What to Look for in Loan Management System for Consumer and Commercial Lending in 2024
Loan management software is enjoying broader uptake as digital technologies continue to take hold, opening new avenues for business development to a host of non-traditional lenders in B2C and B2B settings.
Digital loan-management software is a system that automates every step in the life of a loan, from application through final repayment, and does so far quicker and more accurately than traditional loan management.
Before we proceed, would you (or your staff) like to see what IDC, Gartner, Deloitte, HP, and other trusted institutions say about Turnkey Lender loan origination and loan management automation.
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For example, old-style loan management begins with an assessment of the applicant’s creditworthiness is a time-consuming process that’s followed by more procedural snags such as calculating suitable interest rates, laying the groundwork for collections, and following up with borrowers as needed. By contrast, digital loan-management can assess and (where warranted) fund a loan in minutes — while bringing to many bear more “inputs” relevant to the specific applicant’s disposition to repay, including behavioral-finances “tells.”
These innovations are part of a digital transformation that’s taking place as information technology takes over from analog technologies to become a primary change driver for business and society. Consider how, in the space of three decades, entertainment delivery has been shaped by available technologies, from broadcast television and radio to competing tape and disc formats to the streaming services of today, with each step offering more choice and easier access.
Digital everything, everywhere
With the advent of analogous capabilities in financial technology — plus incentives derived from Covid-era social distancing, and stricter record-keeping requirements in some jurisdictions — the digital-lending market is booming. Digital lending platforms supported transactions worth $5.6 billion, says market-analytics provider Valuates. By 2027, the researcher estimates this market will top $20.3 billion, for a compound annual growth rate of 16.7% over six years.
In more concrete terms, fintech reached “mass adoption” rates with 88% of US consumers using it. In fact, more Americans use fintech than streaming-video services (78%), or social media (72%).
But, as it’s a potential option in every scenario where payment is required, the market for digital loan-management software has much more growth in store. Early signs of the explosion to come include installment-pay options at online retailers like Walmart and Amazon. Far from being limited to traditional banking scenarios or big-ticket retail settings, in other words, digital lending can now stand as a payment option for virtually any purchase, anywhere. And just to provide a high-level overview of what a modern lending automation platform does, here’s the standard digitized loan life cycle inside TurnKey Lender.
Beyond retail and banking, digital loan management is taking hold in settings as diverse as — but not limited to:
- Capital-equipment lending
- Government payments and settlements
- Invoice and “factoring” finance
- Microlending
From the evidence, digital loan servicing is nimble and adaptable enough to take a place not just where loans are made, but wherever delayed payment may be acceptable to buyer and seller alike.
The growing attraction to digital loan-management platforms goes beyond their ability to render credit decisions in less than a minute, according to lending-tech pioneer Elena Ionenko. “Organizations understand what access to digital processes powering scoring models and business rules does to enhance risk assessment — even in highly uncertain environments,” says the co-founder and operations chief of TurnKey Lender, a digital loan-management provider with clients in more than 50 countries worldwide. “Straight-through processing for every stage in the life of a loan from onboarding to collections provides efficiency, certainly, and also a wealth of business intelligence.”
The “big three” to look for in a lending-tech vendor
TurnKey Lender says the organizations that use its loan-management software see a number of tangible benefits, including:
- 10% to 35% decrease in bad debts
- 10% to 25% increase in credit-decision accuracy
- 10% to 25% hike customer lifetime value
- 5% to 40% higher profits
So what does an organization need in its loan-management operations to promote customer satisfaction, enhanced administrative capabilities, fewer errors, and all-around curb appeal? For Ionenko, it comes down to “the big three, qualities or characteristics we’ve identified that make box solutions to loan management the most compelling offerings available today.”
In Ionenko’s telling, the “big three” are:
1.Adaptability
To work across a swath of industries in any number of settings, loan-management software has to be customizable. As a loan-platform shopper, you need a lending-platform provider with experience in many industries and a track record of success — backed by testimonials — in your specific field. Look for vendors that can articulate your pain points and demonstrate their fixes. Another important facet of adaptability is modularity. It may be that you require more emphasis on onboarding than decisioning — or vice versa — so that a full loan-management suite (and its costs) aren’t necessarily required. Look for a loan-management vendor that can help you cut to the chase.
2. Accuracy
While the marquee attributes of accuracy in loan management are clustered around onboarding, origination, underwriting, and servicing, information gathering can contribute to a better understanding of customers in terms of individual behaviors as well as broader trends around customer habits, preferences, and pain points.
3. Overview
At TurnKey Lender, these insights are sharpened by artificial intelligence capable of reordering thousands of inputs into digestible outputs that can help businesses manage inventories, design new product offerings, direct marketing efforts, and measure success.
Past the “big three” characteristics, Ionenko recommends loan-management platform shoppers take a hard look at defining traits such as:
- Scalability
TurnKey Lender’s loan-management platform can process up to three million loans a day.
- Flexibility
TurnKey Lender is used by an array of lender types, from community banks, to pawn shops, capital-equipment manufacturers, community change agents, and orthodontists.
- User-friendliness
TurnKey Lender won first prize in the “Highest Satisfaction Product” category in the SoftwareSuggest Awards, alongside 50+ other awards.
- Integration
TurnKey Lender’s built-in API client promotes easy integration with the tools and data providers of your choice, not to mention the 75+ pre-configured integrations with popular payment providers, credit bureaus, SMS and email providers, and much more.
“Where you see these qualities in play, and they’re backed by testimonials, strong word-of-mouth, and lots of return business, chances are you’re dealing with a software vendor dedicated to providing lending automation that’s intelligent, secure, and user-friendly,” says TurnKey Lender’s Ionenko. “In our case, those qualities have attracted more than 200 organizations around the world to our loan-management technology.”