For every fragmented ecosystem, there’s a digital innovation being built and scaled to streamline it.
The global syndicated loan market, a $7 trillion-plus industry where loans are extended by multiple lenders to a single borrower, is no different. These loans, often ranging from millions to billions of dollars, are too large for any one lender to handle alone. Instead, various financial institutions — banks, funds and other entities — join to pool their resources and share the risk.
“Faxes and PDFs are still flying around,” Versana Founding CEO Cynthia Sachs told PYMNTS. “They are still a significant part of how information moves in this market. And firms need to ultimately processes them and get them into systems.”
Data on loan performance, cash flows and interest payments is — in many cases — still being shared via manual processes, slowing down the system and leaving room for errors, she said.
Since the turn of the 21st century, what began as a private, niche space grew into a massive network of corporate loans, involving thousands of lenders, funds and financial institutions. But with its growth came operational challenges, as, despite this rapid growth, the infrastructure supporting the market remained largely outdated, with major, global players relying on antiquated processes to manage crucial data flows.
“Everyone has to maintain their own books and records, which is a complicated, inefficient process when you’re dealing with millions of dollars and multiple players,” Sachs said. “You have a whole bunch of different things going on here, and nobody has managed so that everyone has good data to put into the right system to ultimately make the best decision off of.”
Recognizing these inefficiencies, major financial institutions have started to embrace digital solutions designed to modernize and streamline in real time the way loan data is processed and shared within the fragmented syndicated loan and private credit ecosystem.
