Seven of the world's top banking groups, including HSBC, ING and BNY Mellon are joining forces to create a platform for syndicated loans based on blockchain technology.

The blockchain service will be provided by R3 (a popular blockchain consortium) and Finastra (a UK financial software company). The service starts with Fusion LenderComm, an online marketplace that will use blockchain’s distributed ledger technology to reduce cost and improve on the efficiency and transparency of loans with multiple lenders. So far, the work in the syndicated loans was done manually.

"The community of banks already on board covers approximately 10 per cent of the global syndicated lending market and demonstrates the appetite to make this market utility a success," said Finastra deputy chief executive Simon Paris. "As more participants join, we will quickly gain the critical mass to develop this into the leading marketplace for syndicated lending and loan trading."

State Street's global lead for syndicated loan products Robert Waddell said: "Fusion LenderComm has the potential to solve a problem whose solution has eluded the loan market since inception: distribution of loan information in a structured, timely, transparent manner that comes directly from the content creators -- the agent banks."

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