LONDON, Sept 27 (LPC) – Europe’s syndicated loan market is on the brink of a technological revolution which will increase its speed and efficiency as banks continue to modernise, but questions remain over its implementation and cost.
The complexity and expense of integrating new technologies into a complex web of existing bank proprietary systems and a reluctance to change is holding the loan market back for now, despite the obvious advantages offered by new digital platforms.
In a market that is still heavily paper, fax and email-based and where secondary loan settlement times can take up to three months due to onerous Know Your Customer (KYC) requirements, bankers are well aware of the advantages of updating lending practises.
“We need to make loan products more efficient and technology will become more important to help with that. We need to be cognisant of the need to change and offer greater flexibility,” said Charlotte Conlan, head of loan and high-yield syndicate for EMEA at BNP Paribas at the Loan Market Association’s (LMA) syndicated loans conference this week.
New technology is expected to have the biggest impact on loan agency operations, followed by KYC requirements and secondary loan trading, according to a poll of conference delegates.
Artificial Intelligence (AI) is expected to be widely adopted by the loan market in the next five years, along with blockchain technology which could help to cut loan settlement times to as little as three days, conference panellists said. While adopting these technologies is a long-term goal, changes will start to be seen within a year which will free bankers from onerous and repetitive administrative tasks, they added.