AI Disruption and Credit Risk
Analysts at Deutsche Bank warn that advances in artificial intelligence (AI) pose a credit risk to private lenders, particularly those with large loans to software-as-a-service (SaaS) providers.
According to Stephen Caprio, Deutsche Bank's head of European and US credit strategy, around a third of lending by private sector funds has gone to software companies.
Many of these software firms, particularly SaaS providers such as Salesforce and Workday, may find themselves under pressure if the spread of AI enables clients to develop their own tools in house instead.
This disruption could challenge the business models of key software borrowers, making them a potential area of high vulnerability for private credit providers.
Author's summary: AI disruption threatens software lenders.
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