Fidelity National Financial's Advanced Commercial Banking System (ACBS) division is targeting greater efficiency in the loan asset class following its acquisition of loan settlement system ClearPar. "In order to get more people into this asset class, we need to have better systems available to more participants and there is still room for improvement," said Joseph Salerno, a senior v.p. at ACBS.
ACBS' key product is a servicing system that does the basic loan processing and administrative agency function for large commercial banks. ACBS also has two front-office products, LoanTrak and SyndTrak, and the final product is called SyndTrak Online, which is a direct competitor with Intralinks. ClearPar, meanwhile, is a loan settlement system founded by law firm Mandel Katz Manna & Brosnan for par and distressed trades.
"The benefits are obvious for our customers," said Salerno. LoanTrak and SyndTrak are ticket capture systems for primary syndications or for secondary trading. "As we connect the front-office systems to ClearPar, it will eliminate redundant data entry. This will remove an important delay and the potential risk for mistake in the rekeying of information. Prior to this acquisition, ClearPar had already taken some of those steps with clients to integrate internal systems. But this will be a giant leap forward in that endeavor," he added.
"Even more importantly, because ACBS has connected its front-office systems with its back-office systems, information can be securely transferred from those systems to ClearPar with the trading desk and agent prior approval, to accurately support the prompt settlement of trades," he noted.
Ellen Hefferan, president of ClearPar, further explained a user will be able to put in a trade in a real-time basis into LoanTrak. On that same real-time basis, ClearPar will have a trade ticket in its system and will be able to begin settlement. "We won't be waiting for someone to rekey the information into ClearPar so that we can begin the day after the trade is done. This could be done within minutes of each other. ClearPar will be able to get that information and confirms will be generated right away. This gives speed to the process by having the connectivity between the front-office and the settlement system," she said.
Salerno explained that earlier this year he was determined to build a competitive e-settlement product at ACBS and received a mandate to do so in the summer. By that time, however, ClearPar's business had sky-rocketed. "We abandoned our internal efforts recently, after we reached agreement on the main points of negotiation," he said.
Meanwhile, Michael Mandel, founder of ClearPar, explained why himself and co-founders John Manna and Kara Katz decided to sell. To take ClearPar to the next level would have required a significant amount of time integrating it into other parts of the technology market in the loan area, where Fidelity had already developed. "For them it was a buy or build decision and for us it was a sell or build decision," he commented. There is a confidentiality agreement on the price.