Syndicated Loans With Blockchain Technology Training Ppt

Slide 1

This slide demonstrates provides an overview of syndicated loan as a blockchain application in finance. Syndicated loans enable clients to get large-scale, diverse funding at current market rates. These loans are funded by a group of investors (a Syndicate), with one investor acting as the lead arranger.

Slide 2

This slide depicts the present condition of the syndicate loan procedure. We go through the six steps which start with a company seeking a loan from a financial institution and culminates at a lead arranger assuming administrative responsibility during the loan lifespan.

Slide 3

This slide lists the issues with the present state of syndicated loan.

Instructor Notes:

• Time-consuming procedure: Selecting syndicate members based on financial health and industry experience is time-consuming and inefficient due to the manual assessment procedure
• Inadequate integration of technologies: Team members use tools and data sources, which adds time and increases the possibility of mistakes
• Labor-intensive process: Documenting syndicate member pledges is labor-intensive and inefficient , with manual processes a huge pain-point
• Inefficient money distribution: The lead arranger facilitates principal and interest disbursement, incurring additional fees for investors
• Danger of default: Throughout the loan lifespan, the lead arranger lives under the fear of loan default
• Delayed settlement time: Payments settle in transaction date plus three days, delaying investors' access to funds
• Costly intermediaries: Third-party companies make servicing operations more accessible but at a higher cost to investors
• Siloed systems: Systems of all lenders do not interact, leading to duplication of activities

Slide 4

This slide illustrates how blockchain technology can overcome the current syndicate loan process — starting from a corporation seeking a loan from a FI serving as the lead arranger to embedding regulation. This makes it easier to check financial records to ensure anti-money laundering measures are followed correctly.

Slide 5

This slide expands upon the benefits of blockchain technology implementation in syndicated loan.

Instructor Notes:

• The formation of syndicates is automated: Syndicate creation is automated using programmable selection criteria within a smart contract, shortening the time it takes for a corporation’s loan to be financed
• Embedded controller: Regulators are supplied real-time financial facts throughout the syndicated loan lifecycle to enable Anti-Money Laundering (AML)/ Know Your Customer (KYC) actions
• Due diligence and underwriting automation: Corporation’s financial data assessment and risk screening are automated, lowering execution time and the number of resources necessary to accomplish these tasks
• Integration of technology: Due diligence systems provide relevant financial information to underwriting systems, optimizing process execution and lowering the time taken for the underwriting process
•  Reduces closure time: Loan money is made available in real-time, eliminating the need for traditional settlement and centralized lead arranger processes
• Disintermediation of services: Smart contracts are utilized to carry out pre-fed actions, removing the requirement for third-party intermediaries
• Decreased counterparty risk: The disbursement of principal and interest payments is automated throughout the lifespan, eliminating operational risk.