Private credit has been a hot source of funding in recent years, growing at an estimated $2 trillion and expected to nearly double by the end of the decade. However, this growth is also creating connections between traditional financial institutions and non-bank firms, such as hedge funds and private equity firms.
As these non-bank firms lend money to FinTech platforms, which then deploy it to individuals and enterprises, the risk of a market shock becomes more pronounced. A higher rate environment could make it harder for them to repay their debts, causing a ripple effect throughout the financial system.
Several examples of this interconnectedness include agreements between SoFi and Fortress Investment Group, and Upstart Holdings with Blue Owl Capital. These partnerships demonstrate how private credit is becoming increasingly tied to FinTech platforms.
Meanwhile, Apple announced plans to expand its AI capabilities, including Apple Intelligence, which will be available on Vision Pro’s mixed-reality headset in April. This move aims to revolutionize the iPhone, iPad, and Mac experience while keeping user data secure.
The expansion of Apple Intelligence highlights the growing importance of AI in various industries, but it also raises questions about the impact of private credit on the financial system as a whole. As markets grow and become more interconnected, regulatory bodies like the Federal Reserve will need to keep a close eye on these developments to ensure stability.
Source: https://www.pymnts.com/news/regulation/2025/scrutiny-increases-private-credit-rewards-risks