Ocorian: Technology is transforming the private credit direct lending market
The adoption of digital platforms and technology is transforming the private credit market in Europe with credit risk assessment and underwriting benefiting the most, new Nordic Trustee research with executives in the sector shows.
More than four out of five (83%) questioned say technology has transformed the sector with 21% saying it has significantly transformed direct lending, the study by Nordic Trustee, part of global capital markets services provider Ocorian found. Nearly three out of four (72%) of private credit executives questioned across the UK & Ireland, Germany, Switzerland, Benelux, the Nordics and Eastern Europe say credit risk assessment and underwriting has benefited the most while 50% point to improvements in deal sourcing and origination.
Around half (46%) say technology has transformed loan monitoring and servicing with 43% highlighting the benefits of technology for due diligence and compliance. Nearly a third (32%) say technology has had a transformative impact on client communications and reporting.
The study with professionals working across private credit and debt fund management private equity and corporates using private credit as a source of funding and for debt advisory firms found almost all (94%) believe standards and infrastructure in the market in respect of data management and reporting are good or excellent.Almost all (99%) are, however, committed to increasing spending to improve data management processes using automation and machine learning this year compared with last. Nearly half (47%) will increase budgets by 25% or more.
One in three (31%) say they are very likely to adopt new technological tools such as AI, blockchain and machine learning to further improve efficiency and transparency in direct lending over the next two to three years. The other 69% questioned say they are likely to do so over the same period.
