How Cooperation is Replacing Competition in Private Credit Markets Banking

Private credit is expanding rapidly, growing from a roughly $1 trillion market in 2020 to more than $3 trillion today – with projections showing the industry reaching $5 trillion or more in market value by 2030. What was once a niche segment of the credit market has become a core pillar of institutional lending, now comparable in size to high yield bonds and growing faster than traditional commercial and consumer bank lending.

As private credit has scaled, fintech platforms have increasingly pursued credit opportunities outside of the traditional bank balance sheet model. At the same time, many banks have reduced appetite for holding longer-duration or higher-risk assets, driven by capital requirements, duration and liquidity constraints, asset-liability mismatches, and a prolonged elevated-rate environment. This dynamic has accelerated fintech demand for private credit partnerships, creating new paths to growth that do not rely solely on bank balance sheets.

These private credit partnerships have created new intersections between regulated banks, fintech partners, and private capital providers. While these intersections can introduce competition, Hatch has consistently found that the greatest opportunity emerges when banks and private capital firms collaborate rather than compete.

As a trusted partner within the private capital markets ecosystem, Hatch takes a deliberately collaborative approach—designing structures that create durable value for fintech platforms, private credit investors, and the regulated banking system alike.

Cooperation between banks and private capital providers create win-win scenarios: banks provide the regulatory compliance oversight and expertise, high operational standards, and bespoke solutions that enable private credit funds to efficiently access high-quality assets and generate returns aligned with their investment mandates.

Competition is Healthy, Coordination Scales the Market

Across the private credit ecosystem, banks and private capital managers are increasingly recognizing that markets scale faster and operate more efficiently when participants coordinate rather than compete for origination lanes. Strategic collaboration delivers several advantages for both banks and private credit investors.

Banks serve as distribution and operations for private capital firms:

○ Historically, banks originated and held loans to maturity. Today, banks increasingly originate and administer assets with the intent to distribute them to private credit investors, improving asset-liability alignment for both parties. In this model, bank-led origination supported by fintech infrastructure, act as technology-enabled operation support, while private credit firms provide long-term capital. The result is a more efficient division of labor that allows each participant to focus on what they do best.

○ Beyond credit, banks continue to provide payments, treasury, deposit, and operating account services, creating incremental value for private credit firms and the portfolio companies they finance. Sponsor banks that partner directly with fintech platforms—like Hatch—also unlock differentiated borrower access that private funds may struggle to reach independently.

Origination and deal flow are increasingly complementary:

○ Sponsor banks maintain broad fintech, capital markets, and institutional partner networks, creating diverse pipelines that include syndications, forward-flow arrangements, co-lending structures, warehouse facilities, and asset sales. These pipelines allow private credit managers to deploy capital efficiently and at scale. Increasingly, fintech platforms are seeking a unified “originating bank + private credit” solution rather than managing multiple relationships. A sponsor bank with deep private markets connectivity—such as Hatch—can orchestrate this ecosystem, delivering seamless execution across origination, funding, and risk management.

Combining strengths to manage risk at scale:

○ Well-structured partnerships allow each participant to play to their strengths. Banks contribute scale, regulatory discipline, and risk governance, while private credit funds offer structural flexibility, bespoke terms, and return optimization for fintech platforms.

○ Collaboration is especially critical for managing regulatory and credit risk. As banks expand exposure to private credit-backed structures, transparency and alignment with private capital partners becomes essential.

Taken together, collaboration between banks and private capital providers is no longer optional—it is foundational to the next phase of private credit growth. The differentiator lies in choosing the right banking partner to enable that collaboration.

What Makes a Good Private Capital Markets Banking Partner

Sponsor banks provide the infrastructure, regulatory framework, and execution discipline that power modern private capital markets. The right partner bank does more than facilitate transactions—it actively enables innovation, scalability, and long-term durability. In all structures, regulated banks retain independent authority over credit decisions, underwriting standards, and compliance obligations.

A strong partner bank promotes transparency and coordination between fintechs and private credit investors, leveraging its network to help align platforms with capital providers that match risk, structure, and growth objectives. Hatch facilitates access to capital across a broad spectrum of private capital—from boutique credit firms to global asset managers and securitization markets—allowing for intelligent capital matching and orchestration as programs evolve.

For fintech platforms working with private credit investors, choosing the right sponsor bank ensures compliant, profitable, and creative financing structures that are built to scale. With access and support models to assist multiple private credit partners across risk profiles, Hatch orchestrates opportunities dynamically, supporting growth from early-stage origination through multi-hundred-million-dollar transactions and beyond

Private capital firms, in turn, benefit from working with sponsor banks that support robust complex structuring and execution requirements. Hatch’s team brings years of hands-on expertise across private credit, fintech sponsorship, and traditional banking, enabling repeatable and resilient partnerships.

Ultimately, sophisticated private credit investors view sponsor banks not as competitors, but as trusted partners—providing complementary capabilities that strengthen fintech platforms and expand borrower access. To learn more about Hatch’s private credit solutions for fintechs and funds, contact our team.

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