Finastra launches ESG service to streamline sustainability-linked loans

Finastra, a leading loan provider, has recently announced the launch of its ESG Service, a SaaS-based cloud-native solution to enable sustainability-linked lending. The service will help in the integration of sustainability performance parameters in the ESG pricing for both Finastra Loan IQ and other back office systems.

The working mechanism of sustainability-linked loans is different from conventional lending strategies, where multiple moving parts need to be monitored against the sustainability terms mentioned in the credit agreement. This in turn, requires the use of complex pricing structures which can tie up banks’ resources and inhibit their ability to provide ESG products.  

The transaction volumes of sustainability-linked loans have also increased in 2022 despite the challenging environment in the market. The introduction of automated solution such as the ESG Service will enable financial entities to manage the KPI’s and ESG pricing charges associated with this form of lending. The SaaS solution also uses open API’s which provides flexibility in deal structures supporting multiple transaction processing system. Additional pricing components can also be added.

Senior Director of the Corporate and Syndicated Lending of Finastra, Simon Thorogood, has expressed that the firm’s ESG Service will create good opportunities for banks to grow in the sphere of finance, where borrowers are constantly in search of banks that are able to navigate them through their ESG journey.

ESG Service can also be used in relevant servicing systems via API’s, and is expected to deliver benefits to the middle- and back-office users including credit managers, sustainability coordinators and borrowers.

For the record, Finastra provides financial software applications and has launched an open innovation platform, in 2017. Its services are applicable in various fields like Payments, Treasury, Capital Markets and Universal Banking, among others. The firm assists banks to support direct banking relationships and facilitate growth through various indirect channels, including Banking-as-a-Service and embedded finance.

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