Structured finance, in the age of digitization
Structured Finance is one of the last banking activities which still implies a lot of paper-based tasks and intensely demanding handwork. So far, this singularity could be explained by the few number of deals signed each year and their tailor-made specificities. However, at least 90% of the facility agreements are already standard: schedules, fees, covenants… and thus, could lead banks and investors to highly optimize their processes.
Therefore, is the true reason for the low digitization not a lack of shared services along the credit chain? Today, all parties to a deal have their own systems and communicate together through unstructured and scattered channels: mails, fax, email… Which leads to reconciliation issues, loss of critical data, and a lack of global trackability.
Now that the Financial Industry is mature enough to set-up flexible shared SaaS solutions, it is time to move forward toward a next-gen Loan IT set-up. In first place, the new generation of investors and borrowers are hungry for automation through digitization. Additionally, this is the best way for lenders to both reduce running costs and improve client engagement. By involving their clients and financial partners, banks have a unique opportunity to streamline and automate internal processes. A cherry on the cake is that by centralizing all data on homogeneous and interconnected communication channels, the platform becomes a great source for cognitive applications, as a tool to better understand clients’ needs and expectations.
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