An overwhelming majority of private credit market practitioners are planning to substantially increase their technology budgets as they seek to address risks that are contributing to concerns about the direct lending sector.
The Compass 2026 survey conducted for Oxane Partners – a technology provider for credit and other private markets – found that almost four-fifths of the hundreds of practitioners interviewed across Europe and North America were “significantly increasing technology budgets”, with the largest proportion of respondents saying their Capex priorities are security and data maturity.“Compass 2026 points to a market where growth is increasingly being tested by the operating complexity beneath the surface,” Kanav Kalia, managing director at Oxane Partners told Data Management Insight.
“As credit markets move into more diverse asset classes and stakeholder expectations increase, fragmented data can quickly become a risk issue. Firms that invest in stronger data infrastructure will be better placed to maintain visibility, respond faster, and make more confident decisions in a more complex market.”
Credit Crunch Time
The research, which also found that macroeconomic and recession risks were the biggest threats to the sector, comes at a time of heightened concern among private credit investors. The Financial Stability Board (FSB), which includes central bankers from around the world, warned last week that the US$2 trillion market’s connections to banks, insurers, and asset managers are increasing risks within the global economy.
Banks including Barclays and Deutsche Bank were singled out for their large exposures to the direct lending market.
Large withdrawals from funds have accelerated as the cost of borrowing has risen amid the Middle East crisis.
Among the FSB’s deepest concerns is the absence of good-quality data within the sector, which it blamed on inconsistent reporting standards, making it difficult for investors to assess fund risks and leverage.
The Compass 2026 survey interviewed 380 respondents from 89 firms who have provided more than $4tn in credit. With two-thirds of those questioned saying they expected their direct-lending activities to grow in the coming year, the report’s authors said participants are recognising that data and technology must be seized upon to strengthen risk controls.“As liquidity, valuations and exit options move up the concern stack, private credit firms are under growing pressure to evidence not just performance, but the quality and defensibility of the data behind it,” they wrote. “In a market where sectoral stress is testing marks and exit assumptions, valuations need to become more frequent, sector-aware, and supported by a clearer audit trail for LPs, lenders and auditors.
“That same standard is extending to collateral quality, cash controls, and borrower reporting.”
AI Expectations
Surprisingly, the survey placed investment in artificial intelligence as the lowest priority, with less than half of respondents citing it as an important part of their technology uplift plans.
That, however, is probably because almost nine in ten participants questioned said they had already implemented AI into their tech stacks or because they expected their tech applications to already have AI built in.
“It is interesting to see that AI has now crossed the chasm in private credit – the idea that AI remains a future consideration is now out of date,” the survey report authors wrote. “The pattern across successful deployments is clear: AI works when it’s stitched into an existing workflow, not bolted on as a standalone tool.”
Data Dearth
The report also noted the stickiness of the perennial challenge within the fast-growing private markets of sourcing data from portfolio companies and general partners (GPs) that have little experience of dealing with digitally savvy investors. That has made it difficult for multi-asset participants who are used to the structured approach to data reporting in public markets to access the information they want.
This led authors to urge greater vigilance by investors.
“Independent verification is becoming a prerequisite, particularly in asset-based and other credit strategies where recent incidents have exposed the limits of borrower-led reporting and periodic checks,” the authors wrote.
“The next operating standard will require continuous data reconciliation, stronger collateral controls, and more formalised KYC, governance, and third-party audit processes.”
They concluded that participants in a market that had grown to “institutional size” needed to reshape the way it operates to ensure the risks of the past could be better mitigated.
“Expanding portfolios are… exposing the drag from fragmented processes, inconsistent data, and disconnected systems. What worked at a smaller scale can quickly become a constraint when firms are managing multiple strategies, collateral types, and reporting requirements,” they wrote.
“This is where operating discipline and risk management come together. Firms will need more than siloed tools; they will need a control environment that brings data, valuations, risk, monitoring, and reporting into a transparent framework.”
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