Loan Agency Software: How technology can cut risk and boost margins for your business

Loan agency can involve a lot of manual work relative to other asset classes

Exchange like clearing is now possible

Thankfully, advances in technology are changing that and the Post trade admin for loans is being dragged into line with other asset classes. Soon the market through a series of new vendors, will be supplying bond-like clearing to the loan market away from the traditional incumbents.

So how can a digital solution to loan administration help Loan agents and their customer base ?

Data Connectivity is the key

So much of the existing loan workflow can be automated, however this is impossible to do unless you have a solid network architecture around you. What does this mean in practice? This means having a data set of lenders, borrowers and upto date loan data to work from. Without this you might as well go home. Forget AI, to efficiently process any data set you need a high quality base to work from.

Once you have a digital data set of lenders, borrower and loan data you can start to really cut into the inefficiencies that currently exist. Accessibility to common pool of KYC, Tax and loan documentation will allow you to do some very powerful things with trade, settlement and ownership data in the loan market.

In short, connect lenders, borrowers, facility data and PE sponsors and you have the right infrastructure for success. The data set you can develop over time will be super helpful for moving through corporate actions, amendments, identifying cornerstone investors for new issues or add ons.

Software as a Margin Booster

Seems obvious but the more you automate and standardise workflows, the cheaper and less risky the process becomes. Noone in the bond universe processes trades manually so why should loans – bilat or syndiated be any different. You can read more here on my thought on Term loans as securities here.

More automation means less staff needed for manual tasks, digital audit trails very quickly replace the need for excessive “4 or 6 eyes” maker/checker processes.

Administrative duties of a loan agent

Monitoring covenants and complex document delivery schedules can be fully automated these days, meaning clients can effectively monitor large portfolios of loans that they are investing or lending against without any need for manual intervention. Security and collateral documentation and monitoring can be done more effectively and the results more widely distributed using modern software platforms.

For a more connected, digital way to manage your loan operations, connect with us. 

Will Nash

Will Nash is the Founder of LedgerComm.