LMA releases results of its FinTech Survey19 May 2020
Below are the results of our recent survey conducted with LMA members to better understand how they are using or planning to adopt new financial/legal technology.
No one can deny that FinTech is coming for the syndicated loan product, and that for approximately two thirds of loan market participants who took part in the LMA FinTech survey, its advent should be seen as an opportunity, rather than a threat. That said, over three quarters of those surveyed admitted that they did not know as much as they needed to about FinTech in the context of their businesses, suggesting a knowledge gap still needing to be filled as FinTech solutions become more prevalent in the next few years. This knowledge gap centres primarily on practical application to business needs, as well as, but to a lesser extent, legal and regulatory issues. Most accept that there is no need to understand the workings of the underlying technology.
Turning to the impediments to adoption, by far the greatest challenge, according to just over 40% of respondents, is finding scalable solutions which are then adopted on a market-wide basis. This is perhaps not surprising, given the nature of the syndicated loan product, which involves many different types of counterparties, all with different needs and drivers. Cost is also another factor, along with the time taken to see a return on investment – only a third of those surveyed are seeing such a return to date. In addition, it is generally agreed that the law needs to become much more permissible if technology solutions are going to become more broadly adopted, specifically with regards to documentation execution, but also other legal and regulatory issues.
Finally, in terms of where loan market technology is currently focused, document automation is top of people's agendas (although it should be noted that the majority of respondents operate in the legal sphere, whether that be in private practice or in-house) as well as negotiation and transaction management. Technology is also seen as a potential solution to the long standing "problem" of KYC. That said, with regards to the LMA's upcoming automation project, it is interesting to note that almost all areas of the loan advancement process, from drafting the document through to negotiation and execution, are considered valuable and applicable features for the future.
About you - what is your area of focus?
To what extent has your organisation been affected by the growth of FinTech? Please give an answer on a scale between 1 (not affected at all) and 5 (greatly affected).
What is your personal opinion of FinTech?
Do you believe you know as much as you need to about FinTech, as likely to impact your business?
If No, in which area do you think your knowledge could be most improved?
What do you think is the biggest challenge to the adoption of technology for syndicated loans?
Does your syndicated loan business have, or is it looking to adopt, a technology strategy?
If yes are you receiving a return on your investment?
If yes to what is your institution's approach to developing technology? (Please tick all that apply)
Which of the following emerging technologies does your business use (or is looking to use) (Please tick all that apply)
Do you think the law needs to be more permissible to allow technology solutions to flourish?
If yes, specifically what areas?
Which area of the syndicated loan market do you think technology will assist with most (please tick all that apply)?
The LMA has recently announced its intention to launch a documentation automation platform. Which of the following features do you think applies most to you (please rank in order of priority, with one being the most applicable):