Why Financial Institutions Need a Configurable Loan Management Software

For banks and financial institutions, one of the key questions that frequently comes up in their internal discussions is how to leverage their loan management software or lending platform to deliver innovative products and offers to their customers.

Financial institutions are constantly competing to deliver lending services and offerings that match user expectations of faster and seamless digital borrowing experiences. Imagine if it was possible for financial institutions or lending organisations to easily configure their loan management software depending on business needs, without waiting for their technology provider to make customisations and delivery cycles. Financial institutions could add new features, configure new variants and build new controls without disturbing or disconnecting from the original platform, or in this case, the technical framework. As customer needs and market dynamics change, they could enable, disable or enhance new features, getting the flexibility to evolve their offerings and be creative. Much like everyone’s favourite Lego blocks.

Configurable loan management platforms, equipped with customizable modules, supported by analytics and disruptive technologies, help churn out loan requests faster, reduce processing time and in the process deliver superior customer experiences. Each of these modules are not just additions or retro-fits, but are key integral parts of the main platforms.

Making Changes is Not That Easy

To accommodate changes or upgrades, legacy loan management software typically require a full scale requirements study and impact analysis, and need to build expertise to deliver customizable loans. This entails additional effort for a technology vendor, who could require several weeks to make those changes. In an era of hyper-personalization and high competition, this is not the optimal way to respond to fast-changing market needs.

The Pressing Need for Speed

Financial Institutions are typically under pressure to adapt to rapid changes in credit policies, constantly changing regulations, market fluctuations, practices, etc. A configurable loan management platform will allow users to simulate the new configurations without going through full regression testing. The platform should also be able to keep track of any configuration changes made for any audit reviews.

The solution to this problem is to work with a loan management platform that is modular with customizable components that can be reconfigured in-house, without having to rope in your technology provider each time.

Adopt Modular, Configurable Loan Management Platforms

A single out-of-the-box plug-n-play solution is unlikely to meet any bank’s needs. For instance, lending institutions can customize the various moving parts of workflows, repayment schedules, MIS reports, document checklists and the overall computation various fees and charges, to address the needs of customers faster and at a much lower cost.

There are several benefits financial institutions get from configurable loan management platform:

• Customizations can be done faster: No technology vendor can understand better than a financial institution’s employee about what kind of customizations will work best for the customer and the business. Employees have better context as to why the configuration changes are required and can better gauge the impact of these modifications. Easily configurable modules reduce the need to search for programming skills and the consequent time involved.
• Better control over configuration changes: Financial institutions can exercise control over the extent of changes being made by applying role-based access and permissions. All configuration changes or modifications are recorded and this history can be easily accessed and checked during an audit.
• Enhanced services: Financial Institutions can set up adaptive, customized loan products that can respond in real time to rapidly changing industry scenarios, with granular control over what they offer to whom. They can create a robust suite of customer-focused features and end-to-end straight through processing to ensure that customers are served well.

Conclusion

Fact of the matter is that a loan management system has many moving parts and dynamic conditions, making rapid and ongoing adjustment necessary. Any changes made to these often complex loan management solutions require a lot of time and cost investment (such as license fees), thus hindering a bank’s ability to keep pace with market dynamics.

A configurable loan management platform with prebuilt modules that can be moved around like building blocks, is easier and more scalable than the inexpensive – but inflexible – out-of-the-box solution. The modularity and flexibility combined with intelligent straight through processing coupled with an API-based infrastructure, helps financial institutions accelerate product innovation across their lending portfolio. Financial institutions can also ensure complete automation across the loan cycle, add functionalities, fix bugs and upgrade architecture without having to engage or hire tech-savvy specialists. From onboarding, credit assessment, loan origination, underwriting, disbursal, and repayment, all modules can be integrated into one seamless loan management solution that delivers tremendous business value to financial institutions. Further, such a configurable loan management software seamlessly integrates with systems of records like CRM and ERP applications.

What has been your experience? What do you think are some important considerations for selecting a loan management platform?

This article was originally published on Global Banking & Finance Review.