With rapid digitalisation, we are also witnessing a shift in the lending sector as the number of secured and unsecured loans continues to move in an upward trajectory year-on-year. As per recent estimates:
Unsecured personal loans have increased by almost 4x in the period between FY 17 and FY 23, from 4.26 lakh crore in March 2017 to Rs 13.3 lakh crore in FY 23.
Additionally, even the number of personal loans has tripled in the same period, indicating a consistent growth in demand for credit.
Amidst the growing number of loans, lenders are looking beyond traditional processes and platforms to serve their customers better and strengthen their footprint in the current lending market landscape.
One way to accomplish this is by harnessing the benefits of loan management software.
Let us explore the advantages of loan management software and why every lender needs one to scale their business.
What is a Loan Management Software?
A loan management software is typically a digital platform that empowers lenders to handle, manage, and understand a loan’s entire lifecycle within seconds.
A loan management platform comes with an assortment of features that accelerate the entire loan management process, including loan origination, background verification, loan disbursement, documentation, and more.
Benefits of Using an LMS:
- Improved customer experience: Streamlined processes can lead to faster decisions and reduced wait times for borrowers.
- Enhanced operational efficiency: Automation and centralised data management reduce manual tasks and increase accuracy.
- Potential for increased ROI: By saving time and reducing errors, lenders may see an improvement in their return on investment.
How Can Loan Management Software Help Lenders Deliver Excellent Customer Experiences?
Traditionally, applying for credit was an undesirable experience for borrowers due to multiple reasons. These include a lack of digital infrastructure, long queues, ambiguous documentation requirements, short-staffed lenders, and more.
From filling out the loan application form to receiving credit, the entire process could take weeks and, in some cases, even months. The advent of tech-driven loan management software has shortened this to just a few days.
Let us explore how lenders can leverage such tech-based solutions to provide a seamless and excellent customer experiences.
1. Convenient and Faster Loan Processes
As mentioned earlier, applying for a loan and receiving credit was a tedious process, resulting in poor satisfaction and customer experiences. However, due to the monopolistic nature of the lending market, customers had little choice but to give in to these time-consuming and frustrating experiences.
That trend is withering away as tech-savvy users, especially Gen Z and millennials, demand faster turnaround times. Additionally, the arrival of modern fintech companies that harness loan management software is fulfilling these demands, paving the way for faster and more convenient loan processes.
Today, even traditional lending institutions, including banks, are using loan management software to fast-track loans and improve customer experiences.
2. Smart Data Analytics and Collection
Don’t we keep reading or hearing that data is the new oil? But what does it mean? Well, it means that businesses that can access user data have the upper hand over their rivals, who do not harness data to provide better customer experiences.
Lenders who prioritise customer experiences are leveraging data to understand their customer’s pain points, requirements, and expectations.
Data related to credit history, credit scores, repayment habits, spending patterns, and capacity empower lenders to provide tailored experiences, resulting in – customer satisfaction and retention rates.
3. Self-service Support
Customers spent hours chasing support teams to get clarity on several aspects of a loan process. As lenders realise the need to provide convenient and seamless customer experiences, self-service support has garnered immense popularity in recent years.
Instead of depending on manual support to assist them, customers are swaying toward self-service support, including chatbots, WhatsApp, and social media chat to seek answers to their queries.
While traditional forms of customer support are still around, digital natives, and younger customer segments prefer real-time actionable interactions via conversational technologies.
4. Personalised Customer Experience
As mentioned before, lenders leverage customer insights to provide tailored experiences. Customers are increasingly drawn toward lenders who understand their requirements and provide tailored experiences.
A loan management software empowers lenders to provide tailored customer experiences in several ways, including:
- Personalised communication based on customer interactions.
- Language localisation for individual preferences.
- Product and service recommendations aligned with spending capacity and credit history.
5. Tracking and Understanding Customer Journey
Providing a personalised customer experience isn’t a one-time thing, and lenders need to acknowledge this. It is a continuous process wherein lenders must follow up with their customers even after they have sanctioned their loans to understand their customer journey.
A short questionnaire seeking answers to where they can improve their services, what were the biggest challenges for customers, was the entire experience satisfactory, and more.
6. Reducing Errors and Improving Transparency
Loan management software minimises human errors through automation, enhancing efficiency and customer satisfaction by preventing delays and discrepancies.
Simultaneously, it boosts communication and transparency, offering borrowers real-time updates and dashboard access for a clear view of their loan status. This dual benefit of error reduction and improved transparency fosters trust, solidifying the lender-borrower relationship and encouraging repeat engagements.
Wrapping It Up
From housing to personal loans, borrowers are prioritising convenience, top-notch customer service, and experiences. While fintechs are spearheading the CX revolution in the finance sector, financial institutions are quickly jumping onto the bandwagon.
Digital solutions like loan management software are playing a pivotal role in helping lenders deliver better and improved customer experiences today – a trend which will continue to gain further steam in the upcoming years.
Finezza’s web-based loan management software is developed to ensure lenders can manage loans without any hiccups. It allows our clients to be transparent and simplify different stages of their customer’s lending journey and most importantly, provide seamless experiences.
Book a free demo today to learn more.