5 Reasons Why You Need a Loan Management System
Are you keeping on top of technology trends in your lending business?
According to the Digital Banking Report, 85% of financial institutions now have the technology in place to allow customers to apply for loans online.
This is on top of the McKinsey research that found that a staggering 50% of finance companies have prioritised digital development.
So, if you’re not keeping up with technology trends, where does that leave you and your loan business?
Are you now at risk of being left behind by your competitors who are?
Don’t worry, though. You no longer need to build your own loan management technology.
Instead, you can now use an ‘off the shelf’ cloud-based loan management system to power your loan business.
With interest in loan management systems growing exponentially over the past 5 years, let’s take a deep dive into what they are and how they can support you with your goals for your loan business.
What is a loan management system?
Traditionally, in order for a lender to process online applications for loans, they would have been forced to build their own customer – and expensive – software.
However, advances in technology mean that vendors – like LendFusion – can provide a loan management system platform for loan businesses like yours to use as their own.
These SaaS (software as a service) apps are easily configured to mirror your business workflows and can be accessed by all your customers using a web browser.
Because you don’t need to build your own software from scratch, using a loan management system platform offers a number of advantages, including lower cost, higher quality, enhanced security, easy setup, no maintenance, and unlimited flexibility and scalability.
Who uses loan management systems?
But how do you know if a loan management system is right for your lending business? We’ve profiled 5 key types of loan companies that thrive using a loan management system.
Consumer Lending
A loan management system is ideal for any type of customer lending use case. By using LMS technology, you can expect to automate and accelerate the entire consumer lending process for your consumer credit loans. You’ll also be able to complete credit decisions fast and provide the best customer experience.
Auto Finance
Another common business case for using a loan management system is auto finance. Whether you’re focused on auto finance, automobile leasing, car rental, car rent-to-buy solutions, or anything else, an LMS is ideally suited for your needs.
Bridge Loan
If you operate in the bridging loan space, offering high-value short-term loans to help complete property transactions – then a loan management system is an invaluable tool to help you administer the loans quickly and professionally.
Commercial Loan
If you’re operating in the commercial loan sector, you’ll benefit from an all-inclusive loan management system designed to cut costs and streamline business processes while delivering a ‘best in class’ experience for customers
Microfinance If you’re involved in any element of microfinance – providing small loans, ethically, to those who need them most, then a loan management system is the ideal tool to help you deliver on your microfinancing vision.
Why invest in a loan management system?
Aside from being left behind by your competitors, there are a number of other reasons why finance companies invest in finance software like loan management systems.
Research by Gartner uncovered the top 10 reasons buyers invest in financial software – which ones resonate most with your circumstances?
Loan management system features and benefits
So, if you’re considering the idea of introducing a loan management system into your loan business – what are some of the key features and benefits you should be looking out for?
To help you quickly get to grips with this potentially intense topic, we’ve put together a helpful reference guide to give you an ‘at a glance’ insight into some of the key features and benefits you should expect in a leading loan management system.
Perhaps you’re now wondering what a loan management system actually looks like and works in practicality?
The video we’ve included below will give you a walk-through of our very own LendFusion software so you can get a feel for how a loan management system might work for your loan business.
5 reasons why you need a loan management system
1. Reduce operating costs while growing your business
Opting for a cloud-based loan management platform allows you to make substantial savings across both COGS and OPEX in two ways.
Firstly, you can grow your business AND drastically reduce the amount of underwriting staff needed during the loan origination process – since a modern loan management system will automatically do most of the work for you.
LendFusion enables you to get your business processes in order so you can automate as much as possible – from automated emails and text messages to decision-making and collections.
LendFusion can be easily configured to mirror your workflow, with almost every function capable of being automated – provided that your business processes are well-defined.
Secondly, you will not have to invest huge sums of time and money to build your own loan management system just to enable you to run your loan business.
This is because opting for a cloud-based ‘off the shelf’ loan management product to integrate directly into your business means there is nothing for you to build.
Plus, you don’t have to spend your valuable funds on an in-house IT team – because there is no support, maintenance, or development required on your side, we handle it all!
With LendFusion, you simply pay a fixed monthly fee – enabling you to keep tight control of your costs, completely remove the headaches of building your own loan management system, and focus all your attention on growing your loan business.
Take it from Kristjan Tolmats, CEO of Evergreen Capital, an SME lender founded in 2013:
“We have already seen great results from the loan management system. The administrative work has decreased rapidly and we can now spend more time on work that brings in more customers and more sales.“
(Want to find out how Evergreen Capital uses LendFusion? You can read the full case here).
2. Unlock high levels of customer satisfaction
With customers having more choice than ever before – especially in the lending business – it’s critical that you make sure the experience you offer your customers is on point every time.
Providing a high-quality experience for your customers not only gives you the opportunity to retain them for future business, but it will also enable you to turn their high levels of satisfaction into referrals – a vital source of business growth.
With LendFusion, your customers can say goodbye to clunky interfaces or frustrating application processes that tarnish their experience with your brand.
Not only does our end-to-end loan management system include a CRM for easy customer communication – but we also provide your business with a built-in decision and workflow management engine that makes handling any application a breeze for both customers and employees alike.
On top of this, everything can be fully integrated into your own product or infrastructure and ‘white-labelled’ to reflect your brand. So, as far as your customers are concerned, they’re using your loan management system while enjoying a ‘best in class’ experience.
3. Comply with regulations, reduce risk, and operate securely
Because lending is a highly regulated market, LendFusion has tools to make compliance easier, as well as audit trails and highly configurable reporting options.
By partnering with a cloud-based SaaS vendor – like LendFusion – you can rest easy, knowing that our team of experts is busy reducing security risk on your behalf through constant threat monitoring and ongoing security protocol updates. Something you wouldn’t get with your own system.
From a more technical standpoint, to help you operate securely, LendFusion includes two-factor authentication, FIDO UF2 key, and IP-based security measures for user login; we host our servers with AWS, enabling us to use a multitude of security measures, monitoring options, and backup solutions.
4. Easy setup, zero maintenance, and baked-in integrations
Because an ‘off the shelf’ loan management system has been designed to be used across multiple types of loan business, it means it offers a host of options to suit every business use case you can imagine.
Whether you go it alone, or work more closely with our implementation team for custom solutions, one of the key reasons you should choose a loan management system like LendFusion is how simple it is to set up. Our painless roll-our process will have you administering loans in no time at all.
Whether you need to integrate with other data sources, credit reference agencies, 3rd party payment processors, or any other provider, our easy-to-use integrations baked directly into the product make it a piece of cake.
What’s more, because LendFusion is a SaaS platform under the hood, it means we take care of all the maintenance and updates, so all you need to worry about is focusing on the optimum workflow to power your loan business.
5. Full flexibility as your business scales
It doesn’t matter whether your loan business is brand new or you’re an established player with a huge customer base and impressive market traction – LendFusion is flexible and scalable enough to meet your needs.
Our wide-ranging configuration options give you endless possibilities when it comes to configuring workflows that mirror your existing processes.
As well as this, our built-in features automatically take care of frustrating ‘busy work’ like changing loan terms and payment plans for individual customers.
Our platform is hosted in Amazon’s market-leading AWS cloud infrastructure and has been built to handle infinite users, loans, and portfolio sizes. This means LendFusion can scale with you as your loan business grows – without any worries over platform risk or scalability issues.
To help you consider at a glance the 5 reasons why you need a loan management system, we’ve prepared a summary table:
Which loan management platform is right for you?
Here’s a brief overview of the best loan management platforms on the market.
The best loan management platforms are a blend of innovation, user-friendly features, and advanced technologies aimed at enhancing the efficiency of lending operations.
Each platform brings something unique to the table, from AI-driven credit scoring to customizable workflow automation, catering to a broad spectrum of lending businesses.
Here’s a brief overview of the best loan management platforms on the market.
LendFusion
- Features: Comprehensive suite including a decision engine, audit trail, and customer portal.
- Pros: Versatile for various lenders, emphasizes regulatory compliance.
- Cons: Can be complex, requires resource investment, customization limits.
- Pricing: Starts at €1,659 monthly.
LoanPro
- Features: Scalability, API-based integration, and automation.
- Pros: Adaptable to various loan types, robust integration capabilities.
- Cons: Steep learning curve, limited customization, higher cost concerns.
- Pricing: Tailored to the lender’s needs.
HES FinTech
- Features: AI-powered credit scoring, customizable workflows.
- Pros: Efficient loan decisions, innovative technology.
- Cons: Complexity and potential for limited customization.
- Pricing: $20,000 to $70,000 for LoanBox.
Turnkey Lender
- Features: Proprietary AI for credit scoring, comprehensive solution.
- Pros: Supports a wide range of clients, feature-rich.
- Cons: May be complex and costly, with limited customization.
- Pricing: Customized to the institution’s needs.
(Check out our article with tips on how to choose the right LMS here).
Conclusion
At this point, if you’re not leveraging a cloud-based loan management system like LendFusion to be the beating heart of your loan business – you’re at risk of being left behind.
85% of finance institutions already allow customers to apply online for loans, along with finance companies everywhere making strategic decisions to prioritise digital development, so what are you waiting for?
Integrating pre-existing market-leading technology into your loan business enables you to concentrate on growing your business – rather than worrying about the technology at the heart of it.
Don’t get left behind by your competitors or face years swallowed up by developing your own software – take action now and find out how LendFusion can help you grow your lending business.
Grow Your Lending Business with LendFusion
LendFusion is a leading end-to-end loan management platform that gives you all the tools you need to originate and manage a wide variety of loan types across multiple sectors and industries.
We’ve invested for over 10 years in developing the most effective and affordable loan management system on the market that can be entirely customized to suit your brand, workflow, and business needs.
Our feature-rich cloud-based software platform is designed to be user-friendly, easy to integrate into your business, and require zero maintenance from our customers.
To help you run your loan business efficiently, LendFusion boasts a full suite of loan management and origination features, including:
- Customer origination handling.
- Integrated e-KYC or e-KYB processes.
- Rules and financial models configuration for different customer groups.
- Automatic payment plan calculations for both amortised & non-amortised plans.
- Generate template-based loan agreements and informational materials.
- Manage loan top-ups and rescheduling.
- Change loan payment dates or amounts in the payment schedule.
- And much, much more!
Leveraging the technology behind LendFusion to power your loan business allows you to focus on what you do best – without the need for an IT team, custom software, or any of the stressful burdens and costly overheads associated with bespoke software solutions.
Ready to Grow Your Lending Business More Easily with LendFusion?
Get a Personalized Demo
Customers also ask
1. How does a loan management system facilitate compliance with international lending standards and practices?
Loan management systems typically facilitate compliance with international lending standards and practices by incorporating features that allow for customization of lending criteria, interest rates, and repayment terms according to international regulations.
An LMS often includes modules that can be updated as standards evolve, ensuring ongoing compliance.
2. Can the system be tailored to accommodate unique lending scenarios or less common loan types?
Most advanced loan management systems, like LendFusion, are designed to be highly customizable to accommodate unique lending scenarios and less common loan types.
LMS usually offer configurable templates and rule-setting options that allow lenders to create and manage a wide range of loan products, like auto finance, consumer lending and commercial loans, catering to specific market needs or niche lending scenarios.
3. What is the process for migrating existing customer and loan data into a new loan management system?
The process for migrating existing customer and loan data into a new loan management system involves the following:
- Extracting data from the current system
- Mapping and transforming the data to the new system’s format
- Importing the data into the new system.
This process requires collaboration with the platform provider to ensure data integrity and compatibility, along with testing to verify that the migration has been successful and that the data is accurately reflected in the new system.
This migration process usually takes 3-6 weeks to complete.
Vahuri Voolaid, COO
Vahuri is the Chief Operations Officer at LendFusion. Vahuri has 8 years of experience in fintech with loan management software as a product owner and an MBA with a specialisation in IT management.
Connect with Vahuri on LinkedIn.
