Overview

Streamline Loan Syndication

Syndicated loan transactions continue to be challenged with data silos, manual processes, and many intermediaries which slows down the process and adds unnecessary costs.

To improve this process requires a programmatic approach to business logic, which will standardize and sync data across multiple parties.  Doing so allows for increased speed and a greatly reduced cost of business.  This will allow more companies to be included in this market and increase revenue for all parties involved.  

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Key STRATO Features

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Context & Challenges

In 2015, the syndicated loan market was valued at US$1.8 trillion in the United States, €1.1 trillion in EMEA, and US$450.1 billion in APAC ex-Japan.  In Latin America, it was values at $US48.1 billionHalf of the US loan volume were processed through four book-runners–all incumbent financial institutions.

Syndicated loan opportunities can be incredibly beneficial to those involved. For financial institutions, they disperse the risk of a single customer borrowing a large amount, and for customers, they enable the borrowing of large amounts that often would be too much for one lender to put up. Syndicated loans bring together a group of lenders led by one lender in charge who underwrites the loan and coordinates with the other lending institutions. The borrower receives one note or credit line, dissimilarly to other loans.

However, the growth of the market is limited by over-complicated and inefficient back-office operations. For example, the selection of syndicate members necessitates a labor-intensive review of information taken from multiple sources, which can take a while to collate and verify. A similar process is required for the qualification of borrowers.

Syndicated loans are highly reliant on data access and manual processes, moreover they are littered with delays. Intermediaries such as book-runners who are required to step in and disburse principal and interest add costs and delays as do third-party firms who often manage ongoing loan servicing on behalf of the syndicate.

Towards the end of the process, verifying funds for settlement can translate into a wait of up to three days for investors to access their money.

Not only do the many components and parties involved in this process create complication, much of the work is also down in silos which can create duplication and redundant work.

STRATO promises to resolve several of the delays and challenges inherent to the loan syndication market.

  • STRATO’s record keeping functionality allows bookkeeper to use digital identities to select both borrowers and investors
  • STRATO’s smart contracts execute due diligence and automate crucial parts of the underwriting and credit adjudication processes

     

  • STRATO’s automation funds the loan, disburses principal and interest payments to the lenders, and enables loan servicing
  • STRATO’s regulator feature provides a holistic view of all actions for a regulator, minimizing risk

These solutions, as provided by STRATO drive a number of tangible benefits:                                                                          

  • Reduce waiting time from the current 16 day average to a matter of seconds
  • Lessen the need for costly intermediaries
  • Drive effective risk underwriting at far less labor and time costs
  • Enable constant and accurate regulation

Solution Benefits

  • Reduce the potential of error through automation, and ensure all data is updated in real-time

  • Through automated immutability, time-stamping, and traceability, impose transparency on syndicated loan processes

  • By creating a single, distributed ledger, drive industry standardization and allow for seamless communication between parties across borders

  • Automate certain actions through smart contract logic,  automatically introducing rules, models, data, and transactions to be automatically enforced or updated

  • Prevent and seamlessly identify payments fraud by inherently verifying all data and tracking all involved parties

  • Use STRATO's scalability to scale to include infinite groups and institutions on shared private chains, creating standardization

Any STRATO insurance solution leverages STRATO's enterprise grade features

  • RESTful APIs for direct connection of IoT devices such as bankers' devices to the blockchain network

  • Identity Management, OAuth and SSO capabilities for simplified IoT authorization and user login

  • Privacy via private chains to keep sensitive data private and control who sees what data

  • Enterprise Data Modeling for integration into existing data systems, and to ensure interoperability

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