Lenders who are considering upgrading their loan servicing software typically go through the process of comparing the architecture, capabilities, and market standing of various loan servicing vendors. You’ll develop a shortlist of evaluation criteria for vendors you want to consider. Further along in the evaluation process, you’ll develop a more detailed set of criteria to review the pros and cons of each and ultimately select a vendor.
As both a loan servicing software vendor and business process outsourcing provider for loan and lease servicing, we are uniquely qualified to provide you with guidance when comparing loan servicing vendors for value and customer satisfaction. We use our own servicing software to support our business process outsourcing services. In the years that we’ve been both developing lending software and providing loan and lease servicing, we’ve applied our experience to continually improve the servicing software we offer.
Building on this unique perspective of loan and lease servicing, when you’re ready to begin your comparison of loan servicing vendors, consider the following four criteria to help narrow your list.
#1 Reach for the Cloud
When you’re about to replace a legacy servicing solution, only consider loan servicing vendors who offer a cloud solution. Millions of companies worldwide have realized the benefits of cloud software solutions. You’ll benefit from a cloud-based loan servicing solution in the following ways:
- Capital and operating costs associated with your IT infrastructure (servers, electricity, physical space, maintenance, and management) that supported legacy software are greatly reduced and can be applied to support other areas of your business.
- Rapid and frequent software updates that give you access to the latest software releases, allowing you to immediately take advantage of the latest performance improvements, features, and capabilities.
- The ability to easily scale software licenses and processing capacity to match market growth or decline.
- Guaranteed software uptime and responsiveness regardless of demands placed on your system as a result of hosting the software on major cloud service providers such as Microsoft Azure.
The economics, operational advantages, and innovative functionality of a cloud-based loan and lease servicing solution deliver quantifiable value in comparison to legacy systems. Cloud is a requisite for any lender who intends to remain competitive and profitable.
#2 Support a Digital Lending Experience
Leading lenders support a completely digital loan and lease origination process, allowing borrowers to submit applications (including any required documentation) digitally anytime, anywhere. Digital applications facilitate rapid lending decisions, with offers delivered in seconds to qualified applicants delivered via e-mail and e-contracts.
The vendors you consider should support a digital servicing experience, allowing borrowers to easily and securely access relevant loan or lease information online. This application should allow the borrower to update contact information, set up automatic payments, make one-time payments, access loan or lease account statements, calculate current payoff amounts, and coordinate end-of-lease activities.
Borrowers benefit because they have access to current, accurate account information anytime. Lenders benefit from fewer calls to the service center and reduced printing and mailing costs. Support for a digital lending experience boosts customer satisfaction while simultaneously lowering loan and lease servicing costs.
#3 Loan Servicing Vendors Should Offer a Modular Approach
Consider software vendors who offer a modular approach to building a servicing solution that meets your immediate needs and allows you to build on that foundation. The servicing solution should support the entire loan and lease servicing cycle, from borrower onboarding to final payment, and handle the complexities of default management, repossessions, and remarketing.
| Customer Care | Account Administration | Collateral Management | Default Management |
|---|---|---|---|
| -Welcome Call -Complaint Tracking -Fulfillment -Due Date Changes -Late Fee Waivers | -Cash Management -Account Closeout -G/L Maintenance -Payoff Processing Through Bills | -Title Management -Lease Maturity -Vehicle Valuation -Remarketing -Online Sales | -Notifications -Delinquencies -Bankruptcy -Repossessions -Recovery |
Look for a consistent and intuitive user interface that makes it easy for servicing agents to become proficient and quickly respond to borrower requests or efficiently complete servicing tasks. As you expand the solution, a consistent user interface makes it easy to learn other modules’ capabilities.
In addition to the modular approach to solution implementation, look for a vendor’s ability to integrate value-added lending services. Those services may include tax service, tolls and citation resolution, vehicle inspections, and dozens of other capabilities that boost efficiency throughout the servicing cycle.
#4 Focus on Vendors That Focus on Lending
Yes, we’re clearly biased in making this recommendation, but with good reason. Many prominent software vendors develop solutions for multiple industries that may excel in certain industries, but not all. Likewise, there are large software vendors that do well in supporting the financial industry, but lending may only be a portion of their focus.
You’ll obtain better quality software and support from vendors who focus exclusively on the lending industry. In particular, ask how many of the vendor’s employees have actual lending experience. These employees bring valuable hands-on experience to direct the vendor’s software development strategy and design the user experience. They intimately understand the business challenges that lenders face and apply this knowledge to guide software development. The result is a software servicing solution that addresses the needs of lenders and offers the ability to configure features and functionality to fine-tune the solution to your unique loan and lease servicing needs.
Loan Servicing Vendors: Narrowing the Field
A software replacement project is a significant undertaking for any lender. With the dozens of software vendors in the market, it’s challenging to determine which ones deliver the best value and offer functionality that significantly boosts customer satisfaction.
The four high-level criteria mentioned above will help streamline your comparison process, allowing you to quickly narrow the field, carefully evaluate the remaining loan servicing vendors, and decide on the one that best meets your servicing needs.
Getting Started
defi SOLUTIONS provides configurable lease or loan origination systems, loan and lease servicing solutions, analytics and reporting capabilities, and a wide range of technology-enabled BPO services. When comparing loan servicing vendors, if you’re looking for greater efficiency in handling all aspects of loan and lease servicing, take the first step in realizing the benefits provided by a cloud-based, modular solution. Contact our team today or register for a demo.
