Servicing Private Markets: Why Private Asset Growth Demands Infrastructure Rethinking
Private markets growth represents one of the most significant shifts in asset management over the past decade. For asset servicers, it’s also become one of the most operationally demanding. What looked like attractive new business opportunities have revealed themselves as structural challenges to traditional servicing models.
The expansion into private credit, infrastructure debt, direct lending, and other alternative strategies isn’t slowing. If anything, institutional allocators continue increasing private market exposure.1 Yet many asset servicers find themselves struggling with the operational complexity these mandates create, discovering that infrastructure built for traditional fund structures doesn’t adapt easily to private market requirements.2
Why private markets are different
The operational demands of private market funds differ fundamentally from traditional vehicles in ways that stress conventional servicing approaches.
Data requirements are more granular and more frequent.3 A private credit fund doesn’t just need position-level reporting. It needs borrower-level detail, covenant tracking, cash flow monitoring, and collateral management. The underlying assets themselves require ongoing valuation, performance monitoring, and risk assessment in ways that listed securities don’t.
Valuation complexity multiplies. Unlike exchange-traded securities with readily available prices, private assets require individual valuation processes. Each loan, each property, each private equity stake needs assessment. The methodologies vary by asset type. The data requirements differ by strategy. Aggregating this into fund-level valuations becomes substantially more involved than processing market prices.
Cash flow patterns are irregular and unpredictable. Traditional funds have relatively predictable cash movements tied to subscriptions, redemptions, and regular trading activity. Private market funds deal with capital calls, distribution waterfalls, carried interest calculations, and complex fee structures that vary by investor and vintage. The operational rhythm is less standardised, more exception-driven.
Investor servicing demands increase accordingly. Limited partners in private funds expect detailed transparency into underlying investments, regular performance updates, and sophisticated reporting that helps them understand exposure characteristics. The questions they ask require data cuts that many traditional servicing platforms weren’t designed to provide.
Where traditional infrastructure struggles
Most asset servicers built their operational infrastructure around traditional fund structures: mutual funds, hedge funds, standard limited partnerships. The systems, processes, and operating models reflected those requirements. When private market mandates arrived, many servicers attempted to adapt existing infrastructure rather than fundamentally rethinking their approach.
The result is often extensive manual intervention. Data that should flow automatically gets handled through spreadsheets and offline processes.4 Custom reporting becomes a constant demand because standard outputs don’t address investor questions. Reconciliation becomes labour-intensive because different systems handle different aspects of the fund’s operations.
The economic implications become apparent quickly. Servicing a private credit fund requires substantially more operational effort than servicing a traditional structure of comparable asset size.5 The revenue doesn’t necessarily scale proportionally. Without appropriate infrastructure, profit margins compress or disappear entirely.
Scalability becomes the critical constraint.6 When each new private market mandate requires custom configuration, additional manual processes, and expanded operational teams, growth becomes problematic. The traditional asset servicing model relied on operational leverage, with each incremental fund adding less marginal cost than the previous one. Private markets often invert this dynamic, with complexity growing faster than efficiency improvements.
The transparency challenge intensified
The transparency expectations become particularly acute for private markets. Institutional investors in private funds are sophisticated allocators making substantial commitments over extended timeframes. Their need for detailed, current information about their holdings exceeds what traditional quarterly reporting can satisfy.
They want to understand portfolio composition in real-time, not retrospectively. They need to monitor risk concentrations, exposure characteristics, and performance trends on an ongoing basis.7 They expect to query their data, run their own analyses, and integrate fund information into their broader portfolio management systems.
Delivering this level of transparency requires infrastructure designed for continuous data availability rather than periodic reporting cycles. It demands data models sophisticated enough to capture private asset complexity while remaining accessible for analysis. It necessitates client-facing capabilities that enable self-service access without requiring operational teams to manually compile each request.
Many servicers struggle here because their core systems weren’t architected for this use case.8 Building portals that surface data is relatively straightforward. Ensuring the underlying data is structured, current, and comprehensive enough to support meaningful analysis is substantially harder.
The infrastructure implication
The private markets growth story creates an unavoidable infrastructure question for asset servicers. Systems and operating models designed for traditional fund structures can be stretched to accommodate private market complexity, but the strain shows in operational costs, service quality, and competitive positioning.
This isn’t about whether to service private markets. Most established servicers already do, and declining these mandates means ceding growth opportunities to competitors. The question is whether existing infrastructure can service them sustainably and profitably, or whether fundamental modernisation becomes necessary.9
The economics of operational complexity matter increasingly. When servicing a mandate requires substantial manual effort, growth in assets under administration doesn’t translate to proportional revenue growth. The traditional asset servicing model relied on operational efficiency enabling profitable scaling. Private markets challenge this assumption unless infrastructure evolves accordingly.
For servicers evaluating modernisation priorities, private markets capability often surfaces as a compelling driver. The business case extends beyond servicing existing mandates more efficiently. It encompasses winning new business in the industry’s fastest-growing segment, and doing so profitably.
Industry economics are shifting, client expectations for transparency and data access are evolving, and certain market segments demand capabilities that legacy infrastructure struggles to deliver. Private markets represent perhaps the clearest example of where these pressures converge,10 creating both strategic opportunity and operational imperative for those positioned to respond effectively.
Citations
1 Private debt and PE remain top two growth opportunities. Global alternative AuM ~£19tn, growing ~10% annually. Deloitte 2025 AS Survey, p.47
2 92% say legacy systems constrain innovation; 75% plan significant IT upgrades within three years. Deloitte 2025 AS Survey, p.13-14
3 75% investing in data platforms for private markets; firms building single source of truth from unstructured GP/client data. Deloitte 2025 AS Survey, p.48
4 79% cite manual workflows as top hurdle (up from 61%). Only 21% have digitalised most processes. EY Lux Benchmarking 2025, p.6, p.10
5 Semi-liquid structures lack established processes and technology; servicers must integrate private markets and mutual fund expertise. Deloitte 2025 AS Survey, p.49; EY Top 5 Trends 2025, p.4
6 81% cite fee pressures passed down from asset managers. Offshoring budget expected to halve by 2030 as firms seek automation. Deloitte 2025 AS Survey, p.39-40
7 94% view client expectations for real-time data as a key challenge. Only 20–29% of managers would recommend their servicer. Deloitte 2025 AS Survey, p.9-10; EY Top 5 Trends 2025, p.8
8 Only 8% rate themselves ‘Leading’ in data platform maturity; 83% cite interoperability as biggest data challenge. Deloitte 2025 AS Survey, p.17–18
9 83% investing in mid/back-office automation for private markets; 50% using balanced in-house/partnered tech approach. Deloitte 2025 AS Survey, p.47–48
10 67% committed to building platforms for retail access to private markets. 93% plan digital assets capabilities within five years. Deloitte 2025 AS Survey, p.49–50
