Most companies today are reliant on Key Performance Indicators (KPIs) to measure performance. By using KPIs, it is easier to monitor how better or worse the company is performing in relation to its business objectives.
Almost all operating units, particularly the profit centers, want to increase KPIs. The same holds true in the loans business. But in order to maximize lending efficiency, an institution should have an online lending software. You can be assured of volume growth, a healthy loan portfolio, and increased profitability.
A real need in the present
Tracking KPIs is a real challenge for lenders and other financial institutions. Having an online software support could ensure workflow effectiveness in every stage of the lending cycle. That is the tangible advantage to a loan business.
The sequence from the loan origination, credit evaluation & approval, and booking & settlements to collections has never changed. But manual processing is no longer as efficient because the business is volume-driven. Insisting on the old method will bring down KPIs instead of propping it up.
Thus, a fully-automated system is a real need. Many lending firms have no other option but to go with the flow. Otherwise, it can be very costly and worse, the integrity of the loan portfolio might be compromised. The direction now is towards a higher level of workflow efficiency.
How Online Lending Software Could Increase KPI
·Unclog bottlenecks in every stage of the lending cycle
For example, Turnkey Lender online lending software will guarantee a smooth process flow from the beginning to the end of the entire lending cycle. The goal of every loan business is to move through each stage unhindered.
Even if there is a huge volume of information, the desired turn-around time can be achieved while simultaneously performing a thorough examination of the strengths and weaknesses of the process workflow.
·Enhanced efficiency in gathering and organizing loan files
The first submission approval rating is always critical to a loan business. A lending institution would want a high turnover of loan applications that would pass the pre-qualifying stage.
The online lending software can be relied upon to perform the duties of loan processors with greater efficiency. The time spent to collect, gather, and organize loan files and documents will not be as lengthy. It will assure the timely submission of documents for evaluation, approval, and loan settlement.
·Easier monitoring of loan application status
The tracking of the progress of every loan application is easier when done systematically. It prompts everyone involved in the credit process to be mindful of their respective tasks. There is transparency in every area of the loan business.
Even conducting an audit trail is easier when keeping track of accountability. When there is a central source of information, managers and staff can extract the data if need be. In essence, the firm would definitely improve their pipeline management and be accurate when doing funding forecasts.
·Speedy credit evaluation and decision-making process
When the loan application reaches the evaluation and decision-making stages, the system can identify loan applications with potential credit risks. It can also find cross-selling opportunities for other lending activities.
An accurate credit scoring is in place for better risk assessment and well-informed credit decisions. The system can sound off alarms for red flags based on submitted data and information.
A lending firm can save valuable time and energy while strictly complying with established credit parameters. Human error is significantly minimized and at the same time eliminating manual data re-entry.
·Streamlined collection process
A major consideration why lending firms decide using the online lending software is the streamlining of the collection process. The system is not only dedicated to loan origination and settlements but the after-booking activity.
Tracking delinquencies, recording of payments, and follow-ups of updated documents can be done by the system. Any default, non-submission or failure to submit documents can help the collections team assess borrowers that are potentially collection problems. Prompt action can be done to contain delinquency at the earliest sign.
·Cost effective with less manpower complement
The online lending software serves one major purpose. It is designed primarily to ensure the loan process workflow is efficient, without the need of beefing up or hiring additional manpower. The lending firm instantly derives savings from less man-hour spent on loan processing.
With less cost expensed out in the lending operation, there is potential to optimize the yield for every loan originated. The system can be customized according to the loan type or product offering. The needs of a financial institution or lender, regardless of size, can be addressed to increase KPIs.
Time to overcome the challenges
The greatest benefit the online lending software to the loan business is its capacity to accommodate and warehouse voluminous data. Since it’s a volumes game, accepting ‘Big Data’ poses no problem at all. The software can produce the important metrics that need to be tracked and monitored.
KPIs are now an integral part of the loan business. When applied to business goals, it creates synergy in all stages of the lending cycle. There is clarity in so far as managing expectations. Assigning benchmarks can be done effortlessly too.
The operating units within the organization will be guided accordingly. Everyone will remain focused on achieving the business objectives. More importantly, the approach is consistent irrespective of the stage in the lending process. The workforce is properly motivated and duly engaged to perform their job responsibilities.
KPI is a tool to weed out inefficiencies. It measures the good, bad, and underperformance. Hence, no one can make excuses and elude accountability. Internally, indicators can be set to track the performance of sales officers and loan processors.
In short, every activity in each stage of the lending cycle is measurable. An online lending platform is a solution to continually monitor the financial health of the business.
The applicability in the loan business
Most lending institutions are discovering that investing in online lending software will deliver handsome rewards. The lending firm can start out with the basic, applicable metrics. Moving forward, there is freedom of choice to dwell into more complex metrics that are deemed crucial to attain business success.
What’s even constructive is that KPIs can be measured collectively and individually. Once all employees know the relevance of KPIs to the overall business objectives, there would be a concerted effort to move towards one direction.
The contribution of the online lending software is unquantifiable. Given the current market scenario, it becomes imperative to have a competitive advantage. A lending firm will not realize customer and revenue growth unless there is an intelligent software that could increase the KPI of the loan business.