Over the past decade, credit markets have evolved far beyond the binary of banks versus private funds. Today’s reality is more complex: capital comes at different speeds, with different incentives, different infrastructures — and borrowers are often left managing the disconnect.
The convergence of public and private credit is accelerating. Banks are partnering with private funds. Insurance companies are buying loans originated by banks. Endowments and pensions are stepping into direct lending. The ecosystem is more crowded — and more collaborative — than ever before.
But that evolution is creating a tension between speed and stability, between relationship-driven lending and return-driven investing. And at the center of it all is the borrower.
The rise of fast and slow capital
In this new landscape, not all capital moves the same way.
Fast capital, often in the form of private credit funds, asset managers, or pension-backed vehicles, prioritizes agility and return. These firms are built to deploy quickly and flexibly, offering tailored credit structures that banks may not be able to underwrite due to regulatory or balance sheet constraints. This capital tends to follow opportunity, not relationships.
Slow capital, think traditional banks and regulated financial institutions, moves deliberately. It emphasizes credit quality, process, and long-term relationships. These lenders often have decades of infrastructure built around underwriting, servicing, and client management. They may be slower to act, but they’re built to stick around.
Each plays an essential role. But the challenge arises when borrowers are asked to engage with both in a single deal, or when infrastructure hasn’t caught up to make those partnerships seamless.
More partners, more friction
Borrowers don’t usually ask whether a deal is backed by fast or slow money. They ask:
- Can I get the capital I need?
- Are the terms clear and fair?
- Do I know who to call if something changes?
As banks and funds partner in new ways, like joint ventures, loan pass-offs, syndications, borrowers often find themselves navigating multiple stakeholders. Each might have different documentation standards, approval processes, or servicing structures. This isn’t inherently bad, but it’s rarely designed with the borrower in mind.
The result is a system where borrowers must manage increasing complexity to get capital. And that complexity isn’t linear, it grows exponentially with each added layer of coordination.
What borrowers want (and where systems fall short)
In theory, more capital sources should lead to better pricing and more flexible structures. But in practice, when operational ownership is fragmented, even simple requests like checking on a covenant waiver or restructuring a repayment schedule can turn into a maze.
Borrowers are busy running their businesses. They want fewer conversations, not more. Fewer platforms to log into. Fewer approvals to chase. Fewer phone calls to understand who owns what part of the loan. They want credit that works like a relationship, not a patchwork.
That expectation isn’t unreasonable, it’s a signal that infrastructure must evolve in parallel with innovation in deal structure and capital formation.
Specialization, not convergence theater
The answer isn’t to force uniformity across all credit providers. Banks and funds have different strengths. Banks are built for lifecycle management. Funds are built for capital agility. Both should keep doing what they do best, but with infrastructure that allows for coordination, not duplication.
This is where technology has the opportunity to solve real problems:
- Shared servicing rails between banks and funds
- Better visibility into performance, documents, and obligations for all stakeholders
- Tools that support exit scenarios, not just origination
Much of today’s tooling focuses on getting deals done faster. That’s necessary, but not sufficient. The greater opportunity lies in managing what happens after the deal is signed — especially when things don’t go as planned.
Design for the long tail
Capital deployment is easy. Managing a portfolio over years is where the real work begins.
Institutions that succeed over time will be those that invest in the unsexy parts of credit infrastructure: monitoring, restructuring, and servicing. These aren’t front-page features, but they’re what allow capital to operate with confidence at scale.
We’ve seen this play out before. In past credit cycles, firms that spent on monitoring systems, data visibility, and servicing platforms had better recovery rates and lower portfolio volatility. Those who cut corners struggled, or disappeared.
A borrower-centric credit system
The convergence of public and private credit creates opportunity, but only if the systems that underpin it are designed with borrowers in mind.
Borrowers want fewer surprises. Fewer parties. And fewer gaps between who originates a deal and who manages it later. That means building infrastructure that accommodates multiple capital speeds without creating drag.
The future of credit isn’t just about where capital comes from. It’s about whether borrowers can navigate it without getting lost in the middle.
Want more?
Want to dive deeper into how these dynamics are playing out across the credit landscape? You can download our PDF guide, which covers key trends, borrower implications, and the infrastructure priorities shaping the future of credit.
