How to Choose the Right Lending Software

At TurnKey Lender we know exactly what lenders look for in lending software and in this post we share the most important points to take into account before committing to any one provider.

Over the years we’ve boiled the lender’s decision process for choosing a lending platform down to the following criteria:

• Define short and long-term business needs
• Consider an all-in-one system with a modular structure
• Cloud-based vs on-premises
• Make sure to get comprehensive, integrated origination and servicing functionality
• Check for smart automation and proprietary credit scoring
• Consider user-friendliness
• Make sure there are country-specific editions of the platform
• Ease of business logic customization
• Easy to deploy, easy to learn
• The provider should have a proven track record

Over the years, we’ve studied the pain points of credit providers and their employees and kept on improving our intelligent all-in-one lending platform to address every one of their needs. Our clientele ranges from large scale international banks to retailers providing customer financing and from community banks to peer-to-peer lenders. And today we’ll be happy to share more details on what you need to consider when choosing lending software for your business.

This is a blog post version of the in-depth white paper we’re going to release very soon. In it, we dig deeper into each and every point listed above and more to provide as much intel as possible to help you make an informed decision on how to chose the right software to make your lending operation a success So make sure to subscribe to our email list to be among the first ones to receive it. 

1. Short- and Long-term Business Needs

The right lending software needs to be flexible yet scalable. If you start working as a one-man operation and scale it to become a multi-billion enterprise, the platform you rely on in the process should be able to handle any number of clients you have. But often the problem with such solutions is that they are incredibly complex, demanding in terms of resources and have a steep learning curve. So you’re looking for something to meet both your short- and long-term business needs and capabilities.

As a rule of thumb, you want to start the decisioning process with defining or reviewing your short-term business goals, long-term business goals, the software you currently use, and the technologies you’re using. This will act as the basis for a software and technology gap analysis and will significantly narrow down the list of lending software platforms to pick from.

Here are some of the questions you’ll need to answer, preferably with your team:

• Who will be using the software system? Hands-on loan officers and managers as they originate and service accounts, executives for reports, both?

• Do you have a solution in place that you can’t or don’t want to migrate to a new lending platform? 

• Which additional features and functionality would improve the efficiency of your operation and streamline credit decisioning for your business?

• Does your current infrastructure support the type of additional functionality you need?

• Do you have a dedicated IT staff to create and manage an in-house lending software system? 

The result of your gap analysis is a concise prioritized list of lending software features and functionality that your business will need for efficient operation in short and long-term perspectives. Overall, it’s a good idea to work with a provider that acts as a strategic partner and doesn’t just treat you as another client who’s purchased a subscription. 

2. All-in-one nature with a modular structure

The problem with the vast majority of lending platforms is that they only cover parts of the functionality your business needs. So you may end up using separate tools for origination, servicing, underwriting, reporting, etc. And as a lender, you will have enough on your plate developing your business and managing your staff, so you don’t want lending software to be an additional source of headache. It should solve your problems instead of producing them.

The answer to this challenge is to choose a software provider which can cover the entire lending process of your operation. From the moment your client opens an application form to the moment they pay out their last installment.

At the same time, at TurnKey Lender, we see that often lenders don’t need the all-in-one solution. There are cases when you need to solve one problem at a time or aren’t ready to commit to a new platform at once. So the lending software you’re looking for will have a modular structure which allows you to only purchase and use certain parts of the system you need at the moment. This way, when and if you’re ready to add more modules or upgrade to a fully-fledged all-in-one platform, the new functionality will easily integrate and let your departments communicate and process customer data effortlessly and without skipping a bit. Such flexibility is very rare if not unique on the lending automation market. Yet, it’s not impossible to find lending software provider to offer you this level of service. 😉

3. Cloud-based vs On-Premises

Small to mid-size lenders generally don’t have a dedicated IT department to develop, maintain, and manage an advanced lending software platform. 

That’s one of the reasons why with the development of FinTech, SaaS solutions have become the prevalent choice for lenders worldwide. They can be easy to deploy, less expensive to launch than comparable on-premises programs, and the business owner still ends up in control of the software’s source code and customer data.

Make sure to get a platform that includes back-up systems and high-level cybersecurity (it should comply with standards like those of OWASP). Generally, it’s better to use a SaaS that is hosted on a cloud server rather than on the business’ machines in-house. This helps reduce operational costs and improves security.

These software systems deliver a variety of benefits to SMB lenders most important of which are:

• Easy access to advanced features and functionality which previously were accessible only to huge banks.
• Regular maintenance, software upgrades, and new product releases.
• IT and customer service support.
• The program is fully managed at a platform level, so there’s no need to build and fund your own IT department.

In addition, SaaS options have an incomparably lower set-up cost than an on-premises program. SaaS programs are a good choice for the lender who wants to outsource systems and technology and focus on sustaining a competitive edge.

On-premise deployment tends to work best for three types of organizations:

• A larger lending group with a dedicated IT department that can manage cyber security and 24/7 uptime.
• A lender with databases that are complementary to the lending software.
• Or an organization that prefers to maintain their systems behind their own proprietary firewall.

Even though these kinds of organizations still happen to choose to develop their lending software in-house, with solutions like TurnKey Lender, that’s really an anachronic approach which costs way more and delivers a fraction of the returns.

4. Comprehensive built-in origination and servicing functionality

Origination and servicing are the two biggest challenges for any lender. These processes require the most time, human and analytical resources, and result in the majority of errors and risks. So your systems must keep pace.

The ideal software partner offers an integrated origination and servicing platform that’s comprehensive as well as flexible. It’s important for an SME that their SaaS offered individual modules to choose the unit with the features and functionality needed today.

Here are some loan origination features and functionality to consider:

• Automated decision-making and borrower evaluation cycle.
• Customer risk segmentation backed by data.
• Combination of traditional and alternative data sources and approaches in borrower evaluation.
• Flexible management of the lender’s credit rules, credit policies, and scoring models.
• Ability to add individual evaluation processes for different products, portfolio segments, and business lines.
• Evaluating the efficiency and adequacy of the loan origination system’s performance and staff productivity.

To read about the things your lending platform can and should automate in terms of origination, servicing, and more, feel free to check out this post.

5. Ease of business logic customization

Even though on a high level, lending is pretty straight forward, the exact structure of decisionmaking, approval, and corporate hierarchy differs for every business. And in most lending software platforms, this means that you’d need to either roll up your sleeves and adjust the business logic of the system yourself or get your provider to make the required changes for you. This leads to deployment delays, unexpected issues with functionality and data processing, and customization of the system’s source code to meet your requirements.

TurnKey Lender’s team has created a special enterprise package that has a state-of-the-art drag-and-drop business logic editor that lets lenders customize all the flows on the fly without ever touching a line of code.

6. User-friendliness for the employees and borrowers

When thinking about a bank-grade functional enterprise solution, it’s common to imagine some tangled interface with complex flows and outdated design straight from the dot com era. something along those lines is what often comes to mind:

But it doesn’t have to be like this. We may be a little biased, but here’s what TurnKey Lender’s insides look like:

The most advanced software is of no use if the user can’t understand it. The lending software provider you end up using should recognize their obligation to deliver smooth experience both to your employees and to your borrowers. In today’s cut-throat market state, design your clients see is crucial.

7. Smart Automation and Proprietary Credit Scoring

For a business, it’s not just about finding a software provider with the biggest collection of features and functions (even though it’s important). It’s about the tools that help increase revenue and profits. For a lender, these are technologies that help increase operational efficiency and make credit scoring faster, more accurate and safe.

When it comes to operational efficiencies you’ll want a system that automates multiple mundane tasks, so your loan origination and servicing managers can focus their efforts on evaluation, analysis and high-level decisions. A good software choice starts with foundational pre-sets based on lending industry best practices, and then allows each manager to customize as per their needs. The system interface should be clean and clear while being able to easily integrate with multiple outside data sources and tools.

Optimal credit scoring is just as important in lending software to help you manage risk for both new and existing accounts. The best programs provide integration with the major credit reporting agencies and bureaus out of the box. They include proprietary scorecards that enhance credit bureau data and analysis. And they offer non-traditional scoring methods for lenders who cater to borrowers with thin credit or emerging markets with no established credit reporting agencies.

The top programs incorporate artificial intelligence (deep neural networks) into their base system. Machine learning and data analysis can be used to continually refine your credit scoring capabilities and reduce your risks of lending money to the wrong crowd.

8. Easy to Deploy, Easy to Learn

It’s important to get your staff up-to-speed with the new system quickly in order to gain a fast return on your investment.

1. The software must be simple to install and deploy. One of the reasons we’re partial to a cloud-based platform is that it’s easy to complete the set-up process without IT expertise, including seamless integration with all your outside vendors.
2. Look for a system with a well-designed workflow that acts like a built-in training tool. You and your employees should be able to follow the process logically without cross-referencing cumbersome manuals or stopping to read pop-up training screens.
3. Look for 24/7 technology support to ensure all your implementation and training questions get answered right away.
4. It’s a good idea to test-drive the program using a free trial before you make your final decision. If a service provider looks good on paper, but doesn’t offer a free trial period, use the platform demo to get an understanding of what it’ll work like in real-life scenarios.

9. Proven Track Record

You’ll want to research the credentials of each potential service provider. Don’t just rely on advertising messages, or product and service claims made by a sales manager during a platform demo. Here are five ways you can verify a software company has a proven track record.

• Confirm that lending is their core business. Check out their website to make sure lending software isn’t just a new line extension that taps into a high-growth market.
• Search online for press releases announcing consistent new software upgrades and new product releases on reputable resources.
• Check software review websites like Capterra, G2Crowd or Fitsmallbusiness to read how actual users describe their personal experience with the software and support services.
• Search online to see if the technology has earned industry awards from organizations like Credit Excellence Awards, International Asset Finance, Technology Elite Awards, MAS Fintech Award.

Where TurnKey Lender stands in those regards

• TurnKey Lender offers an intelligent all-in-one platform which at the same time is built as a fully modular solution where the client can choose the functionality they need.
• TurnKey Lender was the first company to provide bank-grade cloud-based lending software to lenders of all sizes and types
• The functionality of the platform covers the complete lending process including origination, servicing, underwriting, reporting, and compliance out of the box.
• TurnKey Lender’s platform powers credit scoring and decisioning by deep neural networks and utilizes smart automation on every step of the lending process.
• We don’t settle when any competitor’s tools are more user-friendly or better designed than ours. Our team of business analysts, designers and engineers makes sure that the whole system has little to no learning curve and is easy to use.
• TurnKey Lender has worked with clients in 40 countries: UK, Armenia, Kazakhstan, Spain, Ukraine, Ireland, USA, Canada, Czech, Columbia, Panama, France, Zimbabwe, Switzerland, Croatia, Mexico, Philippines, Ivory Coast, Singapore, Cambodia, Jamaica, Sweden, UAE, Australia, Poland, China, Bahamas, Norway, Brasil, Trinidad, Malaysia, Nigeria, Denmark, Vietnam, Indonesia, Kenya, Oman, Hong Kong, Senegal, and Zambia. And each time we enter a new major jurisdiction we roll out a country edition to address its specific regulatory requirements and peculiarities.
• As mentioned before, TurnKey Lender comes with a drag-and-drop business logic editor which allows you to customize the business flows on the go without any need to edit the code.
• The entire system is fully white labeled so you can brand it according to your needs from your back office.
• TurnKey Lender offers 24/7 customer support provided by highly skilled technical staff ready to fix even complex inquiries.
• TurnKey Lender has won numerous industry awards and is recognized as a technological leader of the lending space.
• The pricing starts at $500/month for the end-to-end solution and the number of users is unlimited. The final price depends on the type of lending operation, the size of the business, needed functionality, and other influencing factors.
• TurnKey Lender offers both a free trial and demos of its platforms to its potential customers to show them exactly what we’re capable of. Feel free to apply for a free trial now.

If our company were a restaurant, it would most definitely have a Michelin star and people would stay in lines to taste what our chefs have to offer.

We’re not just making the software that sells best, our end-goal is to make fair lending globally a reality by means of our tools. And to achieve that our business analysts listen very carefully to all our clients’ needs and wants and then pass all the requests to the R&D team of outstanding engineers and designers. They, in turn, bring the most complex features into reality in slick and intuitive interfaces.

After years upon years of hands-on work with lending business worldwide, we have a crystal-clear understanding of all the important factors to consider when choosing the right lending software for different kinds of credit businesses. And we are proud that our software is objectively the best choice out there. By a huge margin.

Apply for a free trial to see if TurnKey Lender’s right for you.