Loan processing carried out in quick time provides competitive advantages to NBFCs and MFIs and better utilization of time for the applicants. Hence, there is a pressing need to have a technology that is time-saving for the institutions and convenient for potential borrowers. Many times, the NBFCs have to deal with process delays due to the manual loan processing system, which in some cases, results in losing their prospective customers altogether. In order to avoid this, most non-banking financial institutions and MFIs are going the way of an automated loan processing system, which in a way, helps both the customers and the institutions. By cutting down on paperwork and manual process needed during the loan application processing period, a loan management system seeks to add immense business value to the MFI and elevate the overall customer experience the applicant receives.

1. 12 Factors To Be Considered before Choosing A Loan Management System
Introduction
Loan processing carried out in quick time provides competitive advantages to NBFCs and MFIs and
better utilization of time for the applicants. Hence, there is a pressing need to have a technology that is
time-saving for the institutions and convenient for potential borrowers. Many times, the NBFCs have to
deal with process delays due to the manual loan processing system, which in some cases, results in
losing their prospective customers altogether.
In order to avoid this, most non-banking financial institutions and MFIs are going the way of an automated
loan processing system, which in a way, helps both the customers and the institutions. By cutting down
on paperwork and manual process needed during the loan application processing period, a loan
management system seeks to add immense business value to the MFI and elevate the overall customer
experience the applicant receives.
Benefits of a ​Loan Management System

2. A well-designed and scalable NBFC loan management system aims to improve the quality, turnaround
time, and service for end-customers. They ensure that the institutions are better equipped, efficient, and
agile.
In other words, they enable financial institutions to automate the processes for achieving cost savings and
enhanced customer experience. All types of business activities including trade, industry and agriculture
depend on finance in one form or the other. In turn, they directly contribute to better employment
opportunities and raise the standard of living of people.
Benefits like optimal work distribution and reduction in overall loan processing time are some of the key
benefits that make a loan management system a must-have for a financial organization. Here are some
crucial advantages that a financial institution gets when it opts for an LMS –
1 – Efficiencies of the Cloud
Cloud deployment such as the one provided by a robust LMS will add two layers of benefits
● The operational costs will go down substantially as compared to on-premises deployment
● All matters like installation and upgrades will happen automatically on the cloud. This prevents
wastage of time in getting in-house IT support for these tasks and frees up IT resources
2 – Security
2018’s data and privacy issues worldwide have taught us a vital lesson of being vigilant against data
breach attempts. With a web-based loan management system, MFIs can enable users with convenient
access to credit, without the fear of unauthorized breaches that can harm their financial stability. From the
enterprise end too, a secure LMS ensures a streamlined and secured mortgage origination process.
3 – Singular experience
Imagine working on a standalone system which differs in interface or functionality as compared to another
device at

3. a different branch of the financial institution? This will lead to a poor user experience from an operational
standpoint. With a cloud based loan management system, all users can get a singular and consistent
experience irrespective of which device, platform, screen size, or operating systems they access the
system from.
If yours is a forward-thinking organization then these benefits will make it clear why a loan management
software is absolutely vital to gain a massive edge over your peers in the financial industry
Things To Be Considered Before Choosing Loan Management System
Before opting for a Loan Management System, one needs to consider various aspects so that the desired
result can be obtained to the satisfaction of buyers. These factors are of paramount importance in opting
for a loan management system.
1 – Broader Coverage
It is vital to explore a loan management solution that covers a broad array of uses. Be it mortgage
documentation or asset financing, an LMS needs to provide total assistance. It should also deliver
performance in financial advancing activities like commercial leasing or ​consumer loan​ among other.

4. A well-structured loan management system would do a great job in these broad areas at a cost-effective
price. This adaptability across a wide range of use cases is what will help the LMS software to emerge as
a true business value driver for the organization.
2 – User Friendly
A complex loan system is hardly appreciated by the customers and rarely do they opt for such financial
loans. To improve operational efficiency and boost account management function, you need an LMS
that’s simple to setup and configure as per the business’s exclusive needs.
The system should be such that it suits the purpose of the company and is capable of managing its
objectives and cater to clients. The model should not only suit the present purposes of the company but
should be able to envisage the future needs of the company. It must be capable to handle simple and
compound interest rate computation with ease.
From a workflow point of view, the LMS needs to deliver great outcomes. The non-banking financial
institutions should get the ability to spend less time on administrative activities. Such user-friendliness in
navigation, layout, and processing will add tremendous gains to the company’s ROI from a loan
management solution.
3 – Centralized Solution
A Loan Management System centralizes loan application data from multiple branches, including links to
electronic documents. This ensures that the loan department gets a holistic and singular view of all
applications, irrespective of which branch the application has emanated from.
Loans can be conveniently checked against an NBFC’s underwriting protocols. They can also maintain
credit compliance details, and allow the processing department to comment, upload the documents, and
collaborate with branches and MFI representatives through LMS.
4 – Speed & Agility
The quick and streamlined manner of sanctioning of the loan is the most suited discourse for the clients
and they are able to appreciate the potential of the non-banking channel in a true sense. In a way, it

5. eliminates the tedious tasks of sorting papers or documents and minimizes the costing involved in the
process.
The quick approval and sanction of the loans is an added advantage to obtain financial loans in case of a
contingency and in the process save the precious time and energy of the clients. Such agility in an
institution is an asset to the institution and an attraction to the clients.
5 – Authenticated Access
Accessibility of loan management system is of utmost importance to the NBFCs for sanctioning of loans.
It centralizes all seller data, including links to electronic documents, enabling a robust company review
and monitoring process via credential-based access. This helps the financial institutions to access the
relevant documents from third-parties quicker and without waiting for unnecessary approvals.
6 – Technology and Customer Service Support
The advent of technology is like never before; it is unprecedented and surprising at the same time. All
sectors of the civil society are in a consistent endeavor to be abreast with technological advancement.
The MFIs should not lag behind in this pursuit and channelize their resources to advance in the
technological race. A Loan Management System will help them in this pursuit of obtaining a technological
edge.
Post-application processing, the Loan Management System monitors transfer status and enables the
transition of the loan to a client’s servicing systems. A good loan management system, therefore,
harnesses the technological advancements to provide the best experience of disbursing loans and
strengthening the non-banking financial institution’s customer service function.

6. A fully functional LMS also needs to allow the below functionalities via technology –
● Payment collection to lock successful loan processing
● Contract management and paperwork preparation automation
● Entity management to store all details of loan applicant and servicing branch
● Extensive dashboards and reporting for granular views on KPIs
● Managing information across the board for better collaboration
● Collection and accounting for payments
7 – Cloud Based or On-Premises Deployment
Cloud computing is playing a vital role in every sector of business. The same goes for the financial sector.
It is in fact, transforming finance with new perspectives, reinventing new models within the financial
sector, and developing several new concepts with an aim to improve business efficiencies.
What a cloud computing is enabling is a better management of the lending process in assembling,
connecting, and using resources available, to meet business demands and even to provide users with
cheaper and secure financial services.
Cloud technology is transforming the lending industry. The potential of the cloud based services are no
more unknown and they have become the claimed champions of lower capital outlay, reduced operational

7. costs, quick implementation with frequent software updates, and access to a wide range of data sources.
They have benefitted the clients immensely by making the process feasible, more productive, efficient
and available at lower costs.
8 – Better Third Party Integration
A loan processing module needs to work in sync with a lot of other systems like a CRM or ERP. It also
needs to
provide the remote sales team with up-to-date information so that the conversion can happen as targeted.
All these require the LMS to connect with third party applications for improved functionality of the overall
loan processing function. This feature allows a lot of information to be auto-populated and save time
reworking on errors and application submission process.
9 – Microservices-Based Architecture
Microservices​ have become the talk of the town today. They have provided the market with software
setups that primarily are solo-function modules with well-defined interfaces and operations.

8. It is also referred to as a Microservice architecture. Therefore, microservices based loan management
system would ensure that the system is credible, agile and better suited for the sanctioning of loans.
10 – Web And Mobile Compatibility
Application based services in Android and iPhones have become common in today’ mobile driven
economy. A mobile-based application can be immensely used in the lending industry.
A number of surveys have over the time made it very clear that clients prefer application based services
over the entire labyrinth of complicated procedures.
A loan management system that offers life software support is a testament to the company’s commitment
to providing clients with a highly efficient system that will significantly impact your business’s bottom line.
11 – 100% Secure Operations
Data protection has become one of the burning issues in the contemporary world as a result of rapid
technological advancement. Today, most of the services are just one click away. These services range
from retail and healthcare, to banking and insurance services. With this, the emphasis on keeping
confidential information secured at all times too has emerged as a value differentiator.
With a ​cloud based management​ system, several features in the form of real time sharing, updating,
automatic creation of documents, storage and sharing can be achieved. One can streamline the entire
management of loans and all concerned documents through credential-based, secure cloud-based data
management.
Security is paramount while opting for the loan management system as you’ll be managing confidential
and sometimes critical financial and personal information. Hence, built-in security in your loan
management software is crucial.
The system should ensure that the privacy of the clients is not infringed upon. These kinds of
circumstances give rise to situations like data fraud leading to loss of credibility and reputation. There has
been increased number of instances of imposters acting as employees taking confidential information

9. from innocent people and then taking out money from their accounts. A secure LMS can go a long way in
alleviating these problems to a great extent.
12 – Scalability Cost
A Loan Management System eliminates the cumbersome work of diligence managers. They need not
traverse through various service provider websites. They can also avoid relaying multiple attachments
over electronic mail. All findings around the loan processing will be easily stored in the Loan Management
System database for instant authenticated access later on.
An LMS should be able to adhere to evolving compliance mechanisms so that there is no
non-compliance. Also all costs to scale up the product with growing or more complex operations need to
be factored in for getting a true picture of the ROI the product delivers.
To sign off
A wise and practical policy in regard to loans and advances is a crucial factor that instills trust in the
depositors of an MFI or NBFC and allows it to augment its topline. These stipulations can be met by a
loan management software easily. An efficient ​loan management system​ can therefore be an asset and
has to be chosen carefully taking into considerations discussed above.