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The defi Team Credit Unions, defi INSIGHT, Managed Servicing, Servicing Systems, Simplifying Processes

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 some 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 technology challenges credit unions face when they service loans.

Common Technology Challenges for Credit Unions

1) Lack of IT Agility  Credit unions often lack agility in deploying IT resources and services to meet dynamic processing demands associated with business cycles.
2) Slow Application Development Credit unions often cannot rapidly implement new applications or modify existing ones to meet evolving market needs.
3) Difficulty Handling Data Volumes Credit unions often have difficulty getting maximum value from the growing volumes of data generated by transactions and customer interactions.

When you upgrade your loan servicing system to a more modern, efficient platform, you can focus on vital operational tasks like cross-sales or membership services instead of technology challenges. 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 impact your operational efficiency—and your bottom line. Our guide covers seven features of an excellent loan servicing platform for credit unions.

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 into core credit union systems and offer limited functionality.
To decide which loan servicing option 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 has 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 credit unions can choose from many different loan servicing platforms. One of the biggest challenges is finding the right platform for your needs. To help cut through the noise and find the qualities that matter, take a look at the detailed guide to the most essential features below.

7 Features of the Best Loan Servicing Platforms for Credit Unions

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 vital to the loan servicing process. A platform with automated or rule-based recovery options 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 ends. 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 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 reduce the risk of human error significantly.
Industry-Specific Integrations 
  • Auto loans
  • Business loans
  • Personal loans
The platform should have some key features specific to certain industries, such as rules for title changes when an auto lease ends. This is especially important if many of the loans you offer are a specific 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.
  • 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 complete control over how the platform works within your existing system. The platform should allow you to create decisioning rules or change how data is presented or used by your staff and members. It’s a way to introduce a new platform into your workflow smoothly.

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 worrying 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 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 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. 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 your bottom line.
Loan servicing platforms give you more time to think about these challenges and develop 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.
If you are looking for a loan servicing platform that provides the seven features listed above, look no further than defi SOLUTIONS. Our defi MANAGED SERVICING provides a single hub, digital interactions, and intelligent virtual assistants to bring everything together.
defi MANAGED SERVICING uses AI and Contact Center as a Service to boost operations and processes related to auto loans, leases, and leased vehicle dispositions, reducing budgetary expenses and improving customer service.
We offer you a choice of end-to-end auto loan servicing or à la carte services, such as loan and lease customer service, lease maturity management, remarketing, and backup servicing.

Getting Started

defi SOLUTIONS is redefining loan origination with end-to-end software solutions that enable lenders to automate, streamline, and deliver. Borrowers want a quick turnaround on their loan applications, and lenders want quick decisions that satisfy borrowers and hold up under scrutiny. With defi MANAGED SERVICING, lenders can improve operations and processes related to auto loan servicing, leases, and the disposition of leased vehicles, cutting expenses through automation and outsourcing services. For more information on our loan servicing platform for credit unions, Contact our team today and learn how our cloud-based loan origination products can transform your business.

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