The NatWest bank has announced plans to integrate blockchain technology in the management of its syndicated loans platform. The blockchain solution will be launched next month according to a press release by NatWest.
The new platform was developed in association with Finatra and is expected to facilitate a seamless communication between lenders and bank agents. Finatra’s blockchain based syndicated loans platform, Fusion LenderComm leverages on Us-based Corda R3 distributed ledger technology.
A syndicated loans system is a complex process that involves two or more lenders pooling in resources in order to loan mostly huge corporations, fund a massive project or a sovereign government. The pooling in of resources is necessary in order to spread risks.
The syndicated loans system is a lucrative sector controlling trillions of dollars. For example,4.5 trillion worth of syndicated loans was recorded last year alone. It is only important that an efficient system like NatWest’s be deployed in the sector to facilitate smooth running.
The process of setting up a syndicate traditionally is tedious as there is no efficient technology that facilitates fast communication that is cost effective and transparent.
NatWest’s blockchain based platform is expected to facilitate real-time corresponding between parties within the syndicate. It can take up to three months to set up a syndicate in the traditional system because the system is heavily dependent on slow, obsolete means of communications. The blockchain-based solution besides hastening communication is also expected to cut down administrative costs of running a syndicate thus relieving lenders.
According to NatWest, “The platform aims to dramatically reduce the amount of time taken to set-up syndicated loan arrangements for our customers – currently complex arrangements can take months to finalise. It also aims to achieve significant reductions in the ongoing cost of administration for lenders and a massive improvement in transparency.”
Blockchain technology is famed for providing secure solutions and storing transaction history permanently to be accessed easily by stakeholders within the network. More importantly, is that details of the transactions are incorruptible. The Fusion LenderComm technology has proven to an ideal alternative for the traditional syndicated loans management as it addresses the shortcomings of the traditional system.