Citing inefficiencies in the syndicated loan market, National Westminster Bank (NatWest) is set to use a DLT platform built on Corda to streamline communications between agent banks and lenders. A syndicated loan is one where the risk is too large for a single entity. Thus a syndicate of lenders comes together. NatWest is part of the Royal Bank of Scotland (RBS) and is the first bank to use DLT in the syndicated loans market.
Blockchain and the syndicated loan market
NatWest is using the Fusion LenderComm DLT based platform to facilitate syndicated loans. The platform was built by Finastra in collaboration with ING, State Street, HSBC, BNP Paribas, and BNY Mellon. The Fusion LenderComm portal enables lenders to see accurate information, obtain real-time access to credit agreements, and view accrual balances, position information, and detailed transaction data directly from agent banks’ loan servicing platforms. Fusion LenderComm is powered by R3’s Corda and the platform is going live this November. As per the leading Programme Director at NatWest –
“We are excited about the possibilities that this platform offers 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.”
Last year, over GBP 3 Trillion changed hands in the syndicated loans market in 2017. It is not a small industry, and according to NatWest, a lack of innovation in recent times has led to increased costs. According to R3 CEO David Rutter, –
“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. The solution delivers immediate efficiencies and reduces costs for both agent banks and lenders.”
Corda and R3
R3 is an organization aiming to replace large legacy systems with faster and more efficient blockchain solutions. They work with regulators and over 200 large companies to integrate the new technology into the sector, claiming to be the largest collaboration of its kind within the DLT space. R3 provides two types of Corda platform, one enterprise edition, and one open source. The Corda platform was designed in 2016 and was mainly intended to address legacy issues in the financial sector, but the platform itself is industry agnostic. It is already in use by companies in healthcare, insurance, and shipping. Corda also acts as a gateway to an application ecosystem know as CorDapps.
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