The demand for rapid access to credit in business is continually growing. Businesses across all segments, but especially in the Micro, Small & Medium Enterprise (MSME) segment, seek access to funds to accelerate business growth.
Experts predict that business loans to MSME borrowers will rise by 20% in the festive season, especially as consumer spending increases.
Therefore, lenders must be prepared to keep pace with demand. They need to scale up their underwriting processes and process loans quickly.
At the same time, they must be able to access a borrower’s risk profile accurately. Manual underwriting and loan processing services come with significant disadvantages. Hence, one thing is clear: digital transformation is the only path to meet these expectations head-on.
Lenders can gain a digital edge with the adoption of AI-powered commercial loan management software, which automates the entire workflow end-to-end.
In this blog, let’s understand the benefits of automating entire loan management operations, from cost-effectiveness to superior risk assessment and customised solutions.
What Is a Commercial Loan Management Software?
A commercial loan management software is a cloud-based, AI-powered tool which enables lenders to automate the entire loan management workflow.
This single, unified platform harnesses diverse processes, such as loan origination, processing, disbursal, and monitoring of loans to commercial borrowers. It also brings efficiency, accuracy, speed and scale to the lending ecosystem.
Moreover, absorbing modern technology, the tool comes packed with AI-based predictive analytics, enabling businesses to forecast future trends.
A superior commercial loan management software boasts features such as:
- Processing of multi-loan types
- Flexible repayment frequencies
- Flexible payments module
- Dynamic loan document generation
- Bank payment reconciliation
- Non-Performing assets management
And many more.
Commercial Loan Management Software: Top 9 Benefits
Here’s a snapshot of how commercial loan management software enables lenders to cut costs and drive revenues and profitability.
1. End-to-end Automation of Loan Management Workflow
Lenders can digitise all aspects of their loan management operations, from financial analysis and underwriting to monitoring of loans once disbursed. Automation reduces the need for human intervention in repetitive tasks and errors, duplications, and data leakages.
For example, a renowned commercial loan management software like Finezza has the capability to scan text from over 700 formats. This process completely eliminates the need for manual efforts of data entry executives.
2. Accurate Risk Profile Assessment
Lenders are always concerned about borrowers becoming liabilities if they cannot repay loans. At the same time, they don’t want to lose out on opportunities when first-time borrowers have no assets or credit history but have a healthy cash flow.
This is where the analytical capabilities of commercial loan management software take effect by enabling lenders to assess a borrower’s risk profile accurately. Based on all financial data, the software delivers a creditworthiness score, which enables swift and informed decision-making.
3. Superior Fraud Detection Capabilities
Access to digital processes enables lenders to enhance fraud detection capabilities with limited human intervention. AI in commercial loan management software enables recognition of irregular patterns in transactions, fraudulent documents, and the potential for identity theft/ impersonation.
Lenders can drastically reduce loan fraud, which eats into profitability. Loan fraud also makes lenders vulnerable to investigation, reputation loss, and potential shutdowns.
4. Recommendation of Customised Solutions
The adoption of commercial loan management software enables businesses to customise solutions for customers at every step of the way.
The software can restructure loan offerings to make them more relevant to the customer’s needs, bringing flexibility and convenience to the lenders to cater to a diverse set of customers.
5. Ensuring Compliance
Regulatory bodies like the Reserve Bank of India keep evolving lending guidelines to be more stringent. The aim is to reduce fraud and non-performing assets, diminishing the system’s credibility.
Commercial loan management software enables the implementation of guidelines at scale, thus enabling compliance. This step translates to fewer penalties and potential suspension and shutdowns due to non-compliance.
6. Lenders Can Scale Faster
As the demand for commercial loans escalates, lenders can process loan applications and disburse loans much faster. At the same time, they can automate several processes, such as managing non-performing assets and restructuring loans to support existing customers.
Hence, businesses can ensure quicker turnaround for new customers. They can deliver continued and high-quality service to existing customers. The lenders can also simultaneously tackle resolving and closing loan cycles for non-performing assets.
7. Fuels Data-driven Decisions
Businesses can access high-quality, in-depth data insights before making major or long-term business decisions. For instance, if they want to launch a new product, the data will offer adequate insights about customer demands and needs.
Lenders can customise dashboards as per their requirements and extract insights from a massive data set, which keeps growing with every new loan application.
8. Enables Cost Savings
With commercial loan management software, lenders can cut costs in multiple ways. For instance, they can reduce manual human interventions and function with lean teams. The bandwidth of team members can be leveraged to run higher-value tasks.
Businesses can also reduce the number and value of non-performing assets and fraudulent borrowers, which translates to increased revenues and profitability.
9. Predicts Market Trends
The use of AI enables commercial loan management software to produce predictive analytics. This means that lenders can forecast borrower and market trends for a specific day, month or year in the future.
The tool uses a mix of historical and current data to throw up predictive results. Thus, businesses can reshape their strategies and be prepared for future developments early on.
Lenders accelerating digital transformation is an important step towards staying competitive. By adopting commercial loan management software, businesses can bring efficiency into operations, enable accurate risk assessment, deliver relevant products, and reduce costs.
The best approach is to partner with a technology specialist to support lenders’ tech needs.
Finezza offers a comprehensive set of tools and solutions to manage your lending portfolio. Our end-to-end lending management solutions are trusted by brands like ftcash, Hiranandani Financial Services, gromor Finance, and UC Inclusive Credit, to name a few.
Finezza’s intuitive bank statement analysis software is geared to analyse bank statements quickly and accurately and detect potential fraud.
Book a demo to know more.