To manage commercial or individual loans, lending firms need to allocate time and human resources to service each stage of credit transaction — from loan application to reimbursement.
While some activities like loan interest calculation can be easily automated, others like credit risk management or due diligence checks require smart solutions.
Besides, lenders may find it challenging to integrate all this variety of tools into one system and customize it. And a bunch of instruments may cost a fortune.
Thankfully, there are multi-purpose software solutions like Encompass, ApPello or LenderKit to support the entire lending process and cure lenders’ headaches.
Let’s see how loan servicing software for private lenders works on the example of top vendors.
Loan Servicing Software: Overview
Banking and financial institutions are very conservative when it comes to innovation and reorganization.
But even this sector has already recognized the benefits advanced technology brings and become a big fan of smart tools.
The loan servicing software industry is diverse. The market is segmented on the basis of deployment, application and in terms of region according to the Insight Partners.
Based on deployment, there are Cloud-based, and On-premise solutions.
On the basis of application, the loan servicing solutions are split into tools for:
- banks
- credit unions
- brokers
- mortgage loan origination software, etc
Typically, vendors offer a holistic software package to manage every loan-related process and credit type. OpenCBS, HES FinTech, Zoho Loaner — to name a few of all-in-one service providers.
There are also vendors that cater to specific types of credit or business needs like NuDebt for managing student loan debts or Built for administering construction portfolios.
Why lenders deploy loan servicing solutions:
- it helps optimize centric business operations and customer support;
- it reduces administrative costs and eliminates human errors;
- it speeds up time to market and boosts profit;
- it improves customer experience;
- and a lot more.
Technavio has recently published a report on the market state and future perspectives. Here are a few highlights:
- the market growth will accelerate at a CAGR of almost 12%;
- the industry will experience incremental growth and reach $446.54m by 2023. Verified Market Research predicts that by 2027 the market size will have grown up to $33.72b (that’s really WOW);
- North America will remain the leading sector and contribute 41% to the overall growth:
- the year-to-year growth rate for 2019 was estimated at 11.45%;
- the need for efficient lending operations will be one of the driving factors for the market development.
The niche is evolving pretty quickly. The new trends like integration of AI/ML elements, blockchain technology, data-driven scoring models are likely to create a great alternative to traditional lending.
Top 5 Most Recommended Commercial Loan Servicing Software Solutions
We’ve compared several tools for loan origination, management and servicing and created our own top based on ratings and reviews from G2, Capterra, and GetApp platforms.
Consider the below options when selecting the vendor for your online investment business.
Finastra
Finastra is a provider of the broadest portfolio of solutions to financial players of any calibre. This UK-based fintech company is a market leader with 8K+ customers across 130 countries.
Among the rest, Finastra offers end-to-end loan management solutions helping clients enhance borrower experience, facilitate the lending process, create a unified platform and, as a result, achieve better ROI.
The product portfolio includes:
- loan origination tools to streamline key business flows (loan application, documentation, underwriting, credit decisioning, risk analysis and funding);
- loan syndication to serve the origination of componentized credit solutions;
- commercial lending covers all types of business loans (operating lines, term loans, asset-based lending, commercial real-estate, trading);
- consumer credits technology for automated credit decisioning engine and loan document management;
- mortgage loan servicing software to bring together lenders, underwriters and processors and improve borrower experience;
- compliance to help clients meet regulatory requirements.
Last year Finastra announced its brand-new data offering, Fusion Data Cloud. With AI- and ML-based solutions coming in a bundle with the new-generation package, financial companies can optimize loan processing, among other benefits.
Turnkey-Lender
As its name supposes, the company provides intelligent end-to-end software for lending process automation and digitalization.
TurnKey Lender’s target audience: banks, non-banks, and in-house consumer financing providers.
Core benefits TurnKey Lender promises to deliver: enhanced customer experience, lower credit risk, higher conversions, faster process, less human errors.
TurnKey Lender solutions by use case vary from loan origination to digital onboarding, risk management and debt collection.
Segments supported: consumer and commercial lending.
If you’re looking for a vendor with a one-size-fits-all software package, TurnKey Lender may become your go-to.
Commercial lending use cases:
- working capital software with credit scoring audit and scoring consulting, features;
- leasing solutions to update and speed up leasing processes;
- merchant cash advance tools for portfolio management, debt collections, and integration with third-parties;
- p2p lending instruments assist in detecting clients with fraudulent or tax evasion activities, generate informative reports;
- trade finance to put loan processing on autopilot;
- equipment financing shortens buying cycle and streamlines client experience.
HESFintech
For 9 years so far, HESFintech has been empowering financial institutions from all over the world with intelligent automation-driven lending solutions. The company’s main goal is to help lenders solve the toughest industry challenges.
Pillars of commercial loans software solutions developed by HESFintech are automation, origination, calculation engine, underwriting, and documentation management.
With Calculation Engine, clients are able to perform loan-related computations and comply with industry regulations. Underwriting module allows clientele to evaluate the financial standing of potential borrowers, assess collateral quality, loan-to-value coverage, servicing cost, and other important metrics.
The document-first approach is about instantly managing and conveniently storing deal documentation.
The vendor, also, caters for the needs of leasing and factoring companies, microfinance and consumer lending providers, banks.
ApPello
ApPello is a combo of Digital Lending Platform and Core Banking System with a great focus on digital transformation of lending processes.
ApPello’s principle is to bring solutions that can be easily configured and integrated by business users on premises. It hasboth SaaS solutions and standalone self-hosted tools.
There are three product lines ApPello sells:
- loan origination (unsecured, mortgage, corporate&SME) combining digital onboarding and decision engine. The latter allows you to add and update business-specific logic for any decisions regarding pre-screening, classical scoring, monitoring, collection;
- loan servicing covers all vital processes of loan handling, in particular core banking, collateral management, loan management, and real estate valuator, trade finance. Trade finance supports credit letters and documentary export or import activities.
- debt collection & early warning/monitoring are designed to help lenders who deal with legal collections and preventing borrowers’ non-performance.
LenderKit
After years of elevating solutions for financial and investment market players, JustCoded team developed an ultimate toolkit — LenderKit — to speed up and simplify the process of building new p2p lending platforms.
Today, LenderKit is customizable software for investment management and p2p crowdfunding. LenderKit is reg-friendly and fits regulatory frameworks of Europe, the USA, Saudi Arabia, and UAE. The LenderKit crowdfunding software has 3 modules: admin back office, investor/borrower portal, and marketing site.
LenderKit loan management package contains:
- loan origination software;
- real estate lending software;
- SME lending software.
With LenderKit and customizations, you can:
- streamline deals sourcing and borrowers onboarding with a loan configurator built into your site;
- run KYC/AML checks and hand the results over to third-party providers or responsible team members;
- manage docs and prepare detailed reports using integrated HelloSign, DocuSign services;
- process online payments and keep financial records;
- stay GDPR-compliant by sending notifications to users, deleting their accounts, managing cookies.
Whatever business stage you’re currently on such as prototyping, MVP development, entering the market or scaling your offline business to online, LenderKit can provide good flexibility to help you build a unique P2P lending platform.
The Takeaway
The new generation of loan servicing tools have revolutionized the industry and created new opportunities for both lenders and borrowers. The former have got an ultimate digital assistant throughout the entire lending cycle, the latter — a chance to receive funding faster.
Loan servicing software allows managers to speed up all operations including checking reputation and evaluating customer risks, processing and approving payments, and contacting debtors, etc.
