10 Features of the Perfect Loan Management Software

For a long time now loan origination and loan servicing systems together also known as loan management systems have been largely paper-based. These systems have also principally been dependent on human support and as such prone to human errors. However, with the world coming to know and experience digital transformation as we see it today, consumers are fast becoming used to quicker and better service quality experience. That being said, there is not a single industry, whether B2B or B2C, that has escaped the weight of this new expectation of overarching service delivery.

As the financial industry matures, so does one of its core functions, lending. Banks have been primarily reaping in the majority of their revenues from lending functions. Be it consumer lending, commercial lending, or asset financing. The lending industry is now ripe with smaller lenders, start-ups, SMEs, and peer-to-peer lenders in the space that have stepped into the pool and increased their reach further than traditional banks have done in a long time. These businesses have taken on the task of servicing unexplored markets in suburban and rural nooks and corners across the world and turning it into a profitable business opportunity.

What is helping these smaller lenders make a mark in the global lending scenario without having a dedicated IT team, a legacy loan management system, a dedicated clientele and a proprietary credit rating system in place?

It is the ground-breaking digital transformation in the lending industry that has made this vision a possibility for start-ups and SMEs. Loan management software, equipped with the latest technologies, prepped with analytics and disruptive tools like AI and machine learning can get more done in a shorter time, with better accuracy than a legacy loan management system to manage in today’s date.

So, if you are a new-age lender who is looking to give your business the turbo-boost it needs to stand out in this competitive market, read on to find out what features you should look for in the perfect loan management software.

1. Scalability

For any business to grow and scale, they should be equipped with tools that allow them to do so. The perfect loan management system should allow lenders to not only grow in terms of operations and exceptional service delivery but also allow them to diversify their product offerings. This lets lenders not only increase their profit margins but also enter new markets, offer improved solutions and quickly introduce new products to cater to the new needs of emerging markets. Scalability of the product also helps business to start small as per their requirements and once they hit the growth curve a scalable system helps to match the changed expectations

2. Ease of deployment

Most start-ups and peer-to-peer lenders in this space might not have access to a dedicated IT support. To implement, maintain, and troubleshoot issues arising from such an advanced tech solution that is data critical, 24*7 access to an IT team is a must. The good thing about most cloud-based loan management system service providers is that they not only provide quick implementation but also provide regular maintenance services, including bug-fixes, frequent upgrades, and IT support when needed.

3. Integrated solution

There are multiple facets in the lending business, right from onboarding, credit assessment, loan origination, underwriting, disbursal, and repayment. Having all these modules built into one seamless software helps lending businesses save time, churn out loan requests, and create an overall pleasant experience for their customers by reducing turnaround time and being more efficient. Therefore, when looking for the perfect loan management software, look for one that allows you to put together customizable modules into one, seamless, integrated system. The system should also support third party integrations to enrich borrower data. Support to integrate with CRM, ERP and accounting software helps the business to have a unified view and save time on re-working.

4. Centralized access

Loan management software solutions allow lenders to store all customer-related data throughout the customer lifecycle at a centralized location. They do away with the bottle neck of storage and retrieval of borrower data from multiple systems. This also helps the lending organization get a 360-degree view of the customer’s profile, the lending stage they are at, their credit rating and all related information at a glance, from anywhere in the world.

5. Credit assessment

The better and more accurate the credit assessment, better are the chances that lenders decide on interest rates and loan repayment terms that minimize their risk and maximize revenues. This is only possible when lenders have a holistic view of the creditworthiness of their borrowers. Given the fact that most start-ups and peer-to-peer lenders are looking to explore emerging markets where prospective customers do not have any credit history, they will need access to software that provide alternative credit rating methods and database such as social media behavior, utility bills payment behavior, tax data or bank statement analysis to lower their risk and make informed decisions on matters such as interest rates and repayment terms.

6. Process Automation

Process automation also called Robotic Process Automation or RPA goes a long way in automating mundane tasks thus reducing turnaround time and boosting operational efficiency. It does so by easing routine functions such as loan evaluation, credit analysis etc. and also brings down application submission and approval times while reducing human errors in the process. The ideal loan management system therefore should have adequate levels of automation built into its system along with the ability to customize it.

7. Transparency

Transparency has never been a strong suit for banks and lenders for the longest time ever. New-age lenders hope to change that by adding more transparency to their processes, so that all stakeholders, including clients, have a better view and more trust in the lending process. Having an automated dashboard that notifies customers, every step of the way, as to the current status of their loan process and help them enjoy better user experience than they have ever done with traditional banks.

8. Responsive interface

Mobile-friendly isn’t a term reserved only for websites and apps anymore. Tech companies building complicated, heavy-weight software are also seeking to make them mobile-friendly to increase usage and reach new markets. This is especially important for new-age lenders looking at emerging markets where customers might not have access to personal computers and laptops but most certainly own a smartphone or a budget-friendly tablet. Therefore, providing a mobile-friendly borrower or field staff interface is no longer an add-on feature, but a business-critical feature that you must look for in your loan management software system.

9. Analytics and insights

The best cloud-based loan management systems in the industry provide lenders with gold in the form of actionable data. By collecting, churning, and processing data from a variety of sources and applying business intelligence to this data pool, loan management software can provide lenders with expert insights on market trends, help assess and establish KPIs, improve customer acquisition, identify and remove blind spots and bottlenecks, and boost overall productivity.

10. Seamless yet secure

Loan management software solutions allow lending organizations to expand and grow by establishing centralized data storage that can be accessed by stakeholders with the right permissions from anywhere in the world. It reduces dependency on manual labor, decreases human errors, and expedites processes thereby boosting revenue. While delivering the best of everything, the best loan management software out there, also ensure that they adhere to data security best practice and comply with the industry-established data security and privacy standards.

This list of 10 gives you a comprehensive view of what you should be looking for when choosing the right loan management software for your business.

  • November 2, 2022