The significant expansion in the private credit market over the past decade has led to a “fragmented technological landscape”, according to a new report by KPMG.

The private credit market has seen a steady rise over the past 10 years, with its market share now nearing that of syndicated loans and high-yield bonds.

To support this growth, a large number of third-party technology providers have flooded the market to address operational challenges related to private credit, the Big Four auditor said.

However, this has led to a fragmentation of technology providers, which has introduced “notable challenges” for private credit firms in navigating and choosing the most suitable technology solutions, it said.

“The current private credit technology landscape is crowded and disjointed, with a diverse mix of technology providers, both large and small, each focusing on key areas within the private credit transaction lifecycle,” KPMG said.

“The market currently largely lacks a comprehensive, end-to-end solution that bridges the various stages of capital raising, deal origination, client relationship management, execution, portfolio management, compliance, accounting, and reporting, which are essential to enable synergies and efficiencies in a growing asset class.”

It said that this can create a number of significant challenges for private credit firms, including “data chaos” such as inconsistencies, inaccuracies and misalignment of data. It also can mean firms have to rely on inefficient manual processes like manually entering and reconciling a lot of data, which can result in human error.

To mitigate these challenges, KPMG said it is “essential” for firms to select solutions that “prioritise integrations and offer the flexibility to connect with various systems using application programming interfaces, secure file transfer protocols, web hooks and extract-transform-load tools”.

“Performing a detailed vendor evaluation with considerations to integrations, upstream and downstream data impacts, and existing data infrastructure can minimise the risk of fragmentation”, it added.