Community banks offer intimate knowledge of the local economic climate and financial needs of the communities they serve. To maintain focus on this competitive advantage, community banks are looking for greater efficiency in handling many high-volume process activities.
Loan servicing is a primary target for greater efficiency. Over the years, many community banks have built their own loan servicing systems or used the limited capabilities provided by their core banking system to run their servicing operations. To significantly improve efficiency in loan servicing, many community banks are now evaluating loan servicing platforms from specialist providers to find a solution that best meets their needs.
A modern loan servicing platform allows community banks to focus on their core competencies and achieve greater efficiency in loan servicing.
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What to Look for in a Loan Servicing Platform
When evaluating the capabilities of a loan servicing platform, community banks should consider three primary functions: account administration, customer care, and default management. These functions are critical to supporting current servicing requirements as well as providing a foundation for future changes that enhance efficiency and improve customer service.
Account Administration for Seamless Continuity With Loan Origination
The platform should easily import relevant loan contract data generated during the loan originations process to ensure seamless continuity between origination and servicing. Account administration should be coordinated by a comprehensive accounting engine that accurately maintains the general ledger. Loan portfolio balances should be easily mapped to a bank’s general ledger account balances, allowing for real-time system processing and reconciliation of payments and account closeouts. Additionally, the platform should support a wide range of fee management processes and types that can easily be configured and modified (when necessary) by loan servicing professionals. Accuracy and efficiency of account administration is essential to efficient loan servicing.
Customer Care, From Welcome to Closure, Across All Channels
The platform should provide all the tools and processes needed to manage in-bound and out-bound customer communications across all channels—phone, web, chat, text, email, and postal. Beginning with welcome calls to new borrowers, the ideal platform captures all customer communications and tracks inquiries through to resolution with configurable workflows.
The platform should also provide a servicing portal (available on desktop and mobile) that benefits both borrowers and bankers. Borrowers have secure access to loan documents and statements, make payments, and manage loan details. Meanwhile, bankers benefit from a comprehensive and configurable self-service portal that helps reduce servicing costs. Through data, workflow, and communication channels, the platform should establish a complete and accurate record of customer interactions, giving representatives the information needed to deliver exceptional customer service that leads to continued customer retention.
Default Management – Working Toward Resolution
Although community banks enjoy lower levels of lending risk, some number of delinquencies and defaults are unavoidable. A proficient servicing platform provides greater efficiency and accuracy in default management by offering:
- Real-time updates to ensure borrower data is accurate and current, thereby avoiding account synchronization problems associated with batch updates
- Instant notifications that inform customer service professionals of current loan status
- Billing statements that accurately reflect all account adjustments
- Workflow rules that alert to conditions or situations that would be difficult to detect through manual checks and require special handling
Configurable workflows and rules eliminate many routine manual steps that can introduce delays and inconsistencies in a default management process. Accurate accounting ensures borrowers and customer service representatives know the current account status as they work toward resolution.
With a Loan Servicing Platform, Community Banks Focus on Core Competencies
A modern loan servicing platform helps community banks focus on core competencies that give them a competitive advantage: serving the face-to-face needs of meeting with customers, recommending savings, checking, and lending products tailored to their specific needs. A loan servicing platform offered by a provider solely focused on servicing offers considerable advantage over solutions developed in-house or a core banking system.
The best loan servicing platform for community banks will also scale easily to meet changing loan volumes, which lets lending professionals configure workflow rules and routing to reflect the unique loan servicing needs, and facilitate best practices in maintaining compliance with federal, state, and local regulations.
Greater accuracy and efficiency, comprehensive tools for customer and account management, and an opportunity to eliminate many capital and operational expenses associated with in-house servicing solutions may be reason enough to make the change to a loan servicing platform.
defi SOLUTIONS is a loan servicing provider offering innovative solutions for the community banking industry. We have more than 30 years of experience working closely with community banks to efficiently manage every aspect of loan servicing. To learn more about the advantages of moving to a modern loan servicing platform, contact our team today or register for a demo.
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