The old lines between banks and private credit funds are fading fast. What used to be two distinct lending ecosystems now looks more like a fluid partnership model. Banks and non-banks aren’t just coexisting in today’s credit markets; they’re actively working together to originate, structure, and service deals.
This shift is a response to changing borrower demands, shifting regulatory constraints, and a capital market that’s far more complex than it was even a decade ago. At the heart of these partnerships is a simple question: What’s the best way to serve borrowers — and who’s best positioned to do it?
A market shaped by constraint and opportunity
Historically, banks were the primary source of credit for most businesses. But increasing regulatory pressure, especially in the wake of the global financial crisis, limited their ability to lend across all scenarios. As capital requirements tightened, many banks found themselves turning down deals they might have done in the past.
Private credit funds stepped in to fill those gaps. Unencumbered by the same regulatory burdens, these funds could be more flexible in structuring and pricing risk. Over time, they built a reputation for speed, creativity, and deal execution.
Today, rather than competing, banks and funds are discovering they can often serve borrowers better by collaborating. The result is a new kind of partnership: part strategic, part opportunistic, and increasingly normalized across the credit ecosystem.
What each party brings to the table
These partnerships work because the institutions involved bring fundamentally different, but complementary, strengths.
Banks excel at:
- Deep client relationships, often built over decades
- Servicing infrastructure, including loan monitoring, payments, and workouts
- Regulatory compliance and institutional trust
- Geographic concentration and sector expertise in specific markets
Private credit funds excel at:
- Speed of execution and streamlined approval processes
- Flexibility in structuring deals outside rigid credit boxes
- Appetite for risk that banks may not be able to hold on balance sheet
- Access to large, diverse pools of investor capital
Together, these strengths allow a broader range of borrowers to get financing—and to get it from institutions that each focus on what they do best.
A range of partnership models
There’s no single way to collaborate. In fact, the current landscape includes a wide variety of models:
- Loan referrals: Banks refer borrowers to funds when deals fall outside their mandate
- Joint ventures: Banks and funds set up shared lending vehicles or co-investment platforms
- Acquisitions or equity stakes: Banks take positions in private funds, or vice versa
- Servicing partnerships: Banks originate and service loans, while funds provide capital
Some of these structures are experimental. Others are already becoming standard in certain parts of the market. What unites them is a shared goal: retaining relationships while meeting borrower needs in a more fragmented, competitive lending environment.
What borrowers actually want
From a borrower’s perspective, the capital source matters less than the experience. Most companies aren’t concerned with whether their loan comes from a balance sheet lender or a fund manager — they want:
- Access to capital
- Clear, competitive terms
- Speed and certainty in execution
- A long-term partner when problems arise
That’s why successful bank–fund partnerships focus not just on capital, but on process. When collaboration is well-integrated, borrowers don’t see the seams. They get a single point of contact, consistent communication, and a relationship that can evolve with their needs.
The infrastructure challenge
Of course, this only works if the operational and technical infrastructure supports it. Many funds still lack the servicing capabilities that banks have spent decades building. And many banks still rely on legacy systems that aren’t easily extensible or API-friendly.
As more partnerships form, the need for shared infrastructure becomes urgent. There must be a clear division of responsibilities, especially in workouts, restructuring, and post-close operations. Otherwise, borrowers get caught in the middle.
What comes next
Bank–private fund partnerships aren’t a temporary trend. They’re a sign of how credit markets are adapting to serve a wider range of borrowers with a wider range of needs. But their success depends on more than shared economics. It depends on designing systems, both technological and relational, that support collaboration without adding friction.
The most resilient partnerships will be the ones that play to each party’s strengths and make the experience better, not harder, for the borrower. And as markets shift again (as they always do) that borrower-centric lens will be the difference between a quick fix and a long-term advantage.
Interested in learning more?
Want to go deeper on this topic? Download our guide summarizing key takeaways and partnership models.
