Different steps in Loan Management Cycle
Loan origination and loan servicing should be an uncomplicated process. One should review the client’s eligibility to acquire the loan and then approve or reject the loan. Once authorized, the customer should receive the funds. However, in conventional lending systems, particularly in bigger organizations with an enormous customer base, this approach is often difficult and chaotic. Every customer has distinct terms and payment dates. It is unwieldy to keep everything in order.
Also, with the world becoming familiar with the digital transformation as we witness it today, consumers are quickly becoming used to faster and more promising service quality experiences. As the financial industry evolves, so does one of its core operations, lending. Banks have been largely reaping in the bulk of their earnings from lending functions. Be it commercial lending, consumer lending, or asset financing. The need of the hour is for methods/systems that are scalable, flexible, fast, agile, and cost-efficient.
Loan management systems, provided with up-to-date technologies, prepared with analytics and disruptive mechanisms like AI and ML (machine learning) can get more work done in a shorter time, with better precision than a legacy loan management technique to manage in today’s date.
Understanding Loan Management System
A loan management system is a digital forum that not only allows automation of every stage of the loan lifecycle i.e., from application to closing but furthermore provides useful analytics and valuable insights for lenders and borrowers.
The stage for the maturation of the lending software market has been formed by the ongoing digitization of businesses, and more stringent regulatory requirements compelling financial companies to create loan tech software to handle increasing workloads and fulfil regulatory challenges. As per CRIF’s How India Lends FY 2021 report, the Indian lending market expanded 100% from FY17 to FY21. Experts estimate that the absolute market growth potential between 2021-2023 for India’s digital lending sector is USD 820 billion (approx.).
Features of a Loan Management System
Cloud-based and digital lending solutions are scalable, and they assist the Loan Cycle Management. Also, they can be utilized for carrying out individual tasks such as tracking repayments as well as for entire systems management that can validate loan applications and decide on eligibility.
Loan Origination is the principal and most crucial step in loan servicing. It is a procedure that occurs when a customer obtains a mortgage loan from a lender by moving through various stages such as Pre-Qualification Process, Loan Application, Application Processing, Underwriting Process, Credit Decisioning, Quality Check, and Loan Funding.
Lending CRM can assist evaluate the risk or making a decision. Functionalities of the loan origination of a lending CRM can help look up the credit record of a person or an organization. They can also indicate what loans are appropriate for the client. The loan origination system can examine the application and deliver insights to service the loan.
Conneqt’s digital solution for loan lifecycle automation makes the loan origination process easy by assisting and helping effectively with – Loan Application process, Business Process Services – CAM preparation and other system checks, Underwriting and approval, and Loan closure process management, Analytics, and Dispute handling.
Loan servicing is the term used to define the administrative outlook of a loan from the time the funds are distributed to the borrower until the credit is settled off. Every loan is distinct: they have different payment dates, interest rates, and more. Efficient loan management systems allow tracking of all these loans and assure timely payments. It also assists with the calculation of, fees, interests, and so on along with the automated collection of funds via credit cards, wire transfers, and more.
Our Loan servicing solution efficiently manages the loans throughout the lifecycle via Query/ Service Request/Complaint Resolution, Grievance Management, Customer Helpdesk, Virtual Relationship Manager, Online & eCommerce Support, Cross sell / Upsell, EMI Statements, Alerts/Reminders.
Debt collection is the method of following payments of debts owed by people or businesses. A digital lending platform informs you when accounts evolve to become delinquent, when a repayment is due or when the borrower pays back. The collection system can even calculate delinquent fees.
Debt collection software keeps the team concordant. It becomes more comfortable to track all the communication the employees are maintaining with the clients and to look up a debtor’s payment record and make modifications or arrange renewed terms of payment.
We, at Conneqt Business Solutions Limited, are assisting several Indian banks and NBFCs in improving collection efficiencies and lowering NPA levels. Conneqt’s 360-degree collections platform, Digi Colleqt, is powered by BI, AI, and machine learning.
Benefits of a Loan Management System
Digital lending systems are customer-centric platforms. With self-serve forums, the borrower’s journey becomes simplified and delivers a superior customer experience, especially for the millennials and Gen Z. Other benefits include –
Management of loans
Automated lending solutions can handle a broad range of loans – from uncomplicated unsecured loans to business funding. Personal Loans, Commercial Loans, Student Loans, Syndicated Loans, Mortgage Loans, and Payday loans can be easily facilitated with the loan management systems.
Eradicating the human error
In a lending system, there are numerous variables, which is why it is prone to errors. As loan processing evolves to more digital, document management has also become automatic. Lenders are no longer required to store files in large wardrobes as everything is now centrally and digitally controlled. Individuals can view any file with a few clicks, and the probability of error is completely ruled out. Also, nothing ever gets lost.
Enhance the ROI
At its core, the loan management system automates workflows. It simplifies the lending procedure from the beginning to the end and creates this transparent workflow that employees can efficiently follow. The analytics mechanisms in loan management systems can assist comprehend how multiple revenue streamlets are operating and deduce where to slash down the costs and where to invest better.
Tax reports, accounting, and invoices are often demanded by regulatory bodies, investors, and borrowers. This high urgency information should be provided on request and should be 100% authentic. Loan tracking software allows lenders to rapidly develop reports of various kinds and submit them imperatively, in the needed formats.
ERP and CRM solutions are efficient in augmenting the lending system with data and valuable insights. Systems incorporating lending modules with programs for remote sales personnel are also enjoying increased popularity among lenders.
Finance company software functions with classified and extremely sensitive data, and for both customers and lenders, security is a subject of critical importance. An exceptional lending system should have advanced security capacities, and guarantee the highest class of data, customer, and network protection.
The provisions that the market nowadays places on loan products are relatively high: swift loan application processing, scalability, flexibility, increased security, and regulatory adherence. Moreover, research conveys the Digital Lending Market is anticipated to register a CAGR of approximately 11.9% during the forecast period (2021-2026). Therefore, businesses should switch to digital. The right loan management system is competent in helping companies achieve their objectives.
Conneqt, with its digital expertise, provides a one-way stop for the entire Loan Management Lifecycle. We are committed to using the most cutting-edge technology and will continue to lead the way in Loan management solutions.