How to choose a loan management system that’s right for your company

By
inGain team
June 1, 2022
5 minute read

Whether you’re a lending, fintech or banking company, you should be using a loan management system (LMS) – but how do you choose the right one for your business needs? A variety of factors from company size, internal resources, product variety and business ambitions will factor into your decision. But if you’re already baffled by the hundreds of LMS solutions available on the market, then this guide is definitely a great starting point for understanding which are the most important features for your company.

Still not convinced you need to use an LMS? From saving time and money to reducing human error, there are a myriad of reasons your company should be automating as many lending processes as possible. If you’re on the fence about needing such a solution, first check out our guide on the “Top 10 reasons every loan provider should use a loan management system”.

1. Establish product coverage

An LMS solution won’t be of any use if it doesn’t cater to your specific financial product or service. Whether you’re creating a product from scratch or choosing to customise from a product catalogue, the more versatile the system, the better. Not all systems accommodate non-standard business models, such as long-term rental or rent-to-own products. To make the most of a solution, it should not only cover automation of all your business’ current lending processes, but also include additional features your company may require in the future.

2. Understand the deployment timeline

In business time is money, so choose an LMS that can get your product up and running within a timely schedule. A cloud-based SaaS solution will usually get your product to market the fastest. If you opt for an on-premises solution, first evaluate your internal resources and capacity to set up and maintain the servers on which your company will deploy the new system. If you want to get a better idea of the LMS deployment timeline, ask potential providers what their experience has been with previous customers. If you’re looking to test a market before launching a new product, find out if there is an option to test with an MVP solution.

3. Don’t compromise on user experience

The system should be easy for both your business employees and customers to use. You’ve chosen your product and deployed the LMS, the next step is conducting daily business operations. Asking for a demo is one of the best ways to establish user-friendliness. It will give you a chance to explore first hand how the system is structured, including what type of experience your customers will have setting up and using their customer profiles.

4. Ensure system security

For any company dealing with customers’ sensitive personal and financial data, system security is of utmost importance. Digital security is a constantly evolving field, so make sure any system you choose conducts regular security audits to prevent any new vulnerabilities. Not only should the system have standard built-in security features, such as encryption, SSL certificates and secure authorisation, it should also prevent human error. Features like hourly backups and employee login timeouts can go a long way toward making sure sensitive user data isn’t compromised.

5. Don’t assume customer support is included

One of the most common customer complaints regarding LMS providers is inadequate access to customer support. When defining a service-level agreement (SLA), your checklist should include timely and defined access to support during implementation and customisation processes, as well as during further operations. If you find a bug in the system, you don’t want to be stuck waiting months for a solution, so make sure to specify incident reaction and resolution time expectations. One of the best ways to ensure your company gets the support it requires is to define guaranteed support hours on a weekly or monthly basis.

6. Avoid vendor lock-in

What happens when an LMS isn’t performing up to your business expectations, or the provider simply isn’t fulfilling the requirements listed in the SLA? This is the major business continuity risk that you may experience when cooperating with a third party vendor. You should make sure there is an exit strategy which is either walk away and migrate to a different vendor or in-house developed system, or an opportunity to purchase the LMS source code and continue system maintenance and further development with your own or outsourced IT resources. In order to perform system migration make sure the contract doesn’t have provisions that create a financial burden for leaving, and most importantly, ensure that your company can retain all of your data when you migrate to another system.  Don’t wait for the LMS provider to go under before you establish what will happen to your data.

7. Assess no-code opportunities

LMS providers offer various degrees of no-code customisation opportunities. If you’ve chosen a cloud solution, then you want to opt for a no-code or low-code LMS to save your business both time and money. A well-designed SaaS solution won’t require an IT team to customise each feature required by your business – scoring, templates and communications should be easily adaptable to your operations by any employee. No-code systems will also allow your employees to spend less time maintaining the LMS.

8. Understand system customisation options

You might have found the perfect LMS for your current business needs, but what about your future needs? If you’ve chosen an SaaS solution, you should automatically gain access to any updated features included in the system. Make sure you’re able to prioritise any updates that are important for your company. Being able to impact product development ensures the LMS you’ve chosen can grow along with your business. Ensure priority for your company’s custom development needs by requesting guaranteed system customisation hours, which allows for a predictable development timeframe.

9. Check third party integrations options

When choosing an LMS, make sure it can smoothly integrate with any third party services you’re already using in your operations, or plan to use. Whether you need data access, scoring, payment solutions or IP telephony, your chosen system should be able to integrate with all the solutions your business needs to operate at full potential. A new LMS should also be able to leverage any existing system your company already has running, such as a data connector or decision engine.

10. Calculate implementation and maintenance costs

Your business costs will greatly vary depending on company size and operational needs. If your company is dealing with high-volume traffic, you may want to opt for a fixed payment plan, rather than a pay-per use model. Other costs associated with implementing an LMS can include a setup fee (including customisation), licence fee, support fee and server costs. When considering custom development costs, don’t rely solely on hourly rate information – find out what the estimated budget is for typical integrations your company may need from implementation, or possibly further down the line.

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About inGain

For over 10 years inGain has been supporting lenders, fintechs and banks with an out-of-the box, yet fully customisable loan management system. On top of the core system, the company also delivers system integration services and custom feature development. inGain has executed hundreds of projects with more than 50 global clients across a variety of sectors.

The loan management system caters to both secured and unsecured business and retail loans, including instalment loans, auto leasing, mortgages, line of credit, buy-now-pay-later, payday loans, invoice factoring and more.

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