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Benefits of Custom Loan Management Software Development

There is a wide variety of finance management software solutions available on the market that automate many fiscal processes, facilitate budgeting, and provide other benefits to banks and financial institutions.

One of the solutions that significantly alleviates finance management procedures for lenders is loan management software. This type of software helps money lending companies to streamline loan origination and handling as well as more easily comply with growing regulations, and much more. That’s why lending management software is rapidly rising in popularity among banks, credit unions, and others.

loan management system

In this article, we’ll have a look at the features of loan management systems, their benefits, and how they improve the lending experience for financial institutions and their customers.

What Is a Loan Management System?

A loan management system is a digital platform that helps lenders to automate loan handling processes from the application stage to closing. It allows banks, credit unions, mortgage lenders, payday lenders, and other financial organizations to gather and verify customer data much faster, offer new loans, manage the existing ones, calculate interest rates, and more. Above all, these systems include tools for generating quick reports with detailed analytics, providing valuable insights for lenders.

Loan management systems are especially popular among the North American financial institutions, contributing to the Loan Servicing Software Market growth of up to 48%, followed by the EU, Japan, and other countries.

Key Loan Management Software Features

For comprehensive and effective work, loan software management systems have to incorporate the features that cover all stages of loan handling and provide tools for detailed analytics. Here are the main features these systems should include.

Loan Origination

When a client applies for a loan, the lender needs to process it correctly. For this, they do the following:

  • get from the client various documents, including their Credit Score, ID Proof, current employment data, salary slip, and others;
  • ask the borrower some additional questions;
  • check the data for any mistakes, send documents from client service to the credit department, and add some missing information;
  • process all the gathered data and evaluate the risk scores, credit score, and others;
  • take the credit decision and sign the documents;
  • fund the loan.

If all the steps above are made on paper and manually, it can take up to a week to fund the loan. Fortunately, many of these processes are automated today. On the other hand, they often happen in unintegrated systems, resulting in longer data processing.

loan management software features

Loan management systems allow gathering all the data on each client in a single system and performing complex loan origination steps much easier in one or two app page tabs. This way, the lender can quickly make their lending decisions about a particular business or a client and check their credit history in an integrated CRM lending system.

Loan Serving

As the loan is funded, it should be controlled and managed by the lending company. There is much data that should be gathered on every loan, e.g. loan types such as business, mortgage, personal, student, etc., interest rates, payment dates, and other information. Lending companies can simply track each loan and make any amendments such as recalculating interest and fees, and much more.

Aside from processes and data management, the system can automatically collect funds via various sources such as credit cards or wire transfers, and others and automatically adjust the data on each client.

Debt Collection

For effective monitoring of the received payments, many loan management systems have a debt collection feature separated into a standalone page tab. It allows lenders to track each payment, notifies them when accounts become delinquent or on due repayments, offers a recalculating fees tool for the late payments, and fulfills many other activities.

The debt collection feature helps everyone in the team stay updated on the latest activities performed with each loan. Above all, it allows to track all the debtor’s payment history, communication with the client, make any payment modifications, and much more.

Reports and Analytics

For finance-related companies, it’s essential to generate detailed reports on how their cash flows. Reports and analytics feature allows creating visual reports on each company’s client or business as well as producing statistics on the overall company’s business activities, e.g. number of loans, paid penalties, ROI, total investments, and much more.

Benefits of Custom Solution Development vs. Off-the-shelf Software

There is a wide variety of lending software