Private markets edge closer to the mainstream as servicing models evolve

BNY says the operational infrastructure supporting private assets must change as wealth managers increase allocations, highlighting how technology is becoming the key enabler of convergence between public and private markets.

The traditional divide between public and private markets is beginning to blur as financial institutions overhaul the technology and operating models needed to support growing investor demand for private assets.

That is the message emerging from BNY, which argues the next phase of private markets growth will depend less on product innovation and more on the infrastructure required to distribute, administer and service assets at scale.

In a recent paper, the bank said private markets are increasingly moving beyond institutional investors and into wealth management, driven by the expansion of evergreen funds and semi-liquid investment vehicles. As access broadens, firms face mounting pressure to modernise operational processes that were originally designed for listed securities or bespoke institutional mandates.

The shift presents significant challenges for fund administrators, custodians and transfer agents. Unlike traditional public market funds, private assets typically involve more complex subscription processes, capital calls, reporting requirements and valuation cycles, requiring greater levels of automation and data integration.

For technology providers, the trend represents an opportunity to build platforms capable of supporting both public and private assets through a single operational framework. Digital onboarding, workflow automation, real-time data management and interoperable servicing platforms are expected to play an increasingly important role as firms seek to simplify previously fragmented operating models.

The evolution also reflects a wider industry trend. As private assets become more accessible through wealth management channels, the distinction between public and private investment infrastructure is becoming less pronounced. Instead of maintaining separate servicing models, many financial institutions are investing in technology capable of supporting multiple asset classes across a common platform.

While product innovation has attracted much of the attention in private markets over recent years, BNY’s analysis suggests the next competitive battleground will be operational capability. Firms that successfully combine scalable technology with modern servicing models are likely to be best placed as public and private markets continue their gradual convergence.