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FINDING THE BEST LOAN SERVICING SOLUTIONS FOR COMMUNITY BANKS

The defi Team defi INSIGHT, defi SERVICING, Loan Management, Loan Origination Software, Servicing Systems

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Community banks have a lot on their plates. From customer service to payment processing, there are thousands of important tasks banks need to juggle every day. One of the best ways for community banks to take some of this burden off of their in-house staff is by outsourcing most—if not all—of their loan servicing processes. But with so many loan servicing solutions available, it’s not always easy to pick the best one for your bank’s needs. 

These five must-have loan servicing solutions not only ease the burden on in-house staff, but they also streamline the entire loan servicing system from end to end. With these key solutions, community banks can overcome some of their greatest pain points and challenges. 

5 Must-Have Loan Servicing Solutions for Community Banks

Outsourcing the loan servicing process can be a daunting prospect for some community banks. Decision makers must look closely at the capabilities of each loan servicing provider and compare them against the challenges they most need to solve. 

This decision is complicated because loan servicing solutions come in all shapes and sizes. Some providers offer services “a la carte,” meaning you can choose just a few solutions from a list of options. Others offer end-to-end services that take care of every task associated with loan servicing throughout the loan’s lifecycle. 

Which solution is the right choice for your community bank? To help you make this decision, consider these five loan servicing solutions as a baseline. The loan servicing company you choose to work with should, at minimum, offer services related to: 

  1. Automated software 
  2. Account and collateral management
  3. Workflow routing
  4. Customer care
  5. Compliance standards

These five loan servicing solutions are especially important because they solve some of the most common challenges impacting today’s community banks. If you’ve faced any of the challenges below, it may be time to ask a loan servicing company for help. 

Challenge: Loan Servicing Takes Too Much Time and Effort
✔ Solution:Automated Software  

Automated loan servicing software performs three important functions:

  1. It speeds up loan servicing processes like payment processing and title changes. 
  2. It makes loan servicing processes more consistent. 
  3. It reduces staff work hours and wasted resources. 

The less time your in-house staff spends on tedious loan servicing tasks that can be easily automated, the more time they’ll have for more complex tasks that require their expertise. 

Challenge: Not All Loans Are Managed Consistently
✔ Solution: Account and Collateral Management 

Consistency is vital in banking. Not only is it closely tied to compliance, but consistency also directly impacts member satisfaction rates and lending risk. 

The best loan servicing solutions include accurate and consistent: 

  • Ledger maintenance 
  • Title management 
  • Payment processing
  • Account closeouts 
  • Remarketing 
  • Collateral calculations 
  • End-of-term lease calculations 
  • Rules-based decisions 

More consistency in these key areas leads to less risk and fewer errors. 

Challenge: Manual User Handoff is Complicated and Error-Prone
✔ Solution: Workflow Routing

When your staff hand off tasks to other staff members, it’s easy for tasks to get lost in the shuffle. It can also be difficult for staff to know which tasks are a priority. 

Automated workflow routing eliminates the complications that stem from manual user handoffs. Staff manage everything from the same platform, ensuring no data is lost. Workflows are also based on designated scripts, helping staff prioritize tasks properly and complete tasks faster. 

Challenge: Staff Don’t Have a Lot of Extra Time for Members
✔ Solution: Customer Care  

Loan servicing is time-consuming. Unless you hire a large in-house staff to manage loan servicing specifically, some of your staff will likely work double duty as membership representatives and loan servicing experts. 

When you remove loan servicing from your staff’s to-do list, they will have more time to interact with members. Some loan servicing providers even offer additional outsourced customer care services, including:

  • Welcome calling
  • Consumer fulfillment 
  • Complaint capture 

The result is more satisfied members that are likely to apply for loans with your bank again in the future. 

❌ Challenge: Regulatory Rules Change Constantly
✔ Solution: Compliance Standards

When your loan servicing process is consistent, it’s easier to maintain and prove compliance. However, loan servicing providers can also help you follow regulatory rules by keeping your loan servicing system up to date. Third-party providers have the time and resources necessary to follow compliance standards to the letter. 

How to Find the Best Loan Servicing Provider

Now that you know which loan servicing solutions to look for based on the unique set of challenges your bank faces, selecting a provider should be a much easier process. Still, there is one more crucial factor you should also consider: integration. 

After identifying your bank’s unique pain points, you may find that a la carte services deliver exactly what you need, at least for the time being. 

However, a community bank that works with a provider of both a la carte and end-to-end loan servicing is in the best position to address current and future needs. Providers like this help ensure the seamless integration of your existing processes into your loan servicing and core systems and lead to greater efficiency at every level of your organization. All of these solutions working in harmony will help your community bank to thrive.

defi SOLUTIONS is an end-to-end loan servicing provider that offers the best loan servicing solutions to community banks. We have years of experience working closely with community banks to find seamless solutions for today’s competitive industry. To learn more about our solutions, contact our team today or register for a demo.  

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