Five months ago Finastra launched its Fusion LenderComm platform, a blockchain network for syndicated lending. Today Natwest became the first bank to complete the second phase that involves full integration with the platform. The new version goes live in November.
In 2017 there were £3.5 trillion of new syndicated loans globally.
With very large loans, banks won’t take on the full amount, so they spread the risk amongst other banks. Many loans involve revolving credit facilities which allow the borrower to repay the loan and draw it down again later. Banks need to be able to keep track of their share including the interest. In the past, that was done by emailing back and forth. So the first phase of Fusion LenderComm was to share this data but using a web page to interrogate the information.
The second phase involves the banks integrating their systems to read and write information from Fusion LenderComm directly into their systems.
Grant Jones, VP, Fusion LenderComm, Finastra commented: “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.”
The system uses R3’s Corda and was the very first app to go live on Corda. The original pilot involved seven banks BNP Paribas, BNY Mellon, HSBC, ING, State Street and Natixis which is part of the French Banque Populaire group. At launch in May, ten banks were participating.
While this second phase is a significant step forward, the ultimate aim is to facilitate secondary trading. That includes both trade discovery and settlement, and Finastra plans to launch that next year.
But Finastra isn’t the only one with eyes on the sector. Competitor IPREO is working with Symbiont on a blockchain-based syndicated loan platform.