Operational performance has become increasingly important to private credit fund managers as the private credit industry grows and matures. Fund managers need to achieve operational efficiency to stay competitive, and advanced technologies like artificial intelligence and automation can help managers reach their goals. Optical character recognition (OCR) and natural language processing (NLP) can be used to digitize nonstandard data while robotic process automation (RPA) and machine learning (ML) can be combined to create intelligent automation software to take over routine, repetitive processes. These technologies can be deployed to streamline various phases of the private lending lifecycle to help managers meet the demands presented by increasing operational complexity.
- Origination – Purpose-built software solutions can phase out the reliance on spreadsheets and shared drives to help manage deal pipelines, track and prioritize opportunities and package deal data for review and approval.
- Loan applications – Paper-based processes are slow, inefficient and error-prone. A digital onboarding solution can validate data, request additional information from applicants and provide transparency.
- Credit review – Fund managers need a system that can aggregate, standardize and validate real-time data from both internal and external sources, enabling data-driven decision-making.
- Documentation of terms and conditions – Manually processing the sheer volume of documentation from lending operations can be overwhelming. Intelligent automation can be used to review and check all documentation efficiently.
- Loan servicing – Intelligent automation can invoice borrowers, collect payments and allocate them to investors, and track drawdowns and interest rate changes.
- Valuations – Fund managers need a solution to automatically monitor borrowers for distress signals that could impact a loan’s value.
- Renegotiations and workouts – Analytic technologies can help fund managers identify potentially distressed borrowers and present alternative workout strategies based on the loan terms or borrower circumstances.
- Fund accounting and administration – By delegating fund administration and accounting to a qualified service provider, fund managers can more efficiently face complexities like pooled investment funds or multiple jurisdictions.
Developing and maintaining advanced technologies for every phase of the private lending lifecycle can be a heavy burden on in-house resources. Many fund managers outsource some or all of their operational processes to access the latest technology and deep industry expertise without increasing overhead.
To learn more about how advanced technologies can help you achieve greater operational efficiency at every stage of the private lending lifecycle, download our "Private Credit: Strategies for Sustaining Success" whitepaper.
