Today, potential business or individual borrowers seek an efficient user experience for the loan application process, loan approvals and disbursals, and EMI payments.
Lenders looking to meet and exceed user expectations must work with technology that crafts a superior experience. In turn, they improve the potential to turn leads into customers and accelerate business growth.
This is where cloud-based loan management software (LMS) scores over legacy software, spreadsheets, and other tools. The combination of cloud computing, automation, and Artificial Intelligence enables lenders to transform the way they do business, bringing flexibility and scalability to their operations.
Lenders looking to capitalise on the estimated $240 billion credit gap in India’s growth engine—the Micro, Small, And Medium Enterprise sector—must act quickly and shift to superior cloud-based solutions.
Let’s understand the advantages of cloud-based lending management software and the value-add for lenders and borrowers.
What is Cloud-Based Loan Management Software?
Cloud-based loan management software automates the entire lending cycle, from loan origination and the underwriting process to disbursing loans and recovering debt from borrowers.
The adoption of the LMS software helps automate several steps in the lending cycle. Lenders can expect the following capabilities in a superior solution:
- Efficient loan application process
- Accurate, efficient, and speedy analysis of financial data
- Bank statement reconciliation of data
- Disbursements of multiple loan products
- Flexible repayment frequencies & payment modes
- Dynamic loan document generation
- Management of Non-Performing Assets (NPAs)
These goals are made possible by the collective use of several technologies, such as cloud computing, robotic automation, Artificial Intelligence (AI), Machine Learning (ML), and Optical Character Recognition (OCR).
Cloud-Based Loan Management Software: Delivering Superior Scalability
Here’s a snapshot of how the adoption of cloud-based loan management software can deliver scalability to lending operations.
1. Enhancing the Borrower’s User Experience
The adoption of the LMS streamlines a borrower’s user experience, bringing intuition, empathy, and simplification to the entire process.
For instance, this solution can directly pull a borrower’s data from credit bureaus, account aggregators, and the Goods & Services Tax portal, with their consent, thus easing the data collection process for the borrower.
A superior user journey makes it easier to convert leads, retain customers, and scale the business.
2. Automating All Repetitive Tasks
The lending cycle comprises a wide range of repetitive tasks. By automating them, cloud-based loan management software enables lenders to improve efficiency and speed in operations.
For example, lenders can quickly and efficiently digitise data extracted from over 700 file formats.
By automating repetitive tasks, businesses save time and effort and can function with lean teams. They can prevent errors, omissions, errors, duplication, and data breaches.
Also, team members can focus on strategic tasks such as marketing, sales, and business goals, which contribute towards scaling the business.
3. Proactive Risk Assessment & Fraud Detection Capabilities
As lenders scale, they need to be very accurate in their underwriting capabilities. The adoption of cloud-based loan management software enables this goal in multiple ways:
- This AI-powered solution can isolate every bank transaction in statements into over 20 to 30 cash inflows and outflows categories. Lenders can account for every salary paid out, sale made, EMI payment made, and cheque bounce in a borrower’s history.
- The solution can detect unusual patterns in banking transactions that can signify irregularities and fraudulent practices.
- Cloud-based LMS can also detect the presence of fake documents and identity fraud through minute discrepancies in the data.
- The software offers a comprehensive creditworthiness score based on analysis of all financial data, thus helping businesses make data-driven underwriting decisions.
These capabilities collectively contribute towards helping lending businesses detect risk and potential loan fraud, thus enabling businesses to scale sustainably.
4. Strengthening Compliance Through Automation
As businesses scale, compliance is another key concern for lenders. Financial regulators are becoming more stringent in their guidelines. The inability to comply can lead to penalisation by regulators, which, in turn, raises costs and reduces credibility. Lenders even risk being shut down.
The adoption of cloud-based loan management software enables lenders to automate the process of complying with new guidelines by customising dashboards. The software does the heavy lifting, and lenders can stay compliant without intensive manual interventions.
Flexibility of Cloud-Based Loan Management Software
Data plays an important role in the lending process. Leveraging an LMS can bring flexibility to borrowers, and this opportunity can be used to capture more market share and diversify their audiences.
1. Customised Products
Cloud-based loan management software has the capability to process massive volumes of data efficiently and effectively.
One key advantage is that it can understand a borrower’s real-time financial needs and recommend customised and relevant loan products.
Personalised loans can be more cost-effective for borrowers, especially those who belong to the MSME sector, and can benefit from loans of a smaller ticket size with flexible terms and conditions.
2. Customised Collections Strategy
Lenders’ traditional collections approach can be a trust-reducing experience for borrowers, especially those who aim to repay the loan but may be dealing with sudden challenges. These can range from job loss and emergency hospitalisation to business revenues dropping due to a market crisis.
On the other hand, cloud-based loan management software enables lenders to craft a personalised debt repayment strategy based on real-time data.
Thus, lenders can recover payments without antagonising the borrower and reduce customer acquisition costs by retaining customers.
3. Flexible Payments
An automated system gives borrowers the flexibility to set repayment cycles based on their real-time cash flows rather than lenders’ pre-set conditions.
They can also choose to make a payment using their own mode of choice rather than being forced to pay with just one or two options. They can now make payments via UPI apps, credit cards, debit cards, and net banking, to name a few.
The Takeaway
Lending businesses that invest in cloud-based loan management software can gain a competitive advantage in a cutthroat market. They can scale quickly and onboard more customers efficiently and cost-effectively.
The adoption of this state-of-the-art software also enables them to offer customised solutions to customers and stay agile in a dynamic, constantly evolving market.
Finezza, the cutting-edge micro loan management software, streamlines lending processes. It automates applications, credit assessments, and approvals, ensuring security and compliance.
Finezza also harnesses AI technology to provide tailored analytical solutions, enhancing loan decision-making, reducing lead-to-loan time, and effectively evaluating creditworthiness for faster loan approvals.
Sign up to learn more about Finezza and overhaul your financial operations today!
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