NatWest has announced the launch of a syndicated loan market built on blockchain. The goal is to “dramatically transform and streamline the global syndicated loans market.” NatWest partnered with Fusion LenderComm, a platform built by Finastra. The new platform will go-live in November.
NatWest notes that in 2017 syndicated loan deals worth over £3.5 trillion were brokered globally. Complex loan deals involving hundreds of lenders are common but the technology supporting this business is outdated. NatWest says this has resulted in a loan market that is “inefficient, costly to operate and heavily reliant on manual processes.” They want to change all of that.
By using blockchain technology, specifically Corda’s R3 distributed ledger technology (DLT), NatWest will provide secure and confidential messages between corresponding parties. Additionally, DLT provides real time data reporting where parties involved san see shared records instantaneously. NatWest says there is a roadmap to “transform all aspects of syndicated lending from deal set-up and syndicate building through to settlement.” There is also a cost reduction intrinsic to the digital process.
Trish Arksey, Lending Programme Director for NatWest, said they are excited about the possibilities to transform the syndicated loan marketplace.
“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.”
Grant Jones, VP, Fusion LenderComm, Finastra compared Fusion LenderComm to the fax and email process which is currently prevalent and incredibly inefficient. “This not only brings improved operational efficiency for NatWest and its lenders but it also brings much needed transparency to the syndicated loan market,” said Jones.
“The syndicated lending industry relies on costly, manually-intensive processes, making it ripe for innovation with blockchain technology. Fusion LenderComm, powered by Corda, has been proven to address these issues,” said David E. Rutter, CEO at R3. “The solution delivers immediate efficiencies and reduces costs for both agent banks and lenders. We have enjoyed working closely with NatWest and Finastra along with the many other leading institutions involved in this project. Now the focus shifts to the next phase as together we bring Fusion LenderComm into production.”