The lending sector has been undergoing a revolution in India and worldwide. Nowadays, in the aftermath of the pandemic, it is no longer optional for lenders to have digital processes for loan applications. It is the norm.
Customers are not patient enough to visit physical branches, fill out several paper forms, and wait weeks for their loans to get processed. Instead, they want the entire process to be online from the comfort of their home or office in a short time.
Even before the pandemic hit, innovative lenders were working towards digitising their operations, and the process has accelerated even harder. As a result, most reputable lenders now have digital lending capabilities.
One of the significant advantages of digital lending is that large swaths of the process can now be automated. In addition, digital lending software has become so sophisticated that loan processing timelines have shrunk from a couple of weeks to a few hours.
All these factors considered, choosing the right lending software solution for your lending platform may be a top priority if you’re a lender. This article outlines five key factors to consider when choosing the right lending solution software.
5 Key Factors to Consider When Selecting the Right Lending Software Solution
Five of the most important factors to consider before choosing a lending software solution for your lending business are:
1. Does it have cloud-based functionality?
When it comes to software, many businesses are confused between opting for a cloud-based solution or using it on-premises (downloading the software on your computer).
However, cloud-based lending software solutions have been known to work best compared to on-premises solutions. Cloud-based solutions are better because SaaS companies are dedicated to developing automation solutions for their clients, providing robust support and process smoothness.
Not every lending institution can afford the cost of developing an on-premise software solution which can deliver the performance requirements. Cloud-based solutions are more cost-effective and can be scaled according to requirements.
Lenders worldwide opt for cloud-based third-party solutions because they offer the cutting-edge technology and timely updates necessary to stay ahead in the lending business. In addition, such lending software solutions offer access-from-anywhere features, the latest security updates, and cost-efficiency.
2. Does it have end-to-end features?
Many software options available in the market today only offer partial solutions to a lender’s problems. For instance, the software may be developed and created only to perform a specific function. This can lead to a situation where you need to use separate tools to manage different aspects of loan processing.
This can lead to more bottlenecks and headaches than it solves because there won’t be any integrated functionality between these tools.
This is why opting for lending software solutions that offer end-to-end services is essential. Such software will help with origination, underwriting, servicing, reporting, and everything.
While the price point of such software can seem prohibitive at first glance, it can save thousands of person-hours in the long run. An end-to-end software will help integrate all the different aspects of the lending process and automate a large part, so minimal manual input is required.
3. Is the lending software scalable?
The best lending software is customisable, flexible, and, most importantly, scalable. So whether you’re a one-person lending company or a multi-national company, the same software should be able to service your lending process automation needs. In addition, the cost associated with the software will scale according to the level at which it is being used.
If your lending company only has 10 clients, you may be tempted to choose lending software that is good for ten clients but does not scale properly. However, this can be a mistake because your business can grow exponentially over the long term, and you won’t want the headache of changing your lending software provider.
Most software solutions are meant for large companies that can afford to have dedicated expert professionals who can manage the software. In case of the requirement to shift to a better version, they have the resources and money to do so.
However, this may not be true for a lender just starting, for start-ups, or small to medium-sized lenders. Hence, it’s best to opt for a software solution with no steep learning curve and proper scalability and a scale-based cost structure.
4. Is the lending software user-friendly?
Software should be user-friendly. For lending software solutions, this applies to both the borrower and the lender. In today’s cut-throat market, a potential borrower will likely leave your website or mobile app if they find the software too complicated. The software is what your lending company puts forward to its clients. Hence, it needs to look and feel the part.
You should only consider purchasing lending software that does not require a too steep learning curve. In addition, the software should be intuitive, and the various features should be easily understandable.
When testing out software, if it takes more than an hour for a lending professional to understand the workings of the software, then it may be too complicated. Nowadays, software UX and UI have been significantly simplified, and you should not settle for anything less.
5. Does it have robust credit-scoring capabilities?
Usually, lenders source credit scores from third parties such as CIBIL in India. But what if a lending software was intelligent and capable enough to source credit reports from CIBIL automatically.
Lending software these days can provide credit scores that get more accurate and quicker the more they are used. Such software uses machine learning (ML) and artificial intelligence (AI) technology to analyse large swaths of historical data and learn from it.
Such credit scores can help a lending company maximise revenue and minimise risk. Such companies can also reduce the cost of acquiring third-party credit scores.
An extensive range of leading software is available in the market today, offering a plethora of features. These factors have been curated to help you pick the best one that suits your lending needs. But, of course, the best way to pick a lending software solution is to take it for a test drive and see how well it works.
If you want to learn more about the future of the financial services industry in India, then check out our articles here.
Finezza offers an end-to-end loan management software solution which is quick, efficient, and easy to use. Just some of the features include multi-loan types, flexible repayment frequencies, multi-disbursement, and more. Learn more about our software here.