Digital transformation is lagging for corporate banking areas
A popular alternative to corporate bonds for raising capital, the syndicated loan market has seen significant increases in the cost of business. Global banks are faced with unique challenges which inhibit growth such as regulatory and compliance requirements of know your customer (KYC), anti-money laundering (AML) and Bank Secrecy Act (BSA) or new data protection and privacy rules.
Over the past few years, digital transformation has been seen as a way to address these costs and streamline processes. But while digital has provided self-service functionality and empowered users, corporate banking areas like trade finance, syndicated lending, corporate lending and investment banking are still exploring ways to go digital.
Seamlessly track services and compliance across the syndicate
Blockchain offers a very strong and unique value proposition to banks looking to expand their global footprint. Using blockchain’s distributed ledger architecture, banks can spread out tasks like local compliance, KYC or AML and link them to a single customer block. While individual banks in the syndicate may address different regulations, data and privacy laws based on local or regional requirements, all banks can benefit by accessing the data through blockchain. This lowers the cost of meeting regulatory requirements for syndicated lending since banks can take advantage of compliance already completed by others in the syndicate.
The closed loop between the syndicate and the customer allows banks to efficiently track the services provided at various touchpoints such as regional drawdowns, limit utilization, or distribution of fees and charges in the local syndicate banks. Additionally, since all syndicate banks have access to the customer’s digital documentation, they can avoid data duplication and pull down required data for local country activities as needed. The blockchain distributed ledgers are updated real-time to enable business growth and improved profitability.
With blockchain’s distributed ledger, syndicated banks can significantly reduce the complexity and efforts required to comply with local taxation and regulatory rules since local disbursements are accounted for in the distributed ledger. The banks also have a single view of statements and collections made locally which can enable real-time reporting. With blockchain, syndicated banks can:
- Launch business quickly and provide new value propositions
- Improve spreads and margins
- Reduce operational risk and costs
- Comply with regulations across regions
- Perform real-time accounting
- Gain a 360 degree view of each customer
- Mine data and provide real-time customer dashboards and reporting
Capgemini has extensive experience streamlining traditional syndicated loans processes for leading financial institutions and we’ve invested in blockchain technology to support innovative advisory services for our clients. Our proven approach to applied innovation lets clients try out new ideas in an accelerated environment to meet the fast pace of change in today’s banking and financial services industry.