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Loan Management Software: What You Need to Know

Loan Management Software: What You Need to Know

The way lending is done is changing. Forget about those strict suit and tie meetings in a brick and mortar bank. No, nowadays, that loan application is increasingly more likely to be processed from behind a screen. But what does that mean for lending providers? The simple message is adapting digital loan software is no longer a want. It’s a must. That said, what solutions are out there for businesses? Here we’ll help you get to grips with all you need to know about loan management software.

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What Is Loan Management Software?

Loan Management System: Essential Features & RequirementsFirst things first, what is a loan management system? Essentially, it is a piece of technology or software that allows your business to complete a range of processes related to loans and lending. Let’s consider which solutions loan management software includes. 


Loan origination software is all about the processes your business undertakes before you issue a loan. Consider it the preparation step. This covers everything from document management to creating a tailored product engine, client onboarding, and decision-making, and finally, reporting and statistics. Getting your ducks in order with origination means that you are best equipped at the very start to issue loans and less likely to make mistakes.


Now that you’ve onboarded a client and issued a loan, the work doesn’t stop there. Loan servicing software delivers the tools you need to manage the loan process. This type of solution can include a payment calculation engine, loan operations software, accounting, reporting, and collateral to allow you to administrate your loans more efficiently. What are the benefits of adding software at this stage? Compliancy, efficiency, and accuracy, meaning lowering the risk for your business.

Debt collection software

No one wants the worst to happen, but when it does, you need an action plan. Adding smart debt collection software is an essential part of your loan software package. This type of software allows you to implement intelligent collection structures, automate workflows and processes.

Of course, none of these solutions are extensive by themselves, and many businesses combine them to create a custom solution.

Loan management software is a diverse solution and can service a variety of lending products. 

For example:

  • Personal loans. From payday loans to small personal credit, loan management systems can be designed to deliver efficiency, security, and service to your clients. 
  • Commercial (SME). For businesses just starting out or seeking a loan for the next stage of growth, SME loans require careful risk management to ensure it’s an investment worth making.
  • Mortgage loans. For many people, a mortgage is the biggest loan they will ever take. In 2020, the US mortgage market was valued at $11.05 trillion, meaning the sector is still thriving.
  • Student loans. Some argue that the only thing worth investing in is education. In the US today, total student loan debt totals $1.6 trillion. Loan providers are responsible for the issuing and repayment of these valuable (in more ways than one) loans.

We’ve considered the functionality of loan management software allowing us to track credits from applying to direct loan payments – the entire lending process. However, not all companies need the solution. HES FinTech, depending on your requirements, can make either a full-cycle solution or a software with specified functionality, like debt collection software, loan servicing, or loan origination.    

Features of Loan Management System

Now that we’ve got the basics of what loan management software is, let’s go a little deeper and talk about the types of solutions available. Here, for ease, we’ve divided this into two categories: 

Out-of-the-box solutions

This type of loan software comes in the form of an installable system that your company can use to administrate your loans. It can cover part of your business processes or can be a complete system in itself. 

Pros: Ready to use, can come as a set price or a subscription

Cons: Relies on the provider to update software, can be hard to integrate

Tailored software

Custom loan management software allows your business to develop a tailored solution for your needs. This can address part of your business infrastructure or cover an entire system. Each part is entirely customizable to you.

Pros: Designed with your business in mind, can upgrade tech debt

Cons: Expenses at the outset

Why Do Lenders Need Loan Management or Loan Servicing Software?

So here comes the big question – why should you invest in loan management or loan servicing software? After all, your current system works just fine. As we said at the start, the market is constantly evolving, and as a business, you need to adapt to emerging trends to stay on top. By onboarding loan software systems in your business, you give your company the best start.

Get secure

From completing Know Your Customer (KYC) to Anti-Money Laundering procedures (AML) to GDPR and data protection, your loan system must have the most up-to-date security. AN outdated tech stack could leave you and your clients at risk of fraud. So, stay a step ahead and update.

Big data – lower risk

To ensure the risks you take are worth it, you need accurate data and a way to analyze it. Upgrading your loan management software allows you to work with larger amounts of data and analyze it to lower your risk. 

Reduce errors

In the final world, errors can be costly. Having the latest software at your back helps reduce the number of errors that occur and better protect your business.

Stay current

No one wants an outdated product or system. Engaging contemporary loan management software allows you to deliver like never before. Whether you work in traditional lending or all-new peer-to-peer (P2P) solutions getting the right software at your back means you can operate without worry.

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Do I Need Loan Management Software?

If you are a business operating in the lending sphere. Yes! You need lending software. The question is which type. Choosing a smart solution, that aligns with your goals is the best way to keep your business current and meet your goals while maintaining the highest security levels.

Need loan management software? Contact us to level up your business.

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