Evlo, a leading voice in financial innovation and credit market strategy, today highlighted a transformative trend reshaping the global financial ecosystem: traditional banks are rapidly expanding their partnerships with private credit firms. According to recent industry data, bank lending to private credit funds has surged by 145% over the past five years, reaching approximately £75 billion by the close of 2024.
“This shift marks one of the most significant structural changes in the credit market in recent years,” said Sam Foster, Head of Marketing & Communications at Evlo. “Banks and private credit funds are no longer rivals but collaborators, delivering more sophisticated, diversified lending solutions to today’s borrowers.”
From Competitors to Strategic Partners
Driven by evolving regulatory frameworks and a need for efficient capital deployment, banks are increasingly providing warehouse lines, credit facilities, and capital infusions to private credit vehicles. This allows them to maintain exposure to high-yield lending markets while sidestepping the regulatory burdens of direct loan origination.
Private credit funds, in return, offer banks access to specialised markets—such as middle-market enterprises, asset-backed finance, and sector-specific borrowers—where banks have reduced their direct footprint. This symbiotic relationship enables both parties to play to their strengths while meeting a broader spectrum of borrower needs.
Expanding Reach to Underserved Borrowers
One of the most compelling outcomes of this convergence is improved access to financing for underserved borrower segments. Private credit firms, empowered by bank funding, are increasingly supporting bad credit lending—serving individuals and businesses with impaired credit histories or unconventional financial profiles.
“This collaboration opens new doors for borrowers who might otherwise be excluded from traditional finance,” Foster added. “It’s not just about lending more—it’s about lending smarter and more inclusively.”
Global Expansion and Systemic Considerations
The bank-private credit alignment is also fueling geographic expansion. International banks are now able to extend their lending reach into new regional markets via private credit partnerships, bypassing the need for local infrastructure.
However, the growing interdependence between banks and private credit firms also raises important regulatory questions. With risks becoming more interlinked, financial watchdogs are increasingly scrutinising these relationships to ensure systemic stability and transparency.
Outlook for the Future
As Basel III capital rules and advanced underwriting technologies reshape the financial services landscape, the bond between traditional banks and private credit funds is expected to deepen. Automated systems, data analytics, and AI-powered risk assessment tools are enabling faster, more accurate credit decisions across both sectors.
“At Evlo, we believe this evolution is not only reshaping lending mechanics—it’s redefining the future of financial collaboration,” said Foster. “Stakeholders who understand this convergence will be best positioned to drive growth while managing risk responsibly.”