involve hundreds of lenders but the tech supporting this business has been slow to keep up and is outdated, says NatWest. “This has resulted in a loans market that is inefficient, costly to operate and heavily reliant on manual processes.”
“We are excited,” says Trish Arksey, Lending Programme Director for NatWest, “about the possibilities that this platform offers to transform the syndicated loan market.”
She goes on: “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.”
The move also aims to achieve significant reductions in the ongoing cost of administration for lenders and a massive improvement in transparency.
“NatWest will now,” says Grant Jones, VP, Fusion LenderComm, Finastra, “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.”