Thinking about a new way of doing business is often the most challenging exercise that a business owner can face. In particular, leaders of financial services firms such as lenders and loan servicers tend to trust methods that have worked in the past and are reluctant to alter internal processes even as growth beckons.
Although there are more, here are just five reasons why a loan servicer should re-examine how they do business today and why they should consider investing in technology to propel their business forward:
Simplify. Don’t let your loan servicing business get buried by sheer loan volume or the complexity of tracking multiple loan types and interest rates. Loan origination and servicing is a complicated business whether your portfolio includes a couple hundred loans or thousands of loans. The right loan servicing software package will simplify the tracking of loan parameters, payment and balance statuses, and reduce the clutter of physical paperwork and account files scattered about the office.
Improve efficiency. Servicers and collectors often get bogged down in physical paperwork or an endless trail of computer files connected with their accounts. Account details may have been changed in one area but neglected in another, leading to numerous discrepancies and hours of reconciliation activity. Besides creating uniformity across the business, the right software package can standardize and optimize critical business processes. Workflow management within the software can automate the front-end and back-end tasks, including originations, restructuring, workout, foreclosure, repo, audit control, and bankruptcy. Your frontline people will become more productive and, quite likely, happier employees.
Improve the dependability of your numbers and formulas. By eliminating spreadsheets and manual calculations, you can have complete confidence in the numbers and financial results. Most likely, the reliability of your performance reporting will be improved too.
Manage changes more easily. Loan servicing often entails the modification of loan parameters to accommodate changes in interest rates, terms or repayment schedules. The right loan servicing software package streamlines this process.
Expand your business! Each segment of the lending industry has its own set of rules and regulatory requirements. Often, these rules vary at the individual state level or at the federal level. Beyond regulatory elements, there may also basic business and profitability reasons to be looking at new markets and products. Looking beyond your current business, therefore, is a critical consideration for business growth. Furthermore, finding a software partner that has the desired industry experience should be an essential strategic move.
Thinking outside the box in loan servicing is more than a trite business cliché. Taking a good hard look at how you are operating today and the gaps that exist in getting to where you want to be tomorrow should be an eye-opening experience. The key question to ask yourself is this: Can you sustain your business and its prospects by going about business the same way you’re doing it right now?