Commercial loan management software

A guide for lenders

The commercial loan management software market is experiencing rapid growth as business returns to normal following the pandemic and digitalisation increases. According to a recent study, the global market size was valued at USD 12.1 billion in 2022 and is projected to reach USD 23.2 billion by 2030, growing at a CAGR of 8.60% from 2023 to 2030.

Issuing a commercial loan can be a lengthy process and administering it will be a further drain on time and resources unless loan management is optimised. Margins are often very thin and pricing is competitive because the growth of fintech means many more lenders are vying for business. The lending landscape is also becoming more complex due to regulatory changes and the globalisation of business.

To succeed today, lenders must automate their operations across the full loan cycle, from application to closing. Commercial loan management software can manage all the loan-related activities that lenders must perform, such as loan calculations, origination, risk management, processing and tracking, credit reports, and compliance.

Whether you are a bank, credit union, financial institution, or alternative lender, and whatever type of business you serve, commercial lending will be more complicated and demanding than lending to individuals. It’s therefore vital to review your needs carefully and select the right technology platform.

This blog looks at the current marketplace and what commercial lenders should consider when making software decisions to streamline operations and boost profitability. 

Digital transformation and business focus

In such a competitive and complex industry, automation can make all the difference to the bottom line and market share. It can both bridge technology gaps in routine processing and ensure lenders have the right operational focus to retain commercial clients and attract new ones; for example, by handling intricate calculations seamlessly and eliminating costly accountancy errors. 

Despite the increase in digitalisation, Deloitte says that 30 to 40 percent of time is still spent on manually processing tasks that could be automated with the help of the right commercial loan management software. Maintaining legacy technology is a huge drag on performance and puts incumbents at risk from lenders with advanced fintech solutions. Those who cling to legacy technology are likely to: 

• Lose time and money deploying software upgrades
• Find it difficult to integrate third-party applications
• Struggle to access data in real-time
• Encounter limitations if they want to develop new products. 

Core functions and criteria for commercial loan management software selection

The lifecycle of a commercial loan will span core activities and regulatory obligations, and all can be optimised with software. Let’s take a closer look at the things lenders should think about in the B2B environment, which is more complex than the personal-lending space, and the differing needs of small and medium-sized businesses.

Implementation and support

Commercial lenders need a software platform that is easy to implement and configure, backed by a vendor support team that can provide step-by-step guidance. Equally, the end user must have a smooth journey. Customer experience is vital, not least when onboarding. Research shows that 90% of companies lose potential customers because of slow and overly-demanding customer interactions at the sign-up stage. The goal should be to streamline the onboarding process with commercial loan management software that reduces friction and provides the right balance between compliance and speed. 

Scalability

Most commercial lenders intend to scale and will therefore need software to support their business strategies and growth plans. Adaptability and versatility are key in today’s environment. If lenders make the wrong commercial loan management software choice at the outset, it will constrain the business and dent future earnings. Can the software support multiple markets and enable you to extend your reach and attract new customers? Will it handle growing transaction volumes while remaining accurate and promoting compliance? As a minimum, automating repetitive and time-consuming tasks will enable lenders to process more loan applications. 

Integration and flexibility

Integration and flexibility are functions of scalability. Lenders must look for software that can integrate with third-parties, such as payment service providers and credit reference agencies, and communicate smoothly with core systems and tools. With the growth of fintech, there are now so many tools to support lending and boost the power and efficiency of any platform, so lenders need to be versatile and adaptable to remain competitive and customer-focused. 

Customisation

 Needs vary, and while some businesses may be happy with standard, out-of-the-box solutions that can serve all their requirements, others may want to customise their platforms. If customisation is required, choose commercial loan management software that allows you to tailor the platform to suit your lending strategy and business goals. 

Compliance and security

Compliance and security are fundamental requirements. Automation will help lenders ensure that loan origination reflects compliance obligations such as the General Data Protection Regulation (GDPR), Know Your Customer (KYC), and Anti-Money Laundering (AML). Payment security is obviously vital and the growing threat from cybercrime means lenders must have strong cybersecurity in place.  

Analytics and reporting 

Lenders need to capture and analyse a wide range of data throughout the loan origination process. Commercial loan management software must ensure data accuracy and customer insights to help lenders make informed decisions, mitigate risks, and improve customer experience.  Lenders should look for software that provides complete record accuracy with automated cash movement and reconciliation. 

End-to-end commercial loan management software

The role of commercial loan management software is to reduce errors, make borrowing fast and easy for customers and lenders alike, tailor products and services to customer needs, and ensure regulatory compliance and the secure exchange of sensitive data. 

Software should provide an end-to-end solution that can adapt to new needs and deliver a seamless lending experience as your business scales and evolves. That’s why it’s important to carefully consider the selection criteria listed here and choose a commercial loan management software provider that understands your lending goals and can future-proof your business.