When it comes to digital adaptation, Financial Sector has shown a significant improvement over the years. Yet, Loan management or Lending Solutions still remain the slow adopters of emerging technologies. No Doubt that lending institutions have made the transition from excel sheets to the digital Record books, but, they still fall behind in terms of having a viable solution or a loan management system that would provide components such as automation of loan processing stages, and gauging the loan return capabilities of an individual in real-time.
The best solution for improving the loan process is to facilitate it using a loan Management System software. In fact, this blog will summarize the process for you. So, keep reading!
Now, before we get into the specific steps of developing a loan management system, let’s understand what is a loan management system?
What exactly is a loan management system?
A loan management system is a platform that assists lenders in automating the entire loan handling process. In addition, the software can assist with processing customer information; creating new loans, and much more.
Besides, this type of software comes with various tools and technology stacks. This helps in simplifying the process of consumer lending. The loan management system software also induces reports with proper analytics and provides useful insights concerning the loan process and customers.
Also Read, What is FinTech?
Let’s glide into the features and factors to consider while building a loan management system.
Essential Features of a Loan Management System
Normally, a Lending system is built for scalability. This means, that you can begin with a simple functionality of AI-powered KYC and build your software from there to a full-functioning loan management system.
✤ Loan Origination
Loan origination is simply a process where a consumer applies for a loan. The lender processes the loan. Here are some of the sub-features to include in Loan Origination feature:
- Option for Digital KYC
- Loan Document Software
- Check Credit history
- Different loan types
- Automation of loan process and application
- Cloud-based infrastructure for loan availability and scalability
✤ Loan servicing
A lender can easily manage loans using this feature. Also, each loan being different has separate rates, interests, payment dates, and so on. Therefore, an individual can track all these loans and assure that payments are received on time.
Loan Servicing assists in calculating interest fees, taxation, and more. It also includes sub-features such as payment reminders, monthly statements, collection of payments, wire transfers, credit cards, etc.
✤ Debt Collection
Collecting a payment back i.e. a Debt is a key feature of your loan management software. So, the loan management system software should notify the customers when their payment is due. This also means that the system should calculate the late fees; do tax calculations on the payment and send reminders to loan borrowers accordingly.
In addition, you can also use third-party integrations in the software. This can help establish an auto-debit system of the payment from the borrower’s account.
✤ Reporting and Analytics
A reporting and analytics module is a crucial part of a loan management system. The reason is simple. In order to generate reports highlighting interactions with customers, and businesses and analyzing profits of products you need this module.
In fact, it provides the analytics for the overall stride your business has endured. Also, to develop this module you will need Cloud integration. The Cloud services will help remote sales personnel access the reports and share them with ease.
These were some prominent features now let’s have a glimpse of some factors.
Factors to consider while loan management system development
- Broader Coverage
It is significant to explore a loan management solution that covers various use-cases. This implies that from mortgage documentation to commercial leasing or loans every aspect must be explored.
- User Friendliness
A user should easily be able to set up your loan management system software. In addition, it should also authorize them to configure any business requirements irrespective of their complexity.
- Centralized Solution
A high-quality loan management system makes sure that all of its loan application data remains centralized in a singular view for the loan department.
- Speed & Agility
The quick approval and sanction of the loans in an enterprise is an asset and often lures customers.
Delivering permission via a credential-based system helps the financial institutions to access the relevant documents from third parties easily.
- Cloud-Based Infrastructure
As mentioned earlier, a cloud-based infrastructure plays an important role in improving financial-based services. This in turn makes the lending services more efficient and is made available at lower prices.
- Third-party Integration
This aspect makes sure that your loan management system is in proper sync with other systems. It also makes sure that the data in the system is updated.
A micro-services-based loan management system would guarantee that the system is authentic, agile, and appropriate for sanctioning loans.
- Web & Mobile compatibility
It is essential to develop a system that is compatible with both Web and Mobiles.
- Security & Customer Support
With a single click tons of data will process in the system. Thus, it is important to maintain a secure system for data security and management. In addition, customer support is also necessary for an adequate customer experience.
How to build a Loan Management System Software?
Till now we saw the features and factors loan management or a lending system should have, but here is how you will actually build a Loan Management System:
Step 1: Layout the idea
In general, any app development process kick-starts with a great idea. Hence, make sure that you have a decent lending app idea to work on.
Now, once you have the idea- prepare strategies and use-cases. Carry out research, analyze your competitor, and recognize potential market gaps that you can fill in with your lending system.
Step 2: Design and Development
You have the strategies layout, now it’s for you to gather up a team for Design and Development. In general, your design must include attractive but simple UI/UX Design that will lure customers.
So in order to get your designs up and running, you will need a development team that will add functionalities to them. You can also hire an app development company like WebbyButter to lay out the best roadmap for your lending application.
Check out, How to Design an app in 2022?
Step 3: Testing the Application
If you hire an app development company like Webbybutter you won’t have to worry about this step at all. The reason is simple, an expert Quality Assurance team from the company would perform rigorous testing and clear out bugs from your application.
Step 4: Deployment of Application
Once your loan Management System Software/Application is ready, it’s time for you to deploy it and target different platforms for better promotion.
Final Step: Support and Maintenance
Provide your customers with extreme support and Maintenance. This reduces the chances of catastrophic failures within your application. Of course, as per the contract, you can use the services of the team of the company that helped you build your Lending app.
These were the steps for loan management system/ lending app development. Now, let’s see some perks from an enterprise’s perspective.
Benefits of Loan Management System
✤ Lending is Simple
Borrowers take out loans once in a while. This means that you have a chance or two to mark your impression using your loan system. Hence, with the more superficial process of lending, the chances of a customer staying with your lending app and company for a longer period gets higher.
✤ Digital Process (No Paperwork)
The biggest perk of a loan management system because everything is digitally stored.
✤ ROI Visualization
You can create a workflow structure that employees can easily follow. The analytics tool helps in understanding multiple revenue streams that are operating. Using this you can cut your costs and change your investment strategy.
✤ Fewer Odds of Errors
The Complex Calculations concerning loans will be handled by the lending system. This reduces the chance of errors, especially human error.
In general, loan management is an extensive process. There are a number of steps involved and there is long due diligence as well. So, by utilizing a loan management software you are not only digitizing the records but also reducing the time for executing different tasks by automating various processes.
To conclude our final remarks, it is important for a lending business or a lender to acknowledge that the digital lending space is evolving, along with the use-cases and demand for customer satisfaction.
We hope this guide was useful in understanding the process to build a Loan Management System. If you wish to have a detailed discussion regarding the development process, cost, or looking to know more about Loan Management Systems Contact-us.