Automating and digitizing lending processes is crucial to gain momentum and grow in the ever-expanding lending market. The current lending market is not just limited to traditional banks. A quick look at the market will show you the burgeoning numbers of alternative lenders, peer-to-peer lenders and credit unions competing for a slice of the market.
To stay ahead and swim above the competition, it is critical that lenders ensure that their lending software technology is easy to use both in-house, as well as for the end-users, i.e., borrowers.
Although the core function of all lenders is the same; lending, the market they cater to, the workflow they follow, the size of their business, and other such factors determine what kind of lending platform will suit them the best.
As such, the “one size fits all” feature is not a big winner here. The best lending software solutions are ones that meet the lender’s particular business needs. In a market, ripe with fintech solution for lenders offering some of the most cutting edge lending software solutions, finding the right vendor for your business is not a cakewalk.
The digital lending platform market is growing at a 20% CAGR (2019-2025) and set to hit the US$17 Bn mark by 2025. – GM Insights
In this week’s article, we talk to you about 5 features that you must check off on your list when you are searching for the best software solution provider for your lending business.
Key Feature#1: Customization
Loan transactions don’t just occur between lenders are borrowers. There are several other parties involved such as loan referral partners, mortgage loan teams, branch bankers, etc. Therefore, having a singular interface for the lender and borrower alone will not be enough to make the lending platform its true-to-word digitized and automatized self.
The interface of the lending platform should be created such that it can wholesomely cater to each of the above-mentioned stakeholders in the lending process. Customized dashboards for each stakeholder can help ensure on-time task completion, be it application management, following up with customers, or collaborating with loan referral partners with enough transparency.
Lenders should specifically look for lending software technology that supports such role-based workflow that in turn reduce turnaround time for loan origination, thus providing lenders with shorter loan cycles.
Key Feature#2: Integration
For a vastly siloed process like that of lending companies, finding the right lending software solution that helps them remove the complications of multivariate workflows and bring consistency through in-house and vendor integration is quintessential.
The right kind of lending software solution for your business will fit in like Lego blocks integrating upstream and downstream systems including core banking systems, CRMs, data verification providers, LOSs, pricing engines, and document generation providers.On one hand, they will be modelled to perfectly fit the legacy systems that were in place early on and at the same time, they form the new foundation that allows constant change and improvement through continuous software updates that help lending companies stay ahead of track.
In short, the right kind of lending software solution will be like your bridge between the old and the new.
To find the kind of lending platform that supports this need, look for ones that offer API integrations. Need for custom integrations helps lending software vendors understand the unique need of their lending partners and create APIs right from scratch.
This will let users continue using their legacy lending software now empowered with the latest APIs, UI, and UX, and also help them build a strong foundation that will let them grow, evolve, and move ahead along with the changing needs and demands of the lending industry.
Yet another kind of integration that is critical when it comes to lenders is having continuous access to data providers, both financial and consumer, whose data play a significant role in not only underwriting and establishing loan terms, but also, in creating automation using machine learning.
Data is extremely important in helping lenders make informed decisions regarding loan terms, interest rates, and reduce their risk while maximizing revenue.
With the right integrations, underwriters can verify and access information on creditworthiness through just a few clicks within the same lending platform, without the need to sign into a third-party platform.
So when choosing the right lending platform for your business, look for API integration features/possibilities with data providers you are currently using or the ones you would like to sign up in the future, as well.
Key Feature#3: Continuous updates
In the world of evolving tech, stagnation is not an option. While as a lender you might be focused on implementing a robust lending software technology that starts giving you immediate results through quicker turnaround time, time-to-value, lesser errors and more revenue, you should also take into consideration if the lending software provider is equipped to keep up with the changing market demands and dynamics. Continuous update and improvement is not just a bonus feature anymore. It should be actively considered as a core feature when selecting a lending software solution.
• Is the lending software future proof?
• Is it improving your current lending solution?
• Is it serving both your short- and long-term goals?
Whether you want to replace your legacy lending software, or you would like to improve and build upon it, make sure the new lending platform you are considering checks off the three-pointers mentioned above.
Key Feature#4: Automation
Fintech lending and automation go hand-in-hand. Automation plays a massive role in reducing turnaround times and errors caused by manual paperwork, and also helps lenders make informed decisions by seamlessly integrating third-party tools and vendors, thereby bringing all the critical components to the table, at once. Streamlining workflows that cause major delays in loan origination given their dependence on manual inputs is a key issue that automation eliminates from the lending process.
Apart from automation, some other must-have technologies and features that lenders should look for while selecting their lending platforms are Cloud-based software (SaaS), Responsive UI/UX, and access to analytics that give them a bird’s eye view of the performance and efficiency of their lending platform by measuring KPIs such as deal quality, platform performance, an in-depth view of what’s causing competitive losses, if any.
Key feature#5: Configuration
It is in this step that the hardcore technical details lie. If you are using a legacy lending platform or building/implementing one from scratch, consider these five pointers:
• What kind of technical expertise is needed for configuring the lending software?
• Does the new lending platform support decision rules?
• What kind of support do they extend for creating/modifying decision rules?
• Down to what level can you configure the platform?
• How flexible is it to address the needs specific to individual requirements?
While most lending software solution providers offer this multi-level configuration assistance, it is usually the ones that build their APIs and lending modules from the ground up to meet the needs of the lenders who can make both configuration and implementation an easy process for lenders. Look for lending platforms that help you make changes to dashboards, rules, display fields, menus, access controls, etc.
Apart from the technical viewpoint shared in this article about the key features you should look for in your lending software provider, there are some abstract yet core requirements, too, that you should check for. Among them are – experience in the lending industry, understanding of the current industry needs, constant search of new and innovative ways of introducing disruptive tools to the market, and easy access to account executives who have a clear understanding of your business’s particular needs.
With the 5 features in this article along with the ones that are crucial yet not often discussed (mentioned above) you can certainly find yourself the best lending software solution for your lending business.