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THE BEST LOAN SERVICING PLATFORM FOR CREDIT UNIONS

The defi Team Business Process Outsourcing, Credit Unions, defi INSIGHT, Servicing Systems

loan servicing platform credit union

Over the past 30 years, credit unions have more than doubled their share of the consumer lending market. This market growth has come with a number of complex challenges. Many of today’s credit unions have to service more loans than ever. Some lack the resources or time necessary to do so. The solution: Loan servicing platforms for credit unions.

These platforms help solve some of the most common operational challenges credit unions face when they service loans. When you upgrade your loan servicing system to a more modern, efficient platform, you can focus on other key operations like cross-sales or membership services. Loan servicing platforms empower credit unions to do more for their members. To make the most of this type of platform, you need to know which features have the greatest impact on your operational efficiency—and your bottom line. Our guide covers seven qualities of a great loan servicing platform for credit unions.

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Does Your Credit Union Need a Loan Servicing Platform?

A loan servicing platform is any collection of software or systems that help credit unions manage a loan portfolio. Different platform vendors provide different types of services. Some are end-to-end vendors who can handle everything from loan origination and application approvals to lifecycle management and final repayment. Others focus on just one aspect of the loan servicing process, like payment processing or delinquency recovery. And still others are built in to core credit unions systems and offer very limited functionality.

To decide which loan servicing option, if any, is right for you, consider how your credit union currently uses its resources. Could your loan servicing system be more efficient or cost-effective? Some factors you might want to take into account are:

  • How easy it is for your members to make payments;
  • How much time your staff spends processing payments, approving applications, or speaking with members about missed payments;
  • The total time and money your credit union spends sending delinquent accounts to collections;
  • Whether your staff have extra time to dedicate to marketing, cross-selling, or maintaining positive member relationships.

To get started, take a look at the seven key features all credit unions should look for in a high-quality platform.

Loan Servicing Platforms for Credit Unions: 7 Features to Look For

Loan servicing is big business in today’s lending industry, so there are many loan servicing platforms out there for credit unions to choose from. One of the biggest challenges is finding the right platform for your needs. To help cut through the noise and find the qualities that really matter, take a look at the detailed guide to the most essential features below.

Feature

Core Components

Why it Matters 

Account Administration  
  • Ledger maintenance
  • Payment processing
  • Account closeout
You can keep track of accounts more effectively. Your members will also appreciate having a streamlined payment system and up-to-date information on their account status. 
Default Management  Recovering a delinquent account as quickly as possible is a vital aspect of the loan servicing process. A platform that has automated or rule-based recovery options in place will help you keep accounts in good standing and reduce financial risk. Platforms can also include collections management and direct member communications, which saves your in-house staff from going through this time-consuming and complex process. The best platforms also base these systems on the latest compliance regulations, which can reduce your credit union’s overall risk. 
Collateral Management 
  • End of term leases
  • Title changes
  • Balloon functions
How your credit union manages the end of the lease is just as important as the loan origination process. You should have a reliable system in place for handing off vehicle titles to the new owners, accepting final payments on balloon loans, and tying up any loose threads when the lease comes to an end. Getting through this process quickly ensures full repayment that you can then invest back into the business. 
Efficient Workflows 
  • Short training time
  • Improved staff efficiency
  • Secure user roles and access permissions
  • Workflow routing that replaces manual user handoffs
A great loan servicing platform for credit unions is one that runs smoothly from the moment it’s implemented. The system should be easy for your in-house staff to navigate and use automated, rule-based workflows to significantly reduce the risk of human error. 
Industry-Specific Integrations 
  • Auto loans
  • Business loans
  • Personal loans
The platform should have some key features that are specific to certain industries, such as rules for title changes when an auto lease ends. This is especially important if a significant number of the loans you offer are a certain type of loan. 
Customer Care 
  • Welcome calling
  • System troubleshooting
  • Fulfillment
  • Capturing complaints
  • Answering inquiries
While your in-house staff handles most direct customer communications, an effective loan servicing platform can also help with these efforts. Anything related to the loan servicing process, like questions about payments or repayment schedules, can be channeled through the platform. This gives your members the answers they need fast. 
Configurability 
  • Create new decisioning rules
  • Manage user role configuration
  • Control how data is presented and managed
The best loan servicing platform for credit unions is configurable, meaning that you have full control over how the platform works within your existing system. The platform should give you the freedom to create decisioning rules or change the way data is presented or used by your staff and members. It’s a way to smoothly introduce a new platform into your workflow. 

You may only need one or two of these features to increase your credit union’s operational efficiency. If so, it may be wise to partner with a vendor that offers a la carte-style services in the key areas you wish to improve. Many credit unions will gain the most benefit from using an end-to-end platform. Not only does this take pressure off your in-house staff, but it also allows your credit union to expand and find new lending opportunities. You can safely increase the size and diversity of your loan portfolio without having to worry about as many operational details.

How Does Your Loan Servicing Process Stack Up?

Many credit unions continue to handle their own loan servicing. However, loan servicing platforms are playing a key role in driving the credit union industry forward. Even if your current loan servicing process is relatively efficient, there may still be room for improvement. 

Do you wish your staff had more time to cross-sell other membership services to borrowers? One common challenge credit unions face is is finding ways to engage borrowers in other services the credit union offers — checking, savings, credit cards, CDs, mortgages, or even stock purchases or safe deposit rentals at larger institutions —  not only auto or personal  loans. While some borrowers become members exclusively to get approved for auto or personal loans. Encouraging these members to expand their use of  services, can be better for member retention and for your bottom line. 

Loan servicing platforms give you more time to think about these types of challenges and come up with innovative solutions. They can also improve your membership services. An efficient system means your members will have an easier time repaying loans and managing their accounts. This in turn could encourage them to apply again for loans from your credit union in the future. Upgrading to a new and improved loan servicing platform could be a game changer for your credit union.

Getting Started

defi SOLUTIONS is an end-to-end loan servicing platform provider. We have years of experience working directly with credit unions to improve the way they service their loans, including auto loans and other types of consumer lending. To get started, contact our team today or register for a demo.

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