A lending management system can turn around the way the business runs at a lending firm by streamlining the core business functions at the company. Regardless of the size of the lending business, a quality loan servicing software can not only save time and money for a business but also please the end customers of the firm.
It can be not very easy to choose from a wide range of lending management solutions available in the market that can yield the best results for your business. Businesses that follow an Inside-Out approach, keeping in mind their internal needs along with an insight into the finite set of resources are likely to make a mindful choice of lending management systems.
As more and more NBFCs and MFIs gear up to leverage automated lending management tools,
Here is a list of critical things to consider before investing:
1. Needs of the Lending Business
Lending management software can be a helpful tool to steer your business strategy in the right direction. To decide which Lending Management System you must invest in, it is best to review the short-term and long term goals of the business. Moreover, it’s essential to access the pain points of the software package and current technologies used by the company. Research the requirements from top management to the loan servicers who will be working with the program to analyze where your staff spends most of their time and where you might be able to gain the most efficiencies. Such a gap analysis will provide necessary answers that will help in choosing a better lending management solution. While some lenders need a system that can handle the variable loan and rate types, others may require flexible repayment options, backdated payments, partial payments and custom payment schedules for their business model.
Gap analysis prioritizes the essential features you need today to help you better service your loan portfolios. Lending management software vendors who collaborate to work as strategic partners with lending businesses are your best bets. Given your budget, compare which vendor is offering the most helpful functionality and can accommodate changes to your software requirements as your business evolves. A software vendor who is continually working on developing new features to stay ahead of industry trends should be your welcome partners.
2. Ease of Deployment and Customization
Financial lending companies that work with software tools that do not hamper the security of the data and are easy to use are set to succeed in the industry. A lending management solution that offers the ease of customization can quickly help the business adapt to the diversity of needs of their client base.
It is common business logic that the sooner the operations team at the lending firm becomes adept at using the software solution, faster can they garner the returns on their investment. With a software that is simple to install, the learning process for the lender is streamlined. For example, cloud-based lending management platforms can be set-up even without IT expertise. Software systems that come with a well-designed workflow that acts like a built-in training tool for the operations team, also make the right choice.
3. Choosing Between Cloud-based and On-premise Software Solution
Cloud computing is the ‘in’ thing in almost every sector of business, especially the financial industry. With new perspectives, cloud tech is reinventing new models within the commercial lending sector. Cloud-based lending management tools can improve the efficiencies of the business through better management of functions like assembling, connecting, and using the resources available, to meet business demands. Cloud-based solutions are successful options for companies with the lower capital outlay and reduced operational costs. Software-as-a-solution (Saas) lending management tools allow companies to deploy less expensive solutions than comparable on-premises programs, and it’s easier to manage in house. As SaaS platforms are hosted from a remote location, their service package includes redundant back-up systems and high-level cybersecurity. Apart from the ease of deployment, users gain easy access to advanced features and functionality with cloud solutions. They offer regular maintenance, frequent software upgrades and new product releases, along with proper customer service support. The financial lending firm need not build or fund its own IT department with Saas solutions; thus, it ensures a lower set-up cost than the on-premises program.
On the other hand, the on-premises program brings in the distinct advantage of control. Businesses with a dedicated IT department to manage cybersecurity and 24/7 uptime often prefer on-premise solutions. Such activity enjoys access to databases that are complementary to the lending software they choose. Sometimes, lending organization opt for maintenance of their systems behind their proprietary firewall and thus go for on-premise solutions.
4. Ease of Third-Party Integration
Businesses must ensure that the loan processing module they choose needs to work in syncs well with other systems like a CRM or ERP. The lending management system a business opts for should allow for secure transfer of data from a variety of different methods and software if need be. Given the tech-centric nature of the majority of processes followed today, it’s best if a lending management tool caters to the usage patterns of a client and the core processes they follow. The convenience of integration of data from their party channels onto the lending platform is what makes it a hit. Loan Management Systems should be able to connect with third-party applications for improved functionality of the overall loan processing function.
5. Scope of Evolution and Scalability
Businesses must also consider the range for improvements a lending management solution has. Is the tech being used capable do handling future growth and future demands of the lending markets? Sometimes, lending software is based on static interfaces that do not work well with the dynamic nature of the financial markets. It is unlikely that such software would be a good fit for firms looking for an excellent long-term lending management solution. Only a Loan Management Solution that adheres to evolving compliance mechanisms are set up for success. Businesses need to factor in all the costs to scale up the product with growing or more complex operations for getting an accurate picture of the ROI the product will deliver eventually.
6. Security Features and Accessibility for End Users
Your lending management systems must pace up with the times! Choosing a lending management solution that allows end-users to access it from anywhere is a must for modern businesses. Add to that, well-integrated origination and loan serving functionalities ease the functioning of the lending business. Furthermore, the software solution needs to ensure that the user data is protected in all circumstances. In the view of widespread cyber attacks, data theft, and account hacking, the new financial sector has been suffering. Using a lending management solution that assures adequate measures to ensure that the data of the clients is not compromised in any way.
You can opt for a solution that offers a range of individual modules to suit businesses of all sizes. Solutions with automated decision-making and borrower evaluation cycle and risk segmentation make a valuable choice.
The loan disbursal policy of NBFCs and MFIs plays a vital role in instilling trust in the borrowers in order to augment its topline. This is where an efficient loan management system comes to play. Lending businesses need to evaluate all available options by asking the right kind of questions with an inside-out approach.
We hope the criteria mentioned above serve as a decision-making framework to help you cut through the clutter and give your business the best opportunity to succeed.
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