Fintech provider FIS and structured finance platform Intain deploy blockchain-based marketplace built on which allows regional and community banks to securitize and sell loan portfolios directly to institutional investors, the companies told CoinDesk.
Digital Liquidity Gateway, as it is called, tokenizes loans as non-fungible tokens (NFTs), automates settlement, including with stablecoins like USDC, and removes layers of intermediaries that often make asset-backed financing slow and expensive. It is integrated with FIS’s core banking systems which provide software and payment infrastructure to more than 20,000 customers worldwide.
The platform already onboards banks and investors, with hundreds of millions of dollars in loan transactions expected by the end of the year, starting with loan pools related to commercial real estate and aviation financing, the companies said.
The initiative is part of a broader shift as asset managers, banks and fintechs place assets on blockchain rails in a process called real-world asset (RWA) tokenization. While much of this effort focuses on large institutions, Intain and FIS target the long tail of community and regional banks that fund much of the lending to small, local businesses but rarely reach the securitization markets.
“These smaller banks are removed from most capital market flows,” John Omahen, head of digital assets at FIS, said in an interview. “They make loans and operate them. They don’t have the expertise to structure deals or reach investors. What we’re doing is creating a place where these assets can meet demand and where capital can flow more efficiently.”
Tokenization of loans to increase transparency
Recent failures and controversies, including those at auto lender Tricolor and auto parts maker First Brands, have highlighted how weak data controls and opaque loan tracking can lead to double commitments, pricing errors and losses for investors.
The key functionality of Digital Liquidity Gateway is loan tokenization, where each loan is converted into a non-fungible token (NFT), backed by loan documents, data from FIS systems and third-party verification. Intain’s AI engine matches documents and ensures data accuracy before creating the NFT, which then becomes traceable and tamper-proof.
“Suddenly, what was an off-chain, untraceable asset is now on-chain,” Siddhartha, CEO of Intain, said in an interview. “This means that if I am an investor in an asset-backed security, I can zoom in and see the hundreds of individual loans that back it, with the assurance that they are recorded on-chain and cannot be double-collateralized.”
The platform highlights how traditional financial institutions (TradFi) can leverage blockchain to streamline their operations and open up new markets. For regional banks, this could mean faster access to liquidity, less paperwork and more ability to lend to local communities.
“Asset-backed finance is about capital flows,” Omahen said. “This platform helps banks free up balance sheet capacity so they can make more loans and better serve their communities.”
Read more: $2 Trillion Japanese Payments Provider TIS Deploys Multi-Token Platform with Avalanche
