Carolyn Weinberg, Chief Product and Innovation Officer
BNY
Private markets are having a moment. Once the province of a small circle of institutional investors bound to rigid, closed-end fund structures, private capital has grown into one of the most important engines of financing in the global economy. Yet, according to a new BNY Institute paper, “A New Architecture: Accelerating Private Market Growth,” the systems that keep this asset class running have not kept pace with its success. Unless that changes, the friction baked into today’s infrastructure will become the biggest constraint on tomorrow’s growth. According to Chief Product and Innovation Officer Carolyn Weinberg, “BNY wants to modernize the life cycle of investment assets.” As Weinberg explained to me in an interview, “modernizing the private markets’ infrastructure can improve investment access to institutional investors as well as to individuals.”
An Asset Class Bigger Than Its Own Wiring
The numbers behind this boom are hard to ignore. Semi-liquid and evergreen vehicles — the products wealth and advisor channels have used to bring private markets to a much broader investor base — have more than doubled in assets under management since 2022, crossing $500 billion by September 2025. Private credit tells a similar story at a larger scale. “The private credit market is already quite large, about $1.7 trillion,” said Weinberg. “When you map out data in a transformative way and extract information using blockchain technology for regular assets, we can enable a lot for different investor profiles.”
A category once limited to roughly $1.7 trillion in middle-market sponsor lending is now viewed as having an addressable market approaching $40 trillion once investment-grade assets and other income-generating strategies are counted. The asset class itself has broadened well beyond traditional corporate loans to include fund finance, supply chain and equipment finance, aviation and real estate debt, residential mortgages, infrastructure loans, and even music royalties.
The private credit market has potential to grow exponentially.
Apollo Global Management and BNY
None of that growth means much, though, if the back office cannot support it. Asset servicing, cash movement, collateral pledging, and ownership records are still scattered across a patchwork of intermediaries, legal agreements, and disconnected platforms. Subscriptions, redemptions, capital calls, and secondary transfers often depend on manual, sequential handoffs between parties — a process so unautomated that trade settlement for private credit can stretch up to 30 business days. As more capital and more participants flow into the ecosystem, that fragmentation stops being a minor inconvenience and starts acting as a genuine bottleneck on scale.
The BNY Institute report frames this as more than a temporary growing pain. It is a structural shift in how capital markets work: private and public holdings increasingly sit inside the same portfolios, and investors are starting to treat them as one unified book of business rather than two separate worlds. That blurring of the line raises the bar considerably for the infrastructure connecting them, which now needs far more scale, standardization, and interoperability than it was ever built to deliver.
Four Pillars for a Ground-Up Rebuild
Rather than patching individual systems, BNY argues the industry needs a foundational redesign built around four pillars.
A four-pillar framework to rearchitect private markets
BNY
Persistent identifiers come first. Public markets have long relied on standardized identifiers like CUSIPs and ISINs to track assets instantly across exchanges and custodians. Private markets have no real equivalent — ownership records, servicing data, and transaction histories are scattered across counterparties, administrators, and internal spreadsheets, making it nearly impossible to get one clean, current view of an asset. Digitizing ownership-level data at the asset level would create a single source of truth, support real-time ownership tracking, and produce more consistent records across servicing, transfers, and valuation — while also strengthening auditability. The philosophy behind this pillar is a mindset shift: data stops being a reporting byproduct and becomes shared infrastructure the whole market runs on. “Identifiers are very important,” emphasized Weinberg. “Without identifiers, it is very hard to invest. Streamlining will also help with liquidity. Investors prefer assets that can settle.”
Structured terms and programmable cash flow logic is the second pillar. Private credit agreements are dense, bespoke documents full of side letters and covenant structures that aren’t machine-readable today. AI and generative language models can extract the key legal and economic terms from these agreements and translate them into smart contracts, making features like amortization schedules, floating rates, payment-in-kind options, and fee distributions fully programmable — effectively letting the loan verify its own eligibility and calculate distributions on its own.
Certainty of asset servicing and settlement is the third. Tokenization paired with smart contracts enables delivery-versus-payment settlement, where ownership transfer and cash movement happen simultaneously and atomically, eliminating the lags and cash breaks that plague manual processes today. Compliance checks — KYC/AML, transfer restrictions — can be embedded directly into the tokens themselves.
Collateral utility and intelligent financing rounds out the framework. Once an asset has a persistent identifier, programmable terms, and settlement certainty, it can finally be pledged and leveraged efficiently — something illiquidity has historically prevented in private credit. Integrated with tokenized cash and digital Treasury instruments, this opens the door to extended-hours liquidity and dynamic, cross-venue collateral optimization.
Why Tokenization Needs a Network to Matter
A recurring theme in the BNY report is that tokenizing an asset is only valuable if the token can actually move. Interoperability — the ability to shift tokenized assets, cash, and data across custody platforms, fund administrators, triparty collateral venues, blockchains, and reporting tools — is what determines whether tokenization becomes real infrastructure or just another disconnected pilot program. Weinberg makes the point directly: tokenization is a full lifecycle transformation, not a technical upgrade, and its real value lies in turning manual, fragmented processes into automated, always-on infrastructure. Without an interoperable layer, the report warns, digital rails risk simply reproducing the same old fragmentation in a new form.
To illustrate what this looks like in practice, the report walks through a private credit loan moving through six connected stages — Create, Deploy, Distribute, Transact, Administer, and Report — each step running on a shared digital thread instead of a series of disconnected handoffs, from origination through final reporting.
Liquidity Moves to Center Stage
Cathinka Wahlstrom, BNY’s Chief Commercial Officer, argues that the future of private markets will be shaped as much by infrastructure as by investment returns. When tokenized assets can interoperate with liquid collateral and digital cash, participants can pledge and reallocate collateral faster and more precisely, cutting idle balances and elevating liquidity management from a back-office function into core market infrastructure.
AI at BNY
Artificial Intelligence certainly has a role modernizing private markets’ infrastructure. “BNY has been on an intense AI journey,” Weinberg told me.
“We are focused on products and services that we deliver to clients. We are very careful with data staying in the firm. We use an internal AI framework and continue to build on it. We are focused on precision AI different which is different from productivity AI. We are using precision AI to create Knowledge Mapping to help clients. BNY is exploring how to leverage AI-powered capabilities to extract
unstructured data.”
Cathinka Wahlstrom, Chief Commercial Officer
BNY
The Bottom Line
Perhaps the most striking implication from the BNY report is where competitive advantage goes next. Once the plumbing works, the report argues, firms will not win by navigating operational friction better than rivals; they will win on origination, underwriting, and the quality of their ideas. BNY positions itself at the center of that shift, pointing to its footprint across custody, trustee services, collateral, settlement, and Treasury markets, and framing its strategy as building bridges between emerging digital capabilities and the funding and risk frameworks that already underpin global markets — rather than standing up parallel systems that fragment liquidity further. Persistent identifiers, programmable terms, settlement certainty, and smarter collateral use, the report concludes, aren’t optional upgrades. They are the foundation that will determine how far, and how fast, private markets can grow from here.
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