Kevin Suh is Co-Founder and CTO of Finley. He leads the innovative team that is bringing cutting-edge technology to private credit. In this interview, he shared his thoughts on one of Finley's core beliefs: that debt agreements are best managed with code.
Finley has an interesting perspective on how to automate debt contracts. Could you explain what "contracts as code" means?
"Contracts as code" is a concept we adopted during Finley's very early stages. It essentially involves transforming legal contracts, like credit agreements, into a structured, coded format.
There are a lot of structural and rule-based components of a loan, like how much interest you owe, when the line of credit closes, or when it's considered mature, but it’s all written within these unstructured contracts.
We believe these components should be encoded because code is more reliable for maintaining the structure and rules without ambiguity, unlike traditional legal documents filled with complex legalese.
Ask any engineer; they would much rather look at code to understand what's happening than documentation that could be misinterpreted. So, a big thesis of ours is that contracts like the credit agreement—which could have over 200 different fields, rules, and parameters—can be codified.
Then, we can use the code to automate processes and make following contract rules transparent for both borrowers and lenders.
What does this mean from a technical standpoint?
Technically speaking, a contract like a credit agreement is turned into a large configuration file with about 200 parameters that can be adjusted.
You may want the interest rate to be 8% versus 10%. You may want the total loan commitment to be $100 million versus $150 million. It’s all adjustable. We turn everything into a structured, declarative configuration that powers a series of engines to support the ongoing operations related to that facility.
So, the reporting requirements, the funding requirements, the paydown requirements, or the settlement mechanics are all part of an engine that feeds off of a section of the configuration file we parsed and generated from that credit agreement PDF.
You mentioned that this process is challenging. Why is it so difficult to implement?
The complexity lies in the diversity of loans and the detailed, specific parameters each type of loan requires. There’s a lot more that goes into managing a warehouse facility or a loan than you might think. There’s a lot of nuance within a facility or managing a loan, and that’s only for a single loan.
While there are structural similarities across loans, there are many types of debt instruments, and they are all very different. For instance, credit card companies, student loan providers, and auto loan companies all have unique needs and nuances that must be meticulously managed, which makes standardizing these processes particularly tough.
Why do you think a solution like yours hasn't been developed until now?
When we first started, our CEO Jeremy was at Goldman Sachs managing debt instruments via email and Excel, which is how things have always been done. And that raised a lot of questions. GS is a great institution. If Goldman Sachs is doing it this way, what are other banks doing? Are they all doing the same thing? What are all the fintech companies doing?
We surveyed hundreds of both borrowers and lenders, and discovered pretty quickly that everyone was doing the same thing: managing debt capital manually. They're doing it the way things have always been done over the last 25 years. It’s a lot of Excel and email and a lot of back-and-forth between parties.
There are two main reasons. The challenge is technically demanding, and it requires deep subject matter expertise. You have to have people who are innovative and forward-thinking technologically alongside the subject matter expert who knows the intricate needs of borrowers and lenders.
In addition, the timing is right. Infrastructure advancements have only recently enabled the kind of data integration necessary for a solution like Finley.
How do you collaborate internally at Finley to overcome these challenges?
We use a concept that I love called "mind meld." The whole idea is very simple. Our engineers understand data, schemas, structures, and data pipelines, but that’s only half the solution.
We need to know how debt instruments work, and how to look at a PDF of a credit agreement to determine what operational rules, structures, and schemas to pull out. That’s when we call our Capital Markets team.
The entire Capital Markets team is made up of people who either worked on the lender or borrower side and know private credit and debt capital inside out. They also have a lot of interest in the technology side, just like us engineers have a lot of interest in the subject matter side.
We meet at the table and share notes and ideas. All of our product development is in direct collaboration; it's never in isolation. We always make sure that we see the full picture of available solutions and technologies. Our Capital Markets team talks to our customers daily, so we get a lot of their feedback, too.
This ensures that our technological solutions are informed by deep industry knowledge, and every aspect of product development involves input from both sides.
Why should engineers consider joining Finley now?
Finley is at a pivotal point where the foundational infrastructure has been laid, and now the focus is on scaling and expanding our capabilities. Engineers joining now will have the opportunity to work on groundbreaking features and applications built on a robust data foundation.
What excites you most about Finley's future direction?
I'm excited about leading the digital transformation in the private credit space, which has been slow to innovate. With our technology, we're poised to make significant changes, and people are ready for it. It’s the exact grounds you'd want for creativity and experimentation.
Many of our partners are excited about what we’re doing, which makes the work really fun.
Want to learn more about Finley's debt capital management software?
Finley is private credit management software that helps private credit borrowers and asset managers streamline and monitor asset-backed loans. From tracking covenants and deliverables, to assembling funding requests and analyzing asset performance, Finley gives borrowers and lenders peace of mind when it comes to debt capital management. For more, check out our Product page.
Interested in learning more about what it’s like to work at Finley? Check out our careers page.