The Loan Market Association's (LMA's) inaugural FinTech Conference provided us with an opportunity to reflect on increasing interest in technology to improve the functioning of loan markets. Certainly, our recent experience - in both seeking transactional improvements and advising clients on the risks associated with new technologies - is that the promise of fintech (and 'regtech' and 'legaltech' and other 'tech' - however you wish to split the field...) is changing attitudes and behaviour.
As the LMA's topical agenda highlighted, change is coming in a number of complementary areas, breathing fresh life into markets that have long been associated with financial and legal innovation but have perhaps lagged other financial markets (including those for raising public capital and derivatives) in bettering manual processes.
Lawyers play a significant part in the transition: in development and deployment of solutions (for transaction management, automated drafting and electronic execution and AI-assisted document review, to take a few prominent examples), and in advising clients on the legal and compliance risks associated with these and other uses for the underlying technology.
Loan markets are obviously not the only focus for fintech, but we have been struck by the especially numerous and material opportunities for progress that they present. One of the panelists trumpeted the loan product's potential to lead the way in the use of distributed ledger technology across the lifecycle of origination, syndication and trading. It being a private, wholesale product in which participants are comparatively few and the notional amounts involved are comparatively high was thought to be an advantage (as compared to widely dispersed bonds and equities) in the drive to move meaningful capital to adopt new technology with market-wide benefits.
We have recently conducted a research project into the risks associated with the development, use and application of AI and other disruptive technologies in various fields, including lending. If you would like access to the research, please register at https://www.macfarlanes.com/what-we-think/artificial-intelligence/.
Interest in technology, designed to improve the efficiency, transparency and liquidity of the syndicated loan market, is at an all-time high.