The fintech lending industry is set to grow at a whopping rate in the next couple of years. P2P lending itself is expected to reach the U$567.3 Bn mark by 2026, with an expected CAGR of 26.6%. Competition is ripe in the industry and so is the market.
More consumers are now looking for lenders that offer them a single user interface, quick loan origination and disbursals. They know that in this age of instant gratification, online shopping, easy payments, and next-day deliveries, loans, too, should not be that difficult to get.
Read more on how COVID 19 affected lending patterns in consumers during 2020.
Although there’s a lot more that goes into loan origination as compared to buying products online, the lending industry has been quick to identify this gap and fill it with cloud-based loan origination solutions that make quick loan origination possible.
So, how exactly does cloud-based lending loan origination software help boost the efficiency of lending operations as opposed to legacy lending software?
Cloud computing comes with a host of benefits. Low implementation and maintenance costs, reduced capital expense, scalability, timely updates, secure data storage, access controls, and a whole lot more.
In this article, we are going to find out how these features work in conjunction with the fintech industry, especially, lending operations and how they can help you boost your bottom line.
Reduced capital and revenue expenditure on loan management system
Increased capital expense is normal for lending firms that use legacy lending solutions and require on-premise hardware, and licensing.
Given their hardware heavy structure and the complexity involved, lending businesses using legacy systems need to maintain their own in-house IT department to take care of these matters. This adds to the overall expenditure substantially.
On the other hand, cloud-based solutions free you from the thralls of maintaining expensive on-premise hardware, buying license upgrades and maintaining a dedicated IT team to oversee operations. This will also help you save tonnes on failovers, equipment, and redundancies. Cloud-based SaaS ensure robust cybersecurity controls in place which also frees you from spending on licensed security software.
These loan management systems are mostly subscription-based. A simple switch to the cloud will mean saving on capital expenditure and instead have access to all the features the former, provided in exchange for a monthly fee.
FAQ: How do cloud-based loan origination system solution providers offer such complex solutions at such low costs?
Cloud-based SaaS providers leverage the benefits of economies of scale. This allows them to pass on the benefits of costs to their clients, thereby making cloud-based loan management systems cheaper and more efficient at the same time.
Streamlined onboarding and lending operations and workflows
Right from choosing and implementing a cloud-based loan management system to accepting applications, originating and disbursing them seems like a cakewalk as compared to traditional paper and legacy software-based lending systems.
With cloud-based systems, you do not need to download heavy software, buy expensive license keys, and wait for hours as the software installs and launches.
All you need to do is open your browser, go to your service provider’s website, log in and start using their platform. No need to keep adding hardware to house growing business, information, solutions and software.
Every bit can be accessed on-demand from where ever you want. Just imagine cutting down months or sometimes a year spent on implementation of on-premise software to entire implementation in a mere couple of days.
Cloud-based lending solutions give you a head start in loan origination and thus generating revenue.
Increased flexibility and improved access control
Traditional loan management systems largely depended on paper-based documentation and manual paperwork. This meant a lot of data stored and exchanged in hardcopy that could easily lead to loss due to misplacement, lack of clear communication between department and personnel, and also an opaque workflow in which it could be difficult to pinpoint process outliers or roadblocks in the loan origination process.
Cloud-based systems make this process much more streamlined and transparent by making the entire workflow paperless. Both clients and lenders have a single dashboard interface where they can keep track of the progress of the loan application and the workflow. Soft copies of client data are uploaded to the platform upon receipt of application. This helps all relevant personnel with the right permissions to access client files and get a bird’s eye view of the entire process, along with access to the earlier versions before changes were made.
Let’s dive a bit deeper into access control.
In loan origination services you might have multiple employees assigned different tasks, at different levels. They might just have clearance to view and edit specific files based on their roles. Cloud-based loan management system solutions let you allow specific access controls to specific roles. This helps in boosting security and reducing errors, overlaps, and confusion.
The best part is that your employees could be working from any part of the world. As long as they have a working internet connection and a laptop, they will be able to process and underwrite loan requests, much like they would have done by being physically present at the workplace.
Given the recent COVID situation, this is a definite advantage of adopting cloud solutions to ensure efficient lending operations to customers without hitting staffing roadblocks. If you are a lender looking to normalize trends like “work from home” and “bring your own device,” cloud computing can not only help you do that but also reduce a large chunk of your administrative overheads.
Ability to scale up on demand
With each stage of growth and expansion, your lending operations will also need add-ons and upgrades. If we are talking about legacy software, that means new hardware, more physical space, more cooling, further recruitments in the IT department, etc.
When we talk about cloud-based lending solutions, the expansion allows you to scale on-demand without having to spend on any of the above-mentioned overheads. Also, cloud-based SaaS providers run routine and automatic updates which means little to no downtime and zero impact on your business, data, and customer service.
Cloud-based lending solutions are especially efficient for seasonal lending businesses which see a spike during some months and slumps during others. This allows seasonal lenders to upscale and downscale, as per requirement and only pay for the services and features utilized.
Cloud-based lending solution systems can help your lending business manifold. Right from accepting loan applications, origination, underwriting with minimum errors, disbursals and repayment, it can help you automate and streamline the entire process thus boosting efficiency.
Core features of cloud-based lending solutions such as increased cybersecurity, access control, data storage and protection, ability to scale up and down per need and of course, customization to a tee based on your particular lending needs make it the perfect choice for lenders, irrespective of size and turnover.
Payment through a subscription model, easy onboarding, continuous customer support, automatic updates and new features added every now and then, based on the needs of the market, help lenders stay up to date and match the speed of growth and expansion of the competitive lending industry.
If you are planning to switch to the cloud and would like to explore how it would pan out for your business, feel free to reach out to us for a free demo.