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R3, Banks, Fintech Startups Test Blockchain Platform for Syndicated Loans

Last Updated March 4, 2021 4:51 PM
Samburaj Das
Last Updated March 4, 2021 4:51 PM

A group of banks, the R3 blockchain consortium and Fintech startup Symbiont have created completed the trail of a proof of concept blockchain simulating an exchange of syndicated loans.

An increasing number of financial instruments are being tested, successfully, for transfers and exchange on a blockchain platform and the latest industry endeavor puts the scanner on syndicated loans, an loan offering which sees a group of lenders – a syndicate – collectively lend to a single borrower.

In an announcement today communicated to CCN.com, European bank Credit Suisse, a number of banks forming the R3-led consortium and the New York-based startup itself along with technology partners revealed a proof-of-concept distributed ledger solution around syndicated loans.

Arranged by Credit Suisse, the project saw smart Fintech startup Symbiont’s smart-contract technology coupled with financial data provider Ipero’s business solutions to quicken and increase efficiency of loan trade settlements.

Emmanuel Aidoo, head of distributed ledger and blockchain effort at Credit Suisse stated:

This project demonstrates the potential for blockchain technology to fundamentally reshape the syndicated loan market and the capital markets more broadly.

He pointed to reduced costs and increased efficiency as a result of the technology’s implementation, adding that a network of banks on a common ledger would see “faster and more certain settlements” in the loan trade market.

The project used software from Fintech firm Synaps. With the interface, loan investors are enabled with direct access to the record for syndicated loan data, foregoing the paperwork, hurdles and inefficiencies that any trade market routinely sees. Today’s announcement of a successful test also sees participants proclaiming that loan data processing can be done exclusively on a blockchain in the future.

Joseph Salerno, managing director and Ipreo and CEO of Synaps goes a step further, stating:

We are demonstrating that distributed ledger technology can be put to work now. Our solution addresses actual use cases and meets production standards for maintainability, security, privacy and throughput.

Other banks that contributed market insights and testing resources to the project include R3 members BBVA, Danske Bank, Royal Bank of Scotland, Scotiabank, Société Générale, State Street, U.S. Bank and Wells Fargo.

The announcement of simulating exchange of syndicated loans on a blockchain comes soon after another R3-member-led endeavor which saw a blockchain prototype powered by Intel technology simulate bond transactions successfully.

Featured image from iStock/mediaiamges.