50% of people who want a loan and have access to the internet in India prefer to buy it online. It is stats like these that prove today’s consumer wants the ease of swift loans available without the hassle of dozens of bank visits.
And this demand is not limited to loan origination. They want the same frictionless process till the very last penny is repaid. For banks and other financial institutes, this necessity sets a clear path. You need to have a loan management system that can keep up.
Fortunately, there are plenty available in the market. Unfortunately, not all of them are made equal. To get the most out of it, a loan management software needs to have the following features.
It has to be easy to use.
The first feature of outstanding loan management software is user-friendly UI. Even the best-in-breed system will fail if your employees or customers are unable to utilise it. Make sure it is not too complicated to use, and the experience it provides is without glitches.
It has to be automated.
The primary benefit of loan management software is reducing manual tasks and the costs associated with it. In addition, it diminishes fraud risk and human errors.
So, a solid system would be one that automates the entire lending process, from credit assessment to debt recovery. For example, a great feature is sending personalised reminders to customers when the due date is near. Another is raising receipts automatically.
It should be an integrated solution.
Lending is multi-faceted. From underwriting to debt recovery, there are a lot of elements you have to juggle. A sound loan management system will have modules for each component built-in. A one dimensioned software will add to your workload instead of solving it. Just some of the features the perfect loan management tool will include are:
- Multiple types of loans – property, OD, equipment, etc.
- Multi-disbursement – single/multiple disbursements and schedules.
- Flexible repayment frequencies – Daily, weekly, fortnightly, monthly, etc.
- Flexible payments module – NACH, eNACH, cheques, online, UPI.
It should integrate with other solutions.
A crucial element here is that the software should also integrate with your existing tech ecosystem, particularly MIS or ERP. For instance, keeping the balance sheet and P&L in order is a cumbersome task. Accounting tools automate and ease it. When your loan management system integrates with the tool, it ensures that no errors occur. On top of it, you and your customers gain more transparency.
A reliable software will also integrate with:
- Insurance providers
- Bank gateways and APIs
- Credit bureaus – CIBIL, CRIF, Experian, etc.
- Payments – Paytm, RazorPay, GooglePay, etc.
- eSigns – NSDL, SignDesk, Digio, Signzy, etc.
It must simplify delegation.
A sound loan management system will automate processes, but you still need to manage the cycle. Therefore, check if the software allows you to delegate work at any stage.
Further,making changes and modifications should be effortless because every loan is different. You have to keep an eye on payment dates, calculate interests, charge fees and more. The software should empower you to keep track of all these and tweak them as necessary.
It must comply with laws.
The different stages of the lending cycle come with inherent legal complications. These could be norms set by the RBI for interest rates or invoice discounting. A dependable loan management software would be one that takes over the burden of legal compliance and automatically implements them.
It offers data-driven reports.
A core feature of loan management software is reports and analytics. One example is automatically generating all credit bureau reports. Another is getting reports on a single customer or your overall cash flow.
With analytics, the software visualises data on where your business stands currently. Additionally, you gain insight on what long-term goals to target and how to move your business on that path.
It has an incontestable credit assessment.
As a lender, the one sure way to reduce risk and maximise revenue is to perform a precise credit evaluation. It equips you to offer the correct loan terms like interest rates and gives invaluable insight on the customer.
A genuine loan management software will have an excellent creditworthiness feature. It will not only rely on the credit history of the customer but also on alternate methods to assess, like an automated bank statement analyser.
It has to be customisable and reliable.
The business needs of each lender vary based on the consumer segment they serve. So, it is a mistake to assume any off-the-shelf loan management software will be useful for every lender. That’s why the best loan management software providers offer customisation.
The system can be tailored to your use. Besides, it will come with reliable customer service. Like any other technology, such software might face bugs that need to be resolved. A good service provider will be quick to respond to any issues.
It has to be scalable.
A long list of features is great, but an LMS that doesn’t grow with your operational needs is unprofitable. So, pick a system that allows you to diversify products, enter new markets, improve the current solution and keep abreast with your customer base.
Here, pay specific attention to the scope of innovation. The management system must have a defined framework to introduce a new service or process. And it should be able to do so with minimum time, effort and cost to you.
The bottom line:
BCG estimates that the Indian Digital Lending market will be worth $1 Trillion in the next two years. One reason for it is the 4% higher ticket sizes in loans influenced digitally.
Any bank, NBFCs, or financial institute that wants to capitalise on this market must invest in an outstanding loan management software.
The traditional route simply doesn’t cut it anymore. Rather an automated system lends innumerable advantages like being more appealing to the new generation of borrowers. That they understand your business at a granular level and integrate with your operations without friction are incidental benefits.
At Finezza, we offer a whole product suite that can help any financial player digitise. Our innovative loan management system has all the features you would want. But we also provide collection delinquency management, a loan origination system and more. When you’re game to take a bite of the $1 Trillion opportunity, get in touch!