We recently sat down with some of our Corporate Trust loans and loan-backed securities experts for a wide-ranging discussion about loan transparency and LoanArc, BNY Mellon’s secure, web-based loan reporting solution. In this second of two parts, the team takes a closer look at LoanArc and addresses how collateral managers, fund administrators, operations staff and other parties on the client side can make use of loan data through it.
Who are the core users of LoanArc within a client organization?
Bobby Weil, Senior Relationship Manager for U.S. Financial Institutions: The great thing about LoanArc is that it has something for everyone. Portfolio analysts will really enjoy the in-depth access to their portfolios for both position and cash reporting and covenant testing and analysis. Portfolio managers will like being able to see their portfolios at a glance and an overview of an entire CLO book of business that we have here with us in Corporate Trust. Operations staff will enjoy having the convenience of anytime access with the ability to customize, based on their needs and those of the portfolio management staff that report to them.
It's about being able to have the data available for whatever the need is, to be able to be crafted by the end user, by the client, in whichever format and in whichever value proposition makes the most sense for them to be able to meet their own goals.
LoanArc is very open-ended in the sense that all major participants at a collateral manager or a fund administrator or any other party that is a user will be able to have any person on their staff that really needs access to their data have the data. They can view it through LoanArc either directly, or through an export that they can customize even further. It gives them the opportunity to be able to do what they need to do with their own data.
Why is the ability to do that, to slice, dice, and remix the data, important?
Zeeshan Ahmed, Product Manager: There are two types of web offerings. One is web reporting and the other one is web analysis. Historically what many banks including ourselves have done is provide web reporting that our client managers had to take as-is and basically change their systems or do development on their side to bring the data in.
What LoanArc does now is provide web analysis. That is what you are calling the” slice, dice, remix” approach: being able to take that data and really make it useful within your own operations within your own organization. LoanArc also understand whether an analyst from a client's organization is using the data versus a portfolio manager, and based off of that persona, they are able to actually create the types of reports you want to use and the types of dashboards you want to use.
The API capability of LoanArc is also a very powerful feature that LoanArc offers because it feeds the information directly into the client's own systems. It allows them to customize and even control their technology cost, versus going out and building something or engaging another vendor to do something for them
What does BNY Mellon do to help the client through that process of figuring out how to consume data from those APIs and integrate it within their own systems? How do you partner with the client to allow them to do that?
Ahmed: First, we are working with the clients' wider technology teams in order to understand what kind of systems they use and how they use them. Second, the operational process of it is very important to us because we have to be mindful of what they do once we send our data across to them. This dialogue with the client and their technology teams allows us to offer meaningful, repeatable, and scalable solutions to them.
What's next on the LoanArc product roadmap?
Medita Vucic, Group Manager for U.S. Financial Institutions: LoanArc will continue to evolve based on the market and client needs as we co-create with various clients in the market. But integration with proprietary systems at our respective clients is key. That's going to be using the API functionality.
We will also continue enhancements in analytics. On-demand hypos, data reconciliation tools, data sharing with third-party providers, deal milestones, workflow collaboration features, and waterfall projections are the most critical market needs.
Weil: Medita has really hit it spot on. Two of the critical ideas that she mentioned were "evolution" and "enhancement." Continuous process development around our client needs, by listening and understanding from our clients what they need most in connection with their data, helps us evolve and enhance the platform further. It's a continuous growth process that will allow us to keep LoanArc very nimble, very efficient, and very adept based on our clients’ needs.
Ahmed: We also want to take a look at where the market and the industry is headed from a technology standpoint as well as changes in operational models within the loan asset class, any market indicators that will actually help us be ahead of the competition. As the others have said, we're going to get that information from our clients so we can continue to improve LoanArc and really bring the meaningful data and meaningful information out in front of the collateral managers.
Vucic: That’s right. Now it's a matter of the market transforming it and integrating it. The key to making data that much more meaningful, whether you're a portfolio manager or an investor or a compliance or risk officer, is going to be how you integrate the data considering you have multiple service providers. So, the key thing to think about is ensuring that there is an integration plan for proprietary technology accounting systems, and how clients can now take in information from the various service providers that they have.
Be sure to read part one of the discussion: Loan Portfolios: New Transparency Imperatives