How to Choose The Right Lending Software for Your Business

Choosing the right Lending software for your business can be a major undertaking. Before you train your staff on a new system and invest thousands of dollars, we have identified some key points for you to consider when choosing a software.

  • Outsourcing vs On Site
  • Overall Functionality
  • Decisioning & Risk Scoring
  • User Friendliness
  • Customer Service and Support
  • Track Record
  • Affordability & Value

Situational Assessment

Here are  key questions that you and your team will have to answer before making a decision:

 

  1. Who will use the system? Directors? Managers? Loan Officers? Or all of the above.
  2. Does the system support your business needs?    Does the system offer automation, credit scoring, and reporting?
  3. Can a single package fill all the business’s needs? Will you need to use several pieces of software together? If you need multiple pieces of software, can all the software packages integrate with each other?
  4. Will your current software provider support your business goals in both the short and long-term?
  5. Which key features would be needed to improve your current business processes?
  6. Will you need to employ additional staff to manage the software system?

 

After answering all of these questions put together a shortlist of vendors who meet your budgetary needs and are willing to customize their offerings in line with the current industry standards.

Outsourcing vs On Site

If you are just starting out in Lending, your business would probably not have the resources to employ, run and manage a dedicated IT department. For businesses like yours, Software As A Service (SAAS) is an excellent choice as it is easily deployed and significantly more cost effective to launch versus an onsite program. SAAS provides built-in support and service. They provide the benefit of regular maintenance and continuous upgrades without the cost to further develop the infrastructure.

 

Your company must also take into consideration, the laws of the country within which you operate. Depending on the data and privacy laws of the country, you may be mandated to store user information within the country. If your software provider stores information outside of the country, then you will need to make arrangements to store your data in line with the country’s laws.

Functionality

Best of breed Lending Management and banking systems will offer a slew of customizable options to meet the needs of both your company and clients. Here are some basic loan origination functions which should be offered by your Loan Origination Software:

 

  • Decisioning & Risk Scoring
  • Custom Report Builder
  • User Defined Process Workflows and Rules.
  • Customer Relationship Management
  • Full spectrum Loan Servicing and Administration

 

 Scoring

Easy access to scoring data will shorten credit decisioning and overall processing times. The key thing about scoring is determining how much technical know-how is required to setup and manage scoring rules. Is there an easy to use, intuitive interface for users to control the levers of risk?  

 

Scoring is required because you should bring as much science into how you make lending decisions. Science doesn’t mean you lose the human touch. Just the opposite, in fact, it means you will quickly know how to touch your customers: which ones should you hug and give a great rate because they have been a super customer versus those who might get a more cautious welcome with a regular rate until they can prove themselves. Bringing more quantification into your lending helps you make better decisions faster.

User Friendliness

A cloud SAAS based solution would be the easiest to implement for most businesses, as there is no need for IT personnel to install or set up the solution.  Seek out a system that is highly intuitive, and easy for your staff to navigate and integrates well with your business processes.

Look for systems that provide a free trial or demo version of their platform. If they come packed with ‘real’ demo data so you can see the system under load, even better. Ensure that key staff members test out the software before you make a financial commitment or get locked into a contract. Although the software may on the surface meet your business needs, ensure that you utilize your demo experience to ask questions on real-life scenarios to see how the software will measure up.

Customer Service and Support

24-hour Technological support, an extensive knowledge base, and platform training are necessary for the efficient implementation of the new software into your lending business. A friendly, professional and responsive customer service team is needed to help you and your team get the most from the new system. If your software provider doesn’t deal with issues as they arise it could affect the level of service you are able to offer to your clients.

Take a close look at the service agreement, ensure that you examine the sections which deal with core functions & features, support services and especially service level commitments.

Track Record

It’s great that you’ve found the right software today. But will they be around tomorrow when you need them?  You should make sure that the company has good backers, a sound Board of Directors, experienced Managers and a committed staff. Speak to other clients who may be using them – the information you get will be very helpful in giving you a more balanced view of the Software provider.

 

How does the company keep the software current? Is there an infrastructure to capture user

feedback – does there seem to be genuine interest? What is the geographic distribution of users? This could be important in assessing the geographic footprint of user feedback. The broader the better as all users will benefit from global best practices.

Check for reviews on software referrer sites like Capterra (capterra.com), to see how actual users describe their experience with the software and support services.

 

Affordability & Value

Price shouldn’t be your main concern when choosing anything. If it has to be, we always want the best for what we can afford. The leading consideration should always be defining what is the best for us. Your lending business is the same. You want the best software that will help your business grow and become better and bigger.

 

If you are focused on growth then get the best software that has the features you need now and the ones you think you will need 3 years from now. Make sure the company has the same customer success values that you have in your business.

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