What Exactly Is Loan Management Software? [Build or Buy Guide]

Loan management or automation software typically refers to a system or platform designed to streamline and automate various processes involved in lending operations.

(This post is the 1st chapter in our series ‘Build or Buy? An Executive’s Guide to Choosing the Right Approach to Loan Management Software’) 

Financial institutions, banks, and other lenders as well as businesses who want to provide loans to their customers use these solutions to improve efficiency, reduce manual work, and enhance the overall lending experience for both the lender and the borrower. 

What Should Be the Key Capabilities of a Loan Management Software?

• Automated loan application processing  

• Credit scoring and risk assessment 

• Document verification and management 

• Underwriting automation 

• Loan decisioning 

• Workflow management 

• Compliance and regulatory checks 

• Customer communication and notifications 

• Reporting and analytics 

What Are the Main Goals of Implementing Loan Management Software?

• Reduce the time and cost associated with loan processing.

• Improve accuracy and consistency in decision-making.

• Enhance customer experience by providing faster loan approvals.

• Ensure compliance with regulatory requirements.

• Increase operational efficiency and scalability of lending operations.

You can apply these solutions to various types of lending, including personal loans, mortgages, auto loans, and business loans. They often integrate with existing systems and can be customized to fit specific institutional needs and processes. 

Gartner predicts that by 2027, 90% of finance-related descriptive and diagnostic analytics will be fully automated, which will significantly enhance data quality and transparency, removing the needs for the manual tasks.  

According to a McKinsey report, automation in the financial services sector can lead to a reduction in processing costs by up to 70%, with loan approval times reduced from days to minutes. 

In short, lending automation is the foundation for a more profitable and scalable business. 

Just as the examples that follow. 

See how USBC, a community-development financial institution in USA, made loan access easier for its community by automating every stage of the lending process, from origination to discharge to reporting and much more.  

Another great example is one of the oldest private banks in New England, National Iron Bank, that digitized residential and commercial lending through a fully automated, end-to-end loan management solution. 

Now, if you decide to go for a loan automation solution, you stand before the obvious question:  

Which is the better option, buy or build? 

We start with the advantages of buying loan management software.

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