Technology fragmentation within the private credit lifecycle
Explore how to overcome the challenges of fragmented technology in private credit, from data inconsistencies to operational inefficiencies.
The growth of the private credit market
The private credit market has seen significant expansion over the past decade, drawing in institutional investors with the allure of higher returns and reduced volatility. However, this growth has also led to a fragmented technological landscape.
For a more in-depth look at how to navigate the challenges of technological fragmentation in private credit, explore our detailed analysis and recommendations.
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Technology fragmentation within the private credit lifecycle
Download PDFThe challenges of technological fragmentation
The specialized nature of private credit transactions has resulted in a proliferation of third-party technology providers, each focusing on specific parts of the transaction lifecycle. While these systems excel in their respective areas, they often operate in isolation, leading to integration challenges, data inconsistencies and operational inefficiencies. For example, a system designed to manage complex syndicated loans might not integrate smoothly with a portfolio management system, causing data discrepancies and hindering effective decision-making.
In this fragmented environment, maintaining accurate and consistent data across multiple platforms is a major challenge. Managing private credit positions requires precise data from sources like the security master, legal entity identifier, and fund master. With data spread across various systems, organizations struggle to ensure uniformity and integrity, often resulting in issues like credit rating updates appearing in one system but not another, leading to breaches in investment limits and the need for manual updates.
Five key reasons why technology implementations fail in private markets
Navigate the complexities of private markets by addressing underestimation, data quality, integration, vendor selection and requirement clarity.
Strategies for addressing technological fragmentation
To tackle these challenges, we recommend implementing robust data integration and centralization strategies:
Identify system gaps and integration issues.
Streamline the technology stack to ensure each system addresses specific needs without unnecessary overlap.
Select systems that meet business requirements in terms of functionality, integrations and data accuracy.
Enlist a knowledgeable and trusted adviser to help ensure a successful implementation.
By taking these steps, organizations can achieve a more efficient and scalable private credit operation, enabling better-informed decisions and effective risk management.
KPMG offerings for the private credit market
KPMG offers a full suite of services and products to meet the specific needs of the private credit market.
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