Custom Loan Management Software
An All-in-One Solution to Manage Your Lending Activities
ScienceSoft applies 18 years of experience in creating software for the financial industry to help lending services providers implement effective loan management solutions.
Loan Management Software: The Essence
Loan management software automates the entire loan portfolio cycle, streamlines control of lending activities, and simplifies compliance with internal credit policies and legal regulations.
Such solutions offer instant processing of loan applications and repayments, support automated debt collection and credit reporting, provide centralized storage for borrower data and documents. They usually also cover customer portal functionality to provide borrowers with seamless lending experience and facilitate lender-borrower interactions.
Custom loan management software can include advanced analytics to enable data-driven assessment of borrower credit risks and ensure accurate loan decisioning.
- Main integrations: Accounting software, a treasury management system, payment gateways, a BI solution, and more.
- Implementation time: 10–18+ months for a custom loan management solution.
- Development costs: $400K–$2M+, depending on the solution’s complexity.
- Annual ROI: 100–540%.
Key Features of a Loan Management System
ScienceSoft knows that each lending business has unique loan management processes and credit automation needs. In our lending software projects, we create loan management systems with functionality tailored to each of our customers’ business specifics. Here, our consultants compiled a comprehensive list of features commonly requested by our clients.
Borrower relationship management
- Configurable registration forms for borrower onboarding.
- AI-powered extraction and validation of data provided in the borrower profiles and documents, e.g., a cash flow statement and a balance sheet (for businesses) or a bank statement and salary slips (for individuals).
- Automated aggregation and processing of borrower data from public data sources (e.g., data on a borrower’s credit rating from a credit bureau).
- Borrower pre-qualification against the requirements posed by the internal lending policies (e.g., minimal borrower income, credit history, etc.) based on the available borrower data.
- Borrower credit risk scoring based on user-defined parameters with pre-assigned weights: loan amount, monthly income, income sustainability, etc.
- Calculating consolidated and distributed credit ratings for multi-entity borrowers.
- Borrower segmentation by user-defined parameters: type (a business or an individual), location, income level, credit risk score, etc.
- Automated recording of omnichannel borrower interactions (emails, calls, instant messages, etc.).
- Centralized storage of borrower-related data and documents.
Loan terms management
- Support for multiple types of domestic and cross-border loans, including:
- Commercial: term loans, business lines of credit, merchant cash advances, invoice financing, invoice factoring, SBA loans (for the US), and more.
- Personal: unsecured and secured loans for personal needs, personal lines of credit, credit card advances, Buy Now Pay Later, and more.
- Mortgage loans.
- Syndicated loans.
- Configurable terms for various types of loans: currency, repayment period, interest rate (fixed or variable), APR (including loan insurance and origination fees), loan amount threshold, prepayment and late payment fees, requirements for collateral, etc.
- User-defined terms for interest-free EMIs.
- AI-based suggestions on the optimal loan terms for particular borrowers (e.g., assigning personalized credit limits based on each borrower’s risk level).
Loan origination management
- Automated aggregation and validation of credit applications from various channels: email, a customer portal, third-party lending platforms, etc.
- Automatically routing applications for processing to the loan officers based on employee qualification, availability, schedule, location, etc.
- Automated generation of loan approval forms containing the application and all necessary borrower data and documents.
- Configurable multi-department loan approval workflow.
- AI-powered loan decisioning based on real-time analysis of a borrower’s credit score and credit history.
- Instant communication of credit approval or decline to borrowers.
- AI-supported verification of loan approval compliance with the internal credit policies.
- Template-based creation of loan agreements, automatically applying the proper terms, covenants, and penalty terms for missed repayments.
- Scheduled and ad hoc funds transfer to the borrower.
Loan repayment management
- Calculating the due principal and interest/APR amounts for each lending agreement.
- Template-based creation of loan amortization schedules and sharing them with borrowers.
- Automatically generating multi-currency invoices on due repayments and sending them to borrowers.
- Embedding payment links and QR codes into the invoices.
- Automated payment processing via the connected payment gateways.
- Support for multiple repayment methods: bank transfer, card, check, digital wallet, etc.
- Automated payment collection by direct debit.
- Real-time monitoring of loan repayment status.
- Automated payment reconciliation.
- (for syndicated loans) Rule-based allocation of received payment amounts to multiple lending entities.
Debt collection management
- Scheduled and ad hoc personalized reminders on due payments.
- Alerts to loan officers on missed repayments.
- Prioritizing debts for collection based on the borrower delinquency level, debt aging, loan amount, and more.
- AI-based recommendations on the optimal debt collection strategies for particular borrowers or borrower segments based on the analysis of historical data on borrower interactions and payment behavior.
- Automated collection and processing of debtor responses, promises to pay, claims, requests for loan prolongation, restructuring, or refinancing.
- Automated debt enforcement workflow in case of non-repayment.
- (for syndicated loans) Collection notifications on behalf of user-defined lenders.
- Template-based registration of a borrower’s financial and non-financial assets for secured loans.
- Rule-based cross-collateralization.
- Automated valuation of non-financial collaterals (e.g., real estate, cars, equipment) based on the analysis of available data on their condition and market prices for the assets.
- Real-time tracking of collateral status.
- AI-enabled collateral risk assessment.
Loan portfolio management
- Creating custom loan portfolio structures with user-defined hierarchies and loan types.
- Configurable dashboards with real-time overview of portfolio transactions.
- AI-powered analysis of portfolio risks based on the available data on reputational, financial, operational borrower risks, up-to-date credit rates, current collateral liquidity ratios, etc.
- Calculating FX rate exposures for multi-currency loans.
- Assigning maximum exposure limits to loan portfolio risks.
- Intelligent recommendations on optimal portfolio limits (by total amount, the volume of transactions, loan type, risk position, etc.).
Lending analytics and reporting
- Calculating and tracking essential lending KPIs, including:
- Loan origination metrics: average cycle time, average loan amount, application approval rate.
- Profitability metrics: total financial gains per portfolio, profit per loan, customer lifetime value (CLV).
- Debt collection metrics: debt amount recovered by period, debtor response rate, outstanding debt.
- The loan servicing team performance metrics: the number of applications processed, profit per employee.
- Loan portfolio risk metrics: the probability of default (PD), loss given default (LGD), exposure at default (EAD), and more.
- Template-based creation of reports on the granted loans, repayment progress, portfolio performance, borrower risks, due and paid taxes, and more.
- Scheduled and ad hoc submission of credit reports in the compliant format (e.g., Metro2 for the US) to the credit bureaus.
- ML-powered forecasting of loan demand and profitability based on the historical data on lending transactions, borrower behavior patterns, financial market data projections.
Borrower self-service portal
- Borrower self-registration, managing and updating personal or business information.
- Uploading the required credit documentation.
- Automated generation and submission of loan applications, loan-related claims and requests.
- Repaying loans via a selected payment method.
- Borrower profiles with a full history of credit applications, agreements, debt repayments, etc.
- Alerts to borrowers on updates of loan statuses, due repayment dates, expiring documents that need updating, etc.
- Instant messaging to communicate with loan officers.
- A virtual assistant to help borrowers solve technical, transactional, security issues.
Security and compliance
- Compliance with IFRS9, CECL, GLBA, FCRA, FCBA, ECOA, MLA, FDCPA, TILA, the Dodd-Frank Act, CFPB, KYC/AML requirements, SOX, SOC1 and SOC2, GDPR, PSD2, AnaCredit standards (for the EU), and other relevant global, region- and industry-specific regulations.
- Full audit trail of loan-related transactions and user activities.
- Geography-based KYC/AML verification for borrowers.
- AI-powered fraud detection.
- Documents e-signing.
- Data encryption.
- Configurable borrower data retention and deletion policies.
- Multi-factor authentication.
- Permission-based access control.
Essential Integrations for Loan Management Software
Connecting your loan management solution with the relevant corporate and external systems helps speed up the aggregation and processing of borrower data and documents. Plus, it streamlines lending data sharing between the internal teams and legal authorities. ScienceSoft recommends setting up the following integrations:
Credit rating platforms
of the selected credit rating bureaus (e.g., Experian, Equifax)
For streamlined customer credit rating checks and prompt submission of credit reports.
- For timely transfer of the approved fund amounts to the borrowers.
- For facilitated reconciliation of repayments.
When used by banks, loan management software can be integrated directly with a core banking system.
Factors that Drive ROI for a Loan Management System
The ROI for lending software can vary significantly (from 100% to 540%+) depending on the solution complexity as well as company size and specifics. Below, ScienceSoft’s consultants share the main factors that, when covered, help achieve maximum payback:
To eliminate manual routine across all lending workflows and free the lending teams for high-value tasks.
To accurately assess borrower credit risks and portfolio risks. To get intelligent recommendations on the optimal loan terms and debt collection strategies for various borrower segments.
To ensure loan underwriting and servicing in accordance with global, country- and industry-specific lending regulations.
To enable loan management teams to approve loan applications and track repayment progress on the go.
To provide scalable centralized storage for borrower data and documents and enable 24/7 remote employee access for faster loan processing.
To protect your IT system from all types of cyber attacks and prevent the risk of sensitive data leakage.
How to Develop Loan Management Software
Loan management software development is a complex process that involves business and regulatory requirement analysis, solution planning and design, coding, testing, integration, establishing security and achieving legal compliance.
Below, ScienceSoft outlines key steps to build a custom loan management system:
Business needs and regulatory framework analysis and eliciting requirements for your lending system.
Introducing the optimal feature set, architecture design, UX/UI design, and tech stack.
Project planning: deliverables, scope of work, duration, budget, etc.
Loan management software development (from scratch or platform-based).
Quality assurance in parallel with coding.
Lending data migration (from spreadsheets or a previously used tool).
Integration with other business-critical solutions and relevant third-party systems.
Establishing security of your loan solution and lending IT system.
Continuous support and evolution of the lending solution (optional).
How Much Does Loan Management Software Cost
The costs and timelines of implementing a custom loan management system vary greatly depending on:
- The scope and complexity of a solution’s functional capabilities, including AI-powered features.
- The number and complexity of integrations.
- Non-functional requirements: performance, scalability, availability, security, etc.
- Requirements for the UX and UI for various user roles.
- The chosen sourcing model (all in-house, team augmentation, or full outsourcing), team composition, tech stack, etc.
Based on ScienceSoft’s experience, custom loan servicing software of average complexity costs around $400,000–$1,500,000. Large financial institutions looking to build a comprehensive loan management system powered with advanced analytics should expect to invest $2,000,000+.
Want to know the cost of your lending solution?
Benefits of Loan Management Software
Up to 300% increase
in the productivity of lending teams due to elimination of low-value manual tasks
Over 2–25x faster
processing of loan applications and credit documentation due to automation
Balanced credit risks
due to data-driven decision-making on loan approval and real-time control of borrower performance
of lending activities due to centralized management of borrower data, loan-related transactions and events
due to automated loan origination and servicing in accordance with the relevant standards and regulations
Improved borrower experience
due to a convenient self-service portal and prompt credit decisioning
Off-the-Shelf Lending Software ScienceSoft Helps Implement
Fusion Loan IQ by Finastra
Managing complex commercial (including syndicated) loans.
- Automated origination of various types of loans, including mortgages and syndicated loans.
- Recording and tracking financial and non-financial collaterals.
- AI-supported decision-making on credit approval.
- Customizable templates for various types of lending documents.
- Documents e-signing.
- Pre-built integrations with over 70 market-available core banking platforms and popular credit-rating platforms.
- Compliance with IFRS9, CECL, AnaCredit standards, FACT Act, Regulation B.
Consumer loan management requires integration with Fusion LaserPro, a separately licensed Finastra’s product, which increases the solution’s TCO.
CL LoanTM by Q2
End-to-end automation of lending processes.
- Instantly processing loan applications from multiple channels: a website, email, phone, and more.
- User-defined lending terms: repayment frequency, interest structure, delinquency grace days, etc.
- Automated borrower pre-qualification against the internal borrower requirements.
- Real-time tracking of lending activities.
- Analytics-based planning of debt collection strategies for various borrower segments.
- A borrower self-service portal.
- Pre-built APIs to integrate with business-critical software and digital banking systems.
CL LoanTM may not provide compliance with lending regulations of the countries you operate in.
FIS Loan Management System
Setting up user-defined automated loan processing workflows.
- Managing multiple types of consumer and business loans, including lines of credit, mortgages, installment loans, payday loans, and more.
- User-defined loan application approval rules.
- Customizable templates for repayment invoices and credit reports.
- Processing repayments via connected payment gateways.
- Scheduled borrower notifications and payment reminders.
- Configurable dashboards providing full view of loan transactions, borrower data, the lending team performance.
Although FIS solution provides vast customization opportunities, it is costly and complicated to extend with additional features you may need.
When to Opt for Custom Loan Management Software
Market-available general-purpose loan servicing solutions do provide credit automation functionality, but often fail to bring the expected ROI. This is especially the case for the companies with specific loan management needs and large teams involved in lending processes.
Below, ScienceSoft describes the most prominent cases that may require custom development. If you find your needs listed below, a tailored loan management system will be the most economically feasible option for you.
You need to automate unique loan management operations and want to receive intelligent guidance on specific credit-related decisions.
You want smooth and cost-effective integration of loan management software with your internal systems, including legacy tools.
You need software that is compliant with all required lending regulations, including region-specific standards.
You are involved in high-value and high-volume commercial credit deals and need a highly secure solution providing advanced data protection capabilities.
You need flexible loan tracking software that is easy to evolve with new features and advanced techs as your business grows or transforms.
You have large lending teams and want to avoid considerable subscription costs for off-the-shelf lending tools, which scale as the number of users grows.
You’re starting a lending business and want to build your corporate software ecosystem around a comprehensive loan management system.
Build Your Own Lending System with ScienceSoft
Having 34 years of experience in custom software development and deep practical knowledge of the BFSI industry, ScienceSoft knows how to design and launch an effective loan management system tailored to your unique needs. We provide:
Loan management software consulting
- Business and borrower needs analysis; assessment of the existing lending processes, tools, and their integration points.
- Suggesting optimal features, architecture, and a tech stack for a loan management system.
- Preparing a plan of integrations with the required internal and third-party systems.
- Security and compliance consulting.
- Implementation cost & time estimates, expected ROI calculation.
Loan management software implementation
- Software conceptualization and architecture design.
- End-to-end software development or modernization of your existing lending system.
- Integrating the solution with the required internal and third-party systems.
- Quality assurance.
- User training.
- Continuous support and evolution (if required).
A Featured Success Story by ScienceSoft
Development of Custom Loan Management Software for a US-based Microfinance Company
ScienceSoft designed and built comprehensive loan management software for a reputable financial services company with 50+ offices across the US. The solution provides:
- End-to-end automation of the company’s specific lending processes.
- Smooth integration with the required back-office software, a US-wide SMS service system, and the three largest credit rating platforms in the US.
- Convenient UX and UI for the company’s employees and clients.
- Top-flight security of sensitive data.
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. Since 2005, we help financial services providers design and develop reliable loan management solutions. Being ISO 9001- and ISO 27001-certified, we apply a mature quality management system and guarantee that cooperation with us does not pose any risks to our customers’ data security. Explore ScienceSoft’s lending software development offering to learn more about our approach.