Finastra has launched its ESG Service, a cloud-native SaaS solution that will streamline sustainability-linked lending.
According to Finastra, ESG Service facilitates the integration of sustainability performance target criteria into ESG pricing for both Finastra Loan IQ and other back-office systems in the market.
ESG Service is a dedicated application designed to support sustainability-linked loan pricing. As a cloud-native SaaS solution that uses open APIs, it provides a high degree of flexibility to support varied deal structures, and offers extensibility for inclusion of new capabilities and partner applications.
It also has scope to add additional pricing components, beyond interest and ongoing fees, and the ability to support multiple transaction processing systems that require loan pricing adjustments.
By providing an automated means for tracking ESG performance and the related margin changes – which can be consumed directly in the relevant servicing systems via APIs – the service will deliver significant benefits to users across the middle and back office, including credit managers, borrowers and sustainability coordinators.
Finastra senior director, corporate and syndicated lending, Simon Thorogood said, “A shift in the mindset of corporate stakeholders, investors, customers and employees is pushing banks to adopt a more sustainable business model and this is driving demand for sustainability-linked loans.
“This creates a huge opportunity for banks to grow revenues and become leaders in the space, with borrowers looking for banks to help shepherd them through their ESG journey. Finastra’s ESG Service offers banks a well-defined, transparent and automated solution for managing ESG performance and the associated pricing adjustments, creating a more seamless experience for clients.
“Furthermore, with complex and constantly-evolving ESG regulations on the horizon, having a centralized store of data will greatly aid banks in being able to efficiently and accurately.”
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