While business lending has gradually increased since the COVID-19 pandemic, microfinance institutions continually face challenges in growing their loan portfolios. Many cannot scale their businesses and grow their loan portfolios, partly due to a lack of proper systems.
Today, we’ll look at five main challenges microfinance institutions face and how implementing a reliable lending management system can increase their growth 10X.
5 Common Challenges in Lending That a Lending Management System Can Solve
1. Unified data management
Lending is a paper-heavy process that requires lots of documentation and many rounds of review before loan approval can happen. For most loan officers, it takes a lot of work to consolidate all this information and complete reviews in a timely, organized manner while continuing to interact transparently with borrowers.
As challenging as it may be, microfinance institutions must find a way to consolidate and manage data correctly. With the correct data, you can make complex and quick decisions that improve your institution’s scalability. To accomplish this, many lending institutions are turning to the cloud and all-in-one online loan management systems that provide a data repository synced to communication channels so loan applications are processed as efficiently and accurately as possible.
How Prest LMS can help consolidate your data
Presta Loan Management System (LMS) allows you to streamline all your loan processes, automate financial record-keeping, and boost productivity. Ultimately, you’ll grow your credit business tenfold.
Our loan management system automates your bookkeeping and tracks all loan transactions in real-time. With these capabilities, you’re sure that all your data is captured in real-time and stored in one place, where you and your team can access it whenever needed.
2. A slow loan origination process
Unlike online lenders, most big financial institutions are too slow to make decisions. So while online and mobile lenders approve or decline loans in minutes, traditional lenders take weeks, sometimes even months. Indeed, how do you compare minutes to months?
Further, thanks to COVID-19, almost every sector was forced to go digital. In a world where services are now available at our fingertips, financial institutions demanding to serve their customers face-to-face find themselves with no one to serve.
Digital lending helps lenders to serve customers expecting—and deserving instant service. Appraisals can be, in part, carried out digitally, and loan forms can be signed online, increasing the speed of the loan origination process.
How Prest LMS can help speed up your loan origination process
With Presta LMS, you can establish standardized loan management workflows that ensure your loan applications are processed consistently and efficiently. Our online loan management system fully automates every step of your loan process—from customer onboarding and compliance to application processing, loan servicing, and collecting repayments. The system completes many routine tasks faster than employees and with more accuracy.
In addition, we offer Presta Sign, a digital guarantorship platform that lets your customers sign loan forms online. For cases where guarantors are required, customers can use our USSD feature or mobile app to guarantee loans, collect electronic signatures, and track document progress in real-time, all from the comfort of their homes or offices.
3. Disjointed loan processes
The lending process can be long and clunky and involves numerous employees, including business development officers, analysts, credit committee members, loan officers, and outside closing agents.
As the loan application advances from stage to stage, bottlenecks are common. There’s constant back and forth with the borrower for required financial documents, and loan guarantors may be unavailable to sign loan forms physically. Not forgetting delays as the credit file is passed between parties.
Without a streamlined way of managing the loan approval process, your microfinance is forced to rely on anecdotal information about the status of a credit request. But, with a proper lending management system, you can speed up and smoothen the origination process by digitally putting everyone at the same table. With that comes less back and forth and more forward motion. When everyone in the origination process can interact without delay, you’ll likely witness shorter closing times, a more extensive loan portfolio, increased repayments, and ultimately increased profits.
How Prest LMS can streamline your loan management process
The Presta Appraisal feature streamlines every step of the lending process so you can approve loans in minutes. Your borrowers don’t have to wait for months to find out whether or not they’ve been approved for a loan.
Our loan management software is a single source of truth for all consumer credit data. It ensures that loan officers access accurate and consistent information when evaluating loan applications.
4. Risk management
One of the significant challenges in the microfinance industry is managing risks associated with lending money to borrowers who may be unable to repay the loan. Lack of accurate and impartial information places microlenders at risk of defaulted loans.
Lenders, thus, need to employ comprehensive solutions for evaluating risk to protect themselves from potential losses.
How Prest LMS can help speed up your loan origination process
Presta LMS offers features like credit scoring and underwriting tools. With these tools, you can quickly assess the borrower’s creditworthiness and minimize the default risk.
Our onboarding approval process allows you to automatically verify every new customer’s identity before they can access any loan products. By doing so, our loan management system helps prevent identity fraud and other issues that can arise when working with unfamiliar customers.
5. Customer relationship management
Building a solid relationship with borrowers is essential for lenders to retain their customers and generate repeat business. In a rapidly changing world, credit businesses must be aware that their customers are changing and cater to them accordingly.
The best providers engage customers to learn how their needs are evolving. Unfortunately, most financial services providers don’t have proper customer relationship management systems to facilitate this interaction.
How Prest LMS can help manage your customers better
Presta LMS is a mobile-powered lending management system that increases flexibility, accessibility, efficiency, security, and overall customer experience and satisfaction. We offer CRM tools that help lenders engage with their customers, manage their accounts, and communicate effectively.
With our reliable loan management software, you can generate insights about your customers to build relationships, identify risks and opportunities, and effectively manage your loan portfolios. In turn, you’ll increase your customer retention and reduce delinquencies.
Want to scale your microfinance and grow your loan portfolio 10X? Sign up on Presta LMS and start your Free 14-day trial Now!
