As the specialty finance industry navigates a 2026 landscape defined by rapid digitization and the proliferation of AI, tension has emerged between technological efficiency and the foundational “art” of lending. While digital tools have revolutionized the pace of capital deployment, the industry’s most respected voices argue that the future depends on a return to “old-school” stewardship.
The Erosion of Personal Context
The shift toward virtual operations can create a visible gap in the diligence process. David Grende, CEO and founder of Siena Lending Group, notes that many management teams are now scattered and rely on video calls, which he considers a poor substitute for being on-site: “There is nothing like face-to-face meetings as you go through the diligence process on new transactions, walking the factory floor or the warehouse floor.”
This sentiment is echoed by John Gullman of Growth Capital Advisors, who highlights the loss of subtle cues. “I see less face-to-face interaction with the borrowers,” Gullman observes. “When I was learning the basics from the ‘old timers’, you were taught to read body language, which can be difficult on Zoom and Teams calls.”
Peter Rosenthal, co-president of Rosenthal Capital Group, points to the “three Cs of credit” — character, capacity and capital — arguing that character is the most important for success but often lost in the digital shuffle.
Lawrence F. Flick II of Blank Rome also misses the physical reality of the business, noting the loss of “in-person closings that often went late into the night”. He warns that the rush for speed risks losing the “careful diligence and documentation” that allows lenders to act early in distressed situations.
Algorithms vs. Human Judgment
The rise of the “quantitative mindset” presents a risk to the fundamental discipline of understanding how businesses actually function. Brian F. Gleason of J.S. Held warns of a growing reliance on algorithms, noting that they can never replace the judgment born from hands-on evaluation. “Real credit work requires analyzing how a specific company operates, identifying its performance drivers and building tools to monitor risks,” Gleason explains.
Pat Hoiby, CEO of Equify Financial, has witnessed the industry drift toward treating deals like data problems instead of business problems. To Hoiby, specialty finance lives in the “in-between” where operational reality matters as much as ratios.
Steven R. Bellah of KCP Advisory Group expresses a specific concern regarding emotional intelligence. He believes that outsourcing critical functions, such as field exams and “back room” operations, has impaired decision-making and stunted the development of future leaders. “By removing these roles, we eliminate the source of future account officers and leaders,” Bellah warns.
Ted Koenig, chairman and CEO of Monroe Capital, agrees that technology cannot replicate the ability to evaluate business resiliency or character. “Protecting these principles ensures responsible lending, especially in volatile periods when human judgment proves far more reliable than algorithms,” Koenig notes.
The Stewardship of Capital
The consensus among these icons is that technology should sharpen judgment, not replace it. Jason Lippman, CEO of nFusion Capital, argues that the foundational principles are actually being reinforced by tech, provided firms don’t believe algorithms alone are a “secret sauce.”
Aaron S. Miller of SB360 Capital Partners emphasizes that qualitative evaluation — actually walking stores and inspecting collateral — reveals operational realities that “rarely appear in spreadsheets.”
David Spreng, founder and CEO of Runway Growth Capital, highlights the distinction between speed and soundness. He warns that technology can encourage investors to prioritize momentum over fundamentals like repayment capacity and covenants. Frank Morton, chief investment officer at Gordon Brothers, views AI as a way to strengthen science-driven insights but insists it will never replace the “art of business” or the trust required for a successful partnership. “Innovation should build on these fundamentals rather than bypass them,” Morton says.
A Vision for the Next 20 Years
Despite these cautionary warnings, the outlook for the next two decades is one of expansion and essentiality. Matt Dekutoski of Pathward sees the industry growing in positive directions as technology allows lenders to provide “greater solutions across a larger scope of industries.” Jack Butler, CEO of Birch Lake, believes specialty finance will continue to evolve to fill the gaps in capital markets for small and mid-cap businesses, driven by “tenacity, creativity, entrepreneurship and passion.”
Ultimately, the industry’s legacy will be defined by its commitment to the real economy. Hoiby envisions a future where specialty finance is not seen as “alternative,” but as essential — the part of the market that shows up when the work is real and complicated.
As Lippman concludes, the industry’s role will only become more vital as it fuels the entrepreneurs who account for two-thirds of new jobs in the U.S.
By imparting the soul of the business to the next generation and pairing modern capability with timeless discipline, specialty finance will continue to be a stabilizing force for businesses. •
Rita E. Garwood is editor in chief of ABF Journal.