Techies stick to technology, and accountants stick to accountancy – right? Well, not at Deloitte. And it’s a good job too because when financial analyst Tom Fewson and debt adviser Robert Connold got together, they developed a programme that has the potential to transform the way companies raise finance across the globe.
Inspired by the speed of change across the financial markets, Rob wanted to help Deloitte clients access liquidity from anywhere in the world. Tom then took that seed of an idea and created a working prototype that has secured interest from three of the world’s biggest banks. Here’s their story.
Robert had been curious as to why some manufacturers in parts of the world are capital constrained, while the UK, US and Asian markets are awash with cash. Could it simply be put down to ‘cultural differences’? No, it was nothing more complicated than a lack of transparency – potential lenders and borrowers didn’t have access to one another. And that’s what led to the development of Vault, Deloitte’s new technology platform that brings borrowers and lenders together.
Spoilt for choice
The past ten years have seen an explosion in the number and range of companies lending money. As well as the traditional options like the major banks, you’ve now got other players like private debt funds, pension funds and insurance companies. But with choice comes confusion and wasted time, as borrowers have to scour the market to find potential suitors that might invest in businesses like theirs on terms that meet their needs. So what makes Vault different?
Vault simplifies things, using digital technology to marry up corporate borrowers with appropriate lenders that offer the right money under the right conditions. To do this it collects data from over 400 recent deals to show what terms lenders have typically offered to different types of business, including debt, pricing, fees and repayment terms. It then uses artificial intelligence to break this down into over 250 data fields that capture the complexity of the lenders’ standard terms, and translates them into user-friendly information that we use to advise clients on who lends on the parameters they need.
By giving lenders information on all their deals in a single platform, it allows them to cross-reference terms and understand what they are offering elsewhere. The result is a faster and smoother process that gets new funds to borrowers and new business to lenders. And each party can be based anywhere in the world.
Looking to the future
Sharing knowledge and best practice across borders has traditionally been limited in an industry reliant on spreadsheets. And with average credit agreements running to around 250 pages, variations in terminology have also worked against cross-jurisdictional lending and the opening up of new markets.
Vault will change all this. The artificial intelligence used by Vault to populate the data fields will make it faster and easier to pick out variations in credit agreements and assess the impact of them – saving time and creating further opportunities for lenders.
Vault has already attracted interest from the world’s biggest banks, and countless debt funds and private equity borrowers too. As the Head of Leveraged Finance at a Fortune 500 client says: “This is a potential game changer for us. Right now we’re using spreadsheets, and they just don’t work for an institution of our scale. This sort of system would change the very way we work.”