How alternative credit fund managers are unlocking tech’s potential

A growing number of tech applications are allowing fund managers to better access, analyse and act on credit data. Jon Yarker reports…

Alternative credit fund managers are faced with a vast universe of credit data, in which actionable and valuable insights can be hidden. Finding these is easier said than done, which is why technology is increasingly becoming a central part of a fund management team’s toolkit – helping translate these swathes of data into insights their experts can realistically use.

This is part of an ongoing shift in how technology has changed how alternative credit fund managers have worked. Balbec Capital’s Matt Rosen, head of real estate asset management, says technology has moved from a support role to a core part of its business and been integrated in the firm’s entire investment lifecycle.

“Building proprietary systems has allowed us to go much deeper into targeted credit analysis and increase the complexity of our business in a meaningful way,” explains Rosen. “Our versatile tech-stack and agile development team enable us to adapt to any new challenges.”

Read more: Tech to play vital role in improving valuations

Given the amount of time and resources taken up by sifting through credit data at alternative credit fund managers, technology can be used to facilitate much-needed efficiency. Technology applications will vary by firm, but Kartesia’s business transformation director Marc Housieaux highlights that a running theme at his company has been around digitalisation and centralisation.

“Technology has fundamentally reshaped the operational rhythm of alternative credit teams,” says Housieaux. Specific to Kartesia, he gives the examples of CRM systems tailored to private markets, data rooms with structured tagging, and integrated portfolio monitoring tools that allow investment professionals to access information instantly, collaborate across jurisdictions, and reduce administrative burden.

“This enables teams to focus more on high-value activities – strategic analysis, relationship building, and proactive risk management,” he adds.

Buy-side decision-making

Nowhere is the value of high-quality data clearer than when it comes to decision-making, especially on the buy side. This isn’t just about the actual quality of the data itself, but also in getting data to the decision makers in a faster way that complements their investment process. Here, Kartesia’s Housieaux highlights the importance of integrated platforms that combine internal performance data with third-party intelligence, allowing teams to benchmark deals, spot trends, and conduct scenario analysis more effectively.

“Not only can decision makers access and utilise more data and information than ever before, but they can also do it in a fraction of the time as well,” says Vishal Saxena, chief technology officer at Octus. “In an industry where time is literally money, fund managers need to trust that the information they have is accurate and timely. Technology partners not only help to manage document workflow to cut hours from research, but they help to confirm the validity of information and corroborate the data with extensive reporting and analysis.”

Read more: Allvue Systems launches AI-ready platform for private capital data

Some firms, like Balbec Capital, have invested in its own proprietary technology to support decision-making. Rosen says this has allowed for deeper asset quality assessment and reduced due diligence cost and time.

“The efficiency gain through the technology-aided decision making is evident in our recent performance,” adds Rosen. “Since implementing our trade management platform in 2021, we have nearly doubled our trade count with only a 20 per cent increase in headcount, and we’ve issued 60 per cent more securitisations compared to 2021.”

Critical to this is data quality, a challenge in private credit due to the lack of standardisation around documents. According to Michael Kovacs, head of product (credit) at Allvue Systems, this risks firms falling into the trap of “garbage in, garbage out” with regard to their decisions.

“That’s why we combine data governance capabilities with purpose-built solutions like our credit research and portfolio monitoring tools, designed specifically for the nuances of private capital markets,” says Kovacs. “These streamline data workflows, support scenario planning, and provide investment teams with clarity on exposures, performance, and risk all in one place.”

Such technology has also helped better portray data, with visualisation software like Power BI and Tableau being integrated with data aggregation tools. Broadridge’s VP of product strategy for asset management Cameron Bunnell argues this helps empower fund managers to make more informed decisions at better speed, impacting pitch books, performance measurement and reporting functions.

“Moreover, with predictive analytics and scenario modelling, managers can better anticipate market shifts and adjust their strategies proactively,” adds Bunnell. “Online portals provided by many software companies offer investors greater reporting power and transparency, further empowering buy-side decision-making through clarity in investment strategies.”

Loan documentation assessment

A pain point many alternative credit fund managers will share is around loan documentation assessment, a critical but time-consuming task for any investment team in the sector. Fortunately, this has become a focus for technological innovation, with solutions designed to bring much needed efficiency to these duties.

“The biggest advances in [loan documentation assessment] are centred around advances in OCR and LLM technologies, which have enabled us to ingest, index and extract key data from all loan documents within our proprietary system,” explains Eric Cho, PhD, managing director of  engineering at Balbec Capital. This allows the firm to run exhaustive reviews of all attributes of a loan file at a level of cost, velocity and consistency that cannot be matched by traditional human reviews.

“Within the platform is the ability to detect issues that normally sit outside the scope of traditional diligence vendors and products, identifying issues that historically may be missed,” adds Cho.

Such solutions may help scan and consume documents quicker and better, but this still requires an expert, human touch. Despite recent innovations, Kovacs says this remains one of the most “time-consuming pain points” in the space.

“We focus on maintaining a ‘human-in-the-loop’ model that complements automation with expert oversight – an approach that resonates with our clients, many of whom still rely on human review for critical document analysis,” he says. “We also recognise that solving this challenge requires tight integration with best-in-class third-party providers who bring deep domain expertise.”

Regulatory considerations

Technological innovation may be creating new efficiencies and transforming processes for firms, but the heavily regulated nature of the industry cannot be ignored. Firms must still adhere to numerous rules, but fortunately this is not stifling such innovation. Kartesia’s Housieaux describes regulation as more of a “guardrail” than a barrier, with technology able to support such rules – not flout them.

“Our approach has been to build trust through transparency, auditability, and robust governance,” he says, regarding the firm’s proprietary systems. “While some solutions may take longer to validate or implement due to regulatory scrutiny, the long-term payoff in efficiency and control is worth it.”

Regulatory “guardrails” may be stringent but have heightened the need for transparency throughout these systems. Broadridge’s Bunnell explains additional rules specifically aimed at technology, such as the EU’s DORA and AI Act, have required the firm to implement robust “compliance frameworks” alongside data processing capabilities. This dual approach is crucial, Bunnell argues, allowing fund managers to optimise both portfolio and risk management strategies without sacrificing regulatory adherence. “This approach not only ensures that we meet regulatory requirements but also enhances our operational efficiency and decision-making agility,” he adds.

The reality of AI

No analysis of the role technology is playing in investment right now would be complete without touching upon the potential of AI, which since 2024 has dominated conversations. It can be easy to overhype technology, but there are signs of this already translating into action within the sector. According to Allvue’s 2024 GP Outlook, AI usage among GPs rose from 47 per cent in the fourth quarter of 2023 to 82 per cent in the fourth quarter of 2024.

“AI is already helping investment teams summarise complex documents, identify red flags in due diligence, and structure unstructured data into actionable insights,” says Housieaux, who reveals Kartesia is actively testing platforms that combine secure LLM technology with domain-specific knowledge to support deal analysis, compliance monitoring, and investor communications.

Read more: GPs using AI to inform investment decisions

“The key is to integrate AI into existing workflows – not as a replacement for human expertise, but as a force multiplier that improves quality and speed without adding headcount,” he adds.

Meaningful AI investments are also being made at Balbec Capital, where the firm is launching components in its in-house software platform. These are already changing how the firm underwrites opportunities and manages existing assets, according to Cho.

“We’re not ready to take our hands off the wheel entirely; all of the outputs from these system features still go through a human review before making any decisions, but these tools augment the existing team in meaningful ways,” he says.

The alternative credit industry is going through a period of stratospheric growth and technology will be an essential tool in supporting its increased scale. With new innovations continuously entering the market, we are yet to see technology’s full potential for the industry.