The lending market is highly competitive and fast-paced, and no matter the size of the lender or the types of products, increasing profits and outdoing the competition is what leaders in the lending industry constantly strive for. Automation is one of the most intelligible means to gain a competitive advantage, lower cost, and scale a lending business rapidly.
Before speaking of benefits, it is important to highlight the importance of selecting a loan management system that is built-for-purpose and designed with ease-of-use in mind. A purpose-made system helps increase client satisfaction, makes processes significantly more efficient, and serves as a force-multiplier. All of these attributes result in cost-savings and higher profits, but the benefits of a well-designed loan management system do not stop there; it also enables lending teams to perform their tasks intuitively without having to go through a painful learning process.
At its core, a robust loan management solution endeavors in minimizing manual tasks and automating repetitive actions. This includes documentation management, decisioning, reporting, and communications, which require flexible workflows and many times interconnectivity with other systems. However, in the world of software there always are legacy solutions, and in the case of loan management solutions these often lack connectivity with other systems (e.g., payment processing, general ledger, etc.), have rigid workflows that require lenders to adapt to the system rather than the other way around, and are difficult to adopt by less technically-savvy users.
Key Benefits of Automated Loan Management Systems:
Automation empowers users to perform value-add tasks rather than spending countless hours in manual, low-value, and manual tasks, but it also offers key strategic benefits that we outline in this piece. So, let’s take a look at how you can leverage the power of a loan management solution:
1. Simplified loan management processes
Every loan originated is the result of a collection of countless data points and a long list of documents that need to be scrutinized in order to make sound decisions and to ultimately approve or deny any given loan. Traditionally, lenders perform a series of complicated and time-consuming tasks to originate and underwrite a loan; in contrast, a loan management system can filter out unqualified applications, automate document gathering, pre-input data points, and complete underwriting in minutes.
When it comes to loan servicing, not all loans are created equal! A flexible yet robust loan management solution supports variations of loan products, even within the same industry and even within the same organization. Servicing a loan becomes a matter of making strategic decisions rather than a series of manual tasks to just stay afloat. Speak of a simplified loan management process!
2. Reduces costs and increase profitability
The cost of a robust loan management solution may seem significant; however robust systems are a powerful force-multiplier that show great return of investment (ROI) in as little as one year, and more importantly are a driving force in reducing long term cost of operation. For instance, rather than hiring additional staff to process a higher volume of loan applications, a loan origination and underwriting system enables you to automate manual tasks like document collection, decision making, and closing documentation; all of which result in both a higher volume of loans and more profits without having to increase headcount.
Speaking of higher yields, a great loan management system will help you streamline the invoicing and payment processes that directly will impact your bottom line by making sure all payments are processed correctly and timely. In addition, more advanced platforms will give you the ability to easily manage and make sure that you are collecting applicable fees, such as late fees, early payment fees, and other loan servicing fees.
3. Better customer relations
The three major factors that affect customer satisfaction are customer understanding, service, and technology. What is great about a mature loan management solution is that it can positively affect all three.
Let’s start with understanding. A big part of customer understanding is about preferences, in this case some clients prefer looking at their balance online, others via phone, or perhaps a text message. Online retailer Zappos, one of the most “customer-happiness” obsessed companies ever, understands that catering to customers preferences is key to earning customer loyalty.
Now let’s look at service, which is the most misunderstood concept in any industry, and lending is not the exception. Service is not only about someone ready to talk to you over the phone to make concessions. Think about Amazon for a minute, they understand that convenience is offering a wide range of products delivered to your doorstep faster than anyone else. In the lending world convenience may mean a seamless loan application or a text with a link to pay my loan every time it’s due.
Lastly, technology. This is the easy part when discussing benefits of a great loan management system. Nowadays, clients would rather check their balance online than opening a mailed statement. Who wants more envelopes in the mail?
4. Better Tracking and Transparency
Not only transparent and reliable information is a key benefit of a loan management system but it also serves as a significant selling point to investors and board members. A mature loan management system provides total and real-time access to data points of all vital parts of the business, including performance metrics.
A modern loan management system also offers ways to make sense of all data points by offering customizable dashboards that can be tailored depending on the audience and reports that can be easily modified and shared on the fly.
Also, tracking performance data in a systematic way allows executives to more quickly identify areas of concern, risks, and ultimately empowers them to make better decisions. In addition, centralizing all reporting and metrics in one system makes inter-departmental collaboration easier and more efficient.
The FUNDINGO Loan Management Solution
Ready to reap the benefits of a sophisticated loan management system? FUNDINGO is a loan management solution that can help you streamline your entire process of originating, underwriting, and servicing loans.
The FUNDINGO solution is built on the salesforce.com platform and can be closely integrated with a company’s CRM, finance, document management and other systems. The solution is supported by experts in alternative lending loan management.
Contact us now to learn more about how FUNDINGO can help you make better decisions and grow your business.