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Loan Management System – Everything You Need to Know

Customers who take out loans through your financial institution do so with confidence and trust in your services.

To keep the loan servicing process streamlined, continue to inspire customer trust, and ensure you receive loan payments back promptly, you should consider a loan management system if you’re not already using one.

If you’re unfamiliar with this type of management software, then you won’t want to miss this must-read guide. We’ll explain the advantages of loan management, what you need in loan software, and how CRM components can increase customer satisfaction.

Why Do Lenders Need Loan Management Software?

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Lenders need loan management software to simplify the process of loan management.

Loan management software can review current borrower applications to determine who’s eligible for a loan, whether it’s a personal loan, business loan, or title loan. The software verifies their eligibility, determines the funds they should receive, and then issues those funds.

The software can also manage ongoing payments and collect those payments. In that regard, loan software is a combination of a loan servicing system and a loan origination system.

Rather than requiring a lender to use both systems, the software streamlines and combines processes in one handy solution.

This enables banks to improve their reporting accuracy and transparency, collaborate more seamlessly among staff and teams, operate more efficiently, and overall provide a more stellar customer service experience.

Read also: What Is Vendor Management? Process, Challenges, Tools

What Should Lenders Look for in a Loan Management Software?

If your loan servicing doesn’t include management software in the mix, it’s to your financial institution’s advantage to change that.

As you browse your software options, you might come across several solutions you like. How do you narrow it down to one? Here are some major features to prioritize.

Loan Origination

The loan origination process includes a variety of steps that can, without the right software, become hard to manage.

The process begins at most financial institutions with a pre-qualification stage to ensure the potential borrower has the right financial prowess to qualify for a loan.

If your bank determines they do, the borrower moves into the loan application state, where they’ll submit a series of documents for your staff to assess.

For example, the borrower must submit a record of their bank balances, credit card information, payment history, and tax returns.

Photo by Scott Graham on Unsplash

Next, you and your staff will review these documents to gauge the borrower’s financial responsibility. Do they pay back loans on time? Do they make extraneous payments too often?

Should the borrower make it through the documents screening process, then you’d next enter negotiations with them to determine the terms of the loan, including for how much, how long the borrower would have access to the money, when they’re expected to begin repaying the loan, and how much they’ll pay on the loan.

Losing track of where you are in the loan origination process can result in confusion and crossed wires. You might approve the wrong borrower or let certain applications sit for too long.

When using loan management software, you can keep the entire loan origination process proceeding smoothly, even if the number of borrowers you work with increases substantially.

Loan Servicing

You’ll recall that loan management encompasses loan originating and loan servicing. This process is even more integral to financial institutions, as loan servicing is how you get your money back from a borrower.

Again, when a lot of tasks pile up, it’s easy to miss certain responsibilities or forget them. With a software system that encompasses servicing loans, you can manage the process more expediently.

You won’t miss loans in progress, and you can check in with the borrower to ensure they’re repaying the loans they’ve taken out.

Read also: Why Loan Officers Need a Specialized CRM Software

Debt Collection

Some customers can fall into debt with their borrowing and spending habits. Debts hurt not only the borrower but your financial institution as you await payments that can take weeks or months over their deadline to arrive.

The longer a debt goes unpaid, the more interest it can accrue. Yet the long-lasting debt can also get tossed to the backburner as other more pressing tasks take priority.

Not anymore! Your new software solution will make debt collection simpler and more efficient than ever. You can use the loan system to track ongoing debts, review payment deadlines and terms, and then set about collecting the money owed with interest.

Control Over Customer Data

Going back to our point from the intro, when a customer trusts your bank or financial institution, they’re hoping you’ll do more than keep their money protected and their personal data.

Photo by Eduardo Soares on Unsplash

If you’re not using some form of management system, then that becomes a much harder promise to keep. Through the software, the control of customer data gets restored to you, even if you deal with a dearth of customer data.

More than that, your financial institution will also feel in control of your interest rates and loan products. This information will be easily accessible to the parties within your company to whom you want to gain access to ensure a consistent customer experience every time.


Enabling a loan software system also allows you to take advantage of automation.

Automation has so many inherent advantages. You can streamline the processes that may bog down you and your coworkers, winning back hours of time each week.

You can also ensure accuracy and expediency as you automate loan requests and payments.

With sensitive financial information such as loans, you may worry about automation approving the wrong thing, but that’s not how it works.

You establish the workflows that automation within your management system utilizes. If you have flags for a loan application that needs further review, then the loan would only go so far without your manual intervention.

Read also: Workflow Automation Explained (with stats + examples + best tools)

Comprehensive Customer Views

You can also use financial management software to create fully explorable, comprehensive, 360-degree customer views.

360 degree contact view in EngageBay
360-degree contact view in EngageBay

You’ll learn more about your customers than ever before, including their financial status ahead of borrowing, what kind of loan they’ve taken out, how much money they’re borrowing, and their status regarding loan repayment.

Explained: 10 Key Mortgage CRM Functionalities

How to Create a Unified Financial Services Experience

Let’s take this section to delve deeper into loan management CRM, as it’s an excellent way to unify your financial services and expand your business offerings.

CRM to Grow Your Business

Customer relationship management (CRM) software helps with the customer data that your financial institution needs to deepen your current customer relationships and extrapolate even more meaningful information from the newer customers coming down the pike.

Banks, loan officers, and financial institutions should use financial CRM for the following reasons.

Retain more customers

Any financial institution wants to hold onto its customers, and financial CRM can help.

You’ll have a database of all your customer relationships, including past and present relationships. You can glean which ones to maintain or rekindle.

One way you can do that is by sending personalized email content. You’ll know the customer’s name and birthday through the CRM, so sending a tailored message just for them becomes a lot simpler.

personalize messages for marketing automation
EngageBay options for personalization

You’ll also access a communications log with your audience, which is something you might not have had prior. If you can understand why a customer left or chose a competitor and possibly woo them back, then the communication record will make it easier to hold onto their business this time.

Read also: What Is Audience Segmentation & What Is Its Impact on Marketing

Better audience segmentation

How deeply segmented is your financial audience?

The more niched down the audience, the simpler you’ll find it to deliver the kind of personalized experiences that keep customers coming back for more.

A financial CRM allows you to group your audiences by type. Rather than have you manually input segmentation criteria, the software can take care of it for you.

Of course, you can tweak audience groups to your heart’s content. Then, once you like how you’ve arranged your audience, you can continue using CRM to start drip campaigns or other campaigns that appeal to your various audience segments.

Understand your customers better

How much do you really know about your customers? Although you deal with numbers as a loan lender, your customers are far more than just numbers themselves. They’re real human beings with needs, interests, and pain points.

When you have full profiles of each customer, you can touch on more of what makes them human with your interactions, deepening the quality of said interactions.

If you acquire a new borrower from another loan lender, you can easily pick up where they left off without skipping a beat thanks to CRM.

The 5 Best Mortgage CRM Software in 2023

The Benefits of Loan Management System Software

Let’s wrap up by exploring all the advantages of using a loan management system.

Elimination of human errors

You’re a financial expert, which means you’re a math whiz. Yet even the smartest people among us can make mistakes. You’re only human, after all!

However, mistakes when in money and finances are often the most detrimental of all. You can end up approving a borrower for too much money or asking them to pay back more than what they owe.

These kinds of errors can significantly erode trust in your financial institution, and rightfully so.

When you switch to a loan software, you can take heed that you’ll reduce and even possibly eliminate the risks of human error. No more will customers see numbers flubs, even if it’s by something as minute as a decimal point being off by one.

They’ll continue to trust you with their finances and maybe even recommend others to try your services as well!

Time savings

Through CRM and automation, you’ll enjoy tremendous time savings by using a loan software management solution.

You’ll find that among your team of lenders that you approve loans faster, request payments on time more often, and receive said payments back more frequently. It pays to stay on top of the ball!

Read also: What is CRM Automation? Learn the Basics Here (Guide Blog)

Digital report generation

Loan lenders must track important metrics like the number of loans issued, the total amount of money issued, how much customers have paid back, eligible customers for borrowing, and the ineligibility criteria.

You can put all this data into a handy report, but admittedly, doing this takes time. If you’re already strapped for time as it is because of your busy schedule, then you might rush to put together reports or generate them less frequently than you like.

EngageBay sales reports
EngageBay sales reports

Loan software can generate digital reports using the criteria that you feed the software (and the CRM) over the course of the month, quarter, or year.

You can edit any elements of the report before sending it to shareholders, but you’ll enjoy having quality reports to deliver on time that didn’t require you to pour hours and hours into them.

Competitive advantage

You’ll also find that once you have a loan system in place, you’ll have an advantage over the competitors who aren’t using such a system.

Your financial institution will enjoy a better understanding of your customers, better lending options, automation for streamlined processes, more personalization, and a higher customer retention rate.

As more customers begin to prefer your services, this can even cause the competition to lose out on business unless they catch up.

Easier lending

The last advantage of using software is how it makes lending much easier. You and your team can log into the system to review lending data anytime, communicate with customers through CRM, and automatically approve loan applications that meet your criteria.

You’ll easily issue loans to eligible customers and improve the number of active loans.

CRM For Financial Advisors: A Complete Guide


A loan management software system can simplify so many of the processes your loan lenders experience daily.

Using a CRM tool and automating repetitive tasks, you can create the kind of loan issuing and payment process that delight customers.

If you want to know more about how CRM software can help your business, talk to EngageBay experts today.

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