Loan servicing businesses are inundated by checks and balances, due diligence, and customer and investor communications. All these tasks would be beyond daunting to take on alone. Luckily, there are many loan servicing software systems on the market offering operation support and automation for loan servicers.
But navigating these complex software systems can be tricky. There’s a ton of different features and capabilities out there. So it’s important that loan servicers pinpoint exactly what their needs are and align them with a specific providers’ offerings. We’ve broken down what’s being offered across the loan servicing software market so you can determine your own must-have features.
Here's what we'll cover:
Loan servicing software is a unique combination of capabilities that support the entirety of a loan service’s operation. These capabilities help automate and streamline previously tedious manual tasks like loan origination and creation as well as prospect outreach and management.
While each system is unique, most offer features that complement the entire loan life cycle.
Lifecycle Of A Loan
As you can see, the lifecycle of a loan begins with initial outreach to prospects. The cycle concludes once a client has paid a loan back in full, but then it just resets and the former client becomes a prospective client once again.
After client outreach and marketing, loan providers must complete their due diligence by administering formal applications and processing these applications to determine a borrower’s financial viability and assess risks involved with the loan. Once this is completed, a loan can then be generated, finalized, and funds distributed.
This process, when being spread across numerous clients simultaneously, can be overwhelming. That’s why loan servicing software is such a valuable tool for loan issuers. It can automate much of these steps and provide a secure, organized data management system.
Given all the different hats that loan service businesses must wear, there’s a ton of common software features for their software systems. These include:
|Loan origination||Create numerous loan types with various combinations of payment options, interest methods, and fees. Expedite the underwriting process through automation.|
|Loan servicing||Automate billing statements and emails notifications for payments. Uphold amortization plans. Automate administration of penalties and fees.|
|Communication tools||Send direct messages and documents through secured communication tools built into each platform. Communicate through SMS messaging. Create and send direct mail.|
|Client management||Run credit checks to obtain client credit scores. Assign and monitor user access using security and permission management. Record client notes to reference down the road.|
|Investor management||Monitor and report on the statuses of private investments. Enable remittance and fund collection with various reconciliation methods.|
|Payment management||Set automated requests for payments. Allow multiple payment options. Automatically withdraw funds from customers.|
|Analytics dashboard||Get an easy-to-understand dashboard display of key metrics across multiple measurements. Automate reporting and customize dashboards with desired analytics.|
|Electronic signatures||Gain efficiency through eliminating the back-and-forth common with paper signatures. Provide a more convenient experience for clients.|
|Document management||Securely create, share, and store key documents between clients and investors.|
This is quite the list, but again it’s important to keep in mind all the features that can benefit your loan servicing business. Obviously the must-have loan servicing software features are loan servicing and loan origination. These two core features lay the bedrock for your loan business.
Aside from them, it’s crucial you are able to properly communicate with current and potential clients and investors. This could be in the form of separate customer relationship management software, or you could choose loan software that features strong customer and contact management tools.
The benefits of loan servicing software are rooted in the accuracy, automations, and efficiencies they provide. By automating critical and even simple everyday tasks, you can remove the risks of human error. This goes for everything from potential client outreach to payment reminders and even loan detail generations.
With the advanced analytics tools, you’ll have a consistent and accurate view of pinpoint performance data. This unparalleled transparency provides you with the ability to make informed business decisions across your entire operation. Such accuracy in data analysis will help bolster your risk management practices, allowing your loan servicing business to assign risked-based value assessments to potential loanees.
The potential value and benefits provided by loan servicing software systems seem apparent, but a number of issues should be considered when deciding on a system. For example, many loan servicing software systems provide varying levels of customer relationship management software. However, not every system has as in depth of capabilities as you’ll need. That’s why it’s so important for you to analyze current pain points and translate those into business needs and software features that can help accomplish them.
But it’s not just enough to determine what pain points you need your new loan servicing system to overcome now. Consider where you’ll be in the next year to two. What about five? When you’re analyzing your current system, it’s crucial you project potential pain points down the road that the software you adopt now can help you address.
Loan servicing software can turn your business around with the efficiencies and organization it provides. But it’s important to keep in mind that not all loan servicing software options are a fit for the specific needs of your business. Just as loan providers complete their due diligence on potential borrowers, the same must be done for a new loan servicing system. This will ensure the new system overcomes troublesome pain points and is designed to grow with the business.
Consider these formalized recommendations and best practices for optimizing the software selection process. We surveyed cross-industry software buyers to determine their methods for most effectively choosing the best software.Two crucial tactics include:
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