The Loan Management System (LS), is a unique, turn-key, comprehensive end-to-end financial services portal that links lenders looking for high-grade, secure, collateralized loans with prospective borrowers seeking easy access to unsecured credit. With better terms and conditions than traditional margin, they are often able to obtain higher loan to equity ratios with better interest rates and no prepayment fees. A flexible borrowing option, LMS offers flexibility in the choice of loan products such as fixed rate, balloon payment, negative amortization, and deferred principal.
A fully-customized loan management system offers lenders an unparalleled opportunity to meet the diverse needs of their communities. From small, individual lenders to large financial organizations, all can benefit from the configuration of lender connections. The LMS provides a single, complete lender network to which lenders must apply for approval and participate. This configuration results in a far more efficient loan processing by reducing redundant requests for approval and processing. As a result of this configuration, multiple lenders may submit bids on the same loans, reducing the possibility of missing out on profitable business.
Banks often balk at the prospect of allowing financial institutions to directly access their accounts. For decades, financial institutions have enjoyed relationships with private loan processors and banking systems. Lenders are willing to tolerate a higher degree of risk associated with these relationships because they have confidence in the trustworthiness and stability of these relationships. The advent of the loan management system has removed this inherent trust and created a situation in which banks and financial institutions must choose to participate or not depending on their own strategic priorities. Banks and other lending institutions are now forced to decide between an open dialogue with their LMS and a tightly controlled, highly-lexical sales environment.
The current trend in the loan management system is toward greater customization of the system through third-party application vendors. Some financial institutions have chosen to implement their own loan management solution. While this gives them control over specific aspects of the system such as borrower contact information, the system still remains largely reliant on the core infrastructure provided by the originating bank. While some banks are pursuing this path, others continue to work with the system that has become familiar to them through their own processes and have tailored their third-party applications to better fit their own needs.
Lending institutions and other institutions are making a number of out-of-the-box loan management system changes. Banks have been slow to make changes that would upgrade their system in light of recent events, including the widespread attention focused on the mortgage crisis. Instead, many banks have focused on internal improvements, making small but meaningful configuration changes that will enhance their long-term performance and help them better serve their customers. Lending institutions have also been slow to make any structural changes to their lending functions, even in light of the recent crisis. Instead, they have sought to improve their processes through the utilization of third-party software applications that make changes in the back office without affecting day-to-day operations.
One example of an area where institutions are looking to move beyond the loan management system configuration is at the point-of-sale end of the lending process. Implementing automatic swiping technology at the point of sale has been a topic of discussion among lending institutions for years. In some cases, lenders have made significant modifications to their current process without changing the core architecture of their business. Other lenders have made more drastic changes, moving to new point-of-sale systems or completely eliminating the manual process. While these efforts may seem unimportant, those without an accurate understanding of the impact of manual processing may miss opportunities to save money on late fees and interest.
To address issues of business needs and process improvements, many lending institutions have begun to work with technology vendors to create custom-designed loan management systems. These systems often utilize key performance indicators (KPIs) to give the lender an accurate depiction of their loan processors’ performance. Some examples of KPI-based systems include customer relationship management (CRM), financial transaction management (FTM), and automated cash flow management (ACM). The goal of using this type of system is to create a platform on which a company can evaluate its own processes and establish goals for improving them. Lenders also recognize the value in providing their clients with a comprehensive overview of the activities that take place during each step of the loan process. By providing this overview to customers, they can determine what areas require additional attention and what areas are stable and well-functioning.
Another area in which institutions are making adjustments to their loan management system is in the area of configuration changes. Loan management vendors and system integrators are now routinely discovering configuration problems in legacy systems that are slowing business operations. Some of the most common areas of configuration concern are application response time, error messages, access and network availability, system recovery, and scalability. Institutions may also be experiencing configuration issues in the areas of loan consolidation and reduction, loan origination and underwriting, property inventory control and management, and loan processing. To ensure the systems are running at maximum capacity, institutions are frequently conducting manual troubleshooting as part of their quality management efforts.