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How to Select the Perfect Lending Software for your Business?

So, for your business, if you are planning to obtain lending automation software, here we will share with you some things that you can go through before you invest in one.

1. What are the specific requirements of your business?

Are you planning to start a small and growing business as you start seeing responses of a good market?

Or would you like to start a big and regulate your software based on the requirements of the market?

Or are you a business that ran on its operations on software that is not able to support your growth track or regulatory needs?

You are required to break down your short and long-term requirements to find software that addresses both. In any case, selecting a software that is both scalable and flexible that makes more sense so that you no need to pay for capacity that you are not used to and can also scale up when you see a surge in request.

A gap analysis is the best way to find out what characters and capabilities you should consider when deciding on lending software for your business. Here are some related questions that you required to ask your team to conduct a successful gap analysis:

  • Who is going to use the lending software?
  • What are the huge user pain points that the solution has to serve?
  • Do you already have lending software in place?
  • If yes, can it be supported by the new platform?
  • What are the particular characters that are missing in your current software addition which will help to increase operational efficiency and incomes?
  • Do you have an efficient IT team that can help you to execute and controls the new lending software?

2. Would you like your software to be on-premises or cloud-based?

The traditional banks and lending organizations are using legacy software with on-premises hosting. They frequently find it very difficult to trade the control and security that will comes with on-premises hosting for the assurance of flexibility and scalability of cloud-based solutions.

However, this does not mean that cloud-based solutions have less security. The enormous competition in the lending software technology has made sure that increasingly secure software and controls in place which make sure that the business owners can have the access to data of customers and control of the source code.

Selecting cloud-based software will give your business an edge in the form of the decreased cost, global access, global integration, and to secure it all, industry-specific best practices when it comes to security.

Also, ensures that your cloud-based software has an automatic backup character along with a high level of security to secure you from data threats and cyber security breaches.

Here are some relevant reasons why more lenders are obtaining cloud-based software:

  • Can easily access from anywhere in the world
  • Premium features are implemented using disruptive technologies such as AI and ML
  • Timely upgrades, regular management, and continuous releases of new products
  • Freedom from controlling your own IT team to for its upkeep

3. Would you go through a complete end-to-end solution or a modular one to plug in the gaps of the existing one?

Many business owners will go through a complete modification digitally at one go without the headache of trying to fit in new solutions, one-by-one, to their present legacy solutions as it is a humongous task of gap analysis and managing the multiple partners for every identified need.

The good news is that with modern systems both choices are now possible. It is a call for the business owner to determine which path they can take. Modern systems will works on microservices architecture, API based and highly modular in structure. They can plug into the legacy system to increase performance and fill in the gaps.

With solutions that help to automate your whole lending cycle, lending organizations that do not only access analytics and reporting but also that allow seamless communication between the employees and business owners. It also helps them to deliver a delightful service experience for your customers.

4. Would you have a separate solution of origination and servicing or a single one?

The biggest, time-consuming, and challenging procedures when it comes to lending are loan origination and loan servicing. Both need a lot of technical and manual team and also gives result in quite a few mistakes.

By integrating these solutions, which though complex in nature offers a seamless, dashboard-based UI for lenders to cater information and get better insights to base their decisions on, lenders can make the origination and servicing procedure very easier and compatible. Here is some characters that you can look for in the lending software that could make the procedure of loan origination very easier for you:

  • Automated borrower estimation cycle and decision-making using AI and ML
  • Customer risk selection based on both alternative and traditional data
  • Capability to consider both traditional and digital data sources to manage borrower estimation
  • Easy control of lender rules, scoring models, and credit policies, thereby making the lending process is more customized.

5. Do you have your business logic figured out?

  • Every lender, whether big or small, traditional or peer-to-peer, will have their own business logic that helps them to make decisions of whether to go for lending software or not and at what terms and rates. The smoothness with which this business logic goes through every step of the loan origination, underwriting, and servicing procedures find out the effectiveness of lending software.
  • Consolidating your business logic after executing the software will be ineffective. Therefore, it's recommended to chalk out your business logic and workflows and combine it at the code level of the software. Or you could also select software that gives you the access to construct your business logic into it without the necessity to code any of it. The software should be modular so that workflows can be arranged as per the business needs.

  • 6. What kind of tools are you receiving as a part of the lending software?

    Getting the right and perfect lending software isn’t only about digitizing the lending system and making it paperless and contactless. It is also about making your organization’s lending procedure more systematic, thereby growing your income and reducing your risks.

    Lending is a risky business; discovering the creditworthiness of applicants and forecasting the future based on calculations and manual underwriting procedures to find out the interest rates and terms of the loan is handled with errors and inaccuracies. Hence the requirement of an automated system with minimum manual intervention.

    7. How suitable will the new platform be for the stakeholders?

    Whether it’s your employees or your customers, your lending software solution should offer them a user-friendly interface that is easy to both adopt and modify to. However, complex the lending function might be, the dashboard should be engaging, conversational, seamless, and should lead both customers and employees to take the steps as required. A short learning curve and fine experience of a user will help in decreasing turnaround time for the whole lending process.

    8. Is the software very easy to learn and acquire?

    When business owners buy lending software for their business, it is by and large meant for the employees who is using it at several stages of lending. Therefore, installation, deployment, training, and acceptance of the new software should be as flawless as possible.

    Software that doesn’t need a continuous recommendation to complex user manuals and uses cases and comes with built-in step-by-step training can help the employees to learn on the job, faster, and with more accuracy.

    Additionally, look for software that offers flexible tech support, so your employees do not stuck at any stage due to confusion, bugs, or errors. It’s always a good idea to pick for a demo before making the decision to purchase. One look, at how the software works, its functionalities and characters, built-in tools, and user experience will give you a good idea as to if it could be the right lending software for your business.

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