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6 things to look out for in your loan software

features of the best loan software

Now that you’ve made the decision to become a lender and to also lend digitally, the next big decision you’ll have to make has to do with the loan software you decide to go with. Whether you decide to build your lending technology yourself or operate off an existing LaaS platform like Lendsqr, here are six things you should keep an eye out for: 

Distribution channels

This is perhaps the most obvious thing you’d want to know. How will borrowers access your loans? No matter how sophisticated your loan software is, there’s no business if there’s no system for people to actually get the loans. Loans can be accessed via mobile app, web app and even USSD. Repayment can also be done via these channels. Lenders are able to reach different groups of borrowers on different channels and you’ll benefit greatly from a loan software like that of Lendsqr that can deliver multiple distribution channels. This is especially important to scale your business. 

Loan decision engine

Decisioning is a crucial part of the loan process and how the decisions about which loans are granted or not are made, largely determine the success of your lending business. A loan decision engine assesses loan applications based on predefined criteria and rules which make up decision models. The engine is responsible for screening and scoring borrowers’ to determine their eligibility for a loan. 

A decision engine can assess thousands of data points at a time and the goal is to have one that runs on decision models that are robust and extensively configurable. This reduces the burden of manually underwriting each loan and the risk of human error.  The decision engine should have multiple modules including a machine learning module which allows lenders to improve the underwriting rules based on the data that has passed through the engine.  

Disbursement

Disbursing loans after they have been granted is another stage where your loan software should be up to the task. Every lender needs an organized method of disbursement that is seamless and secure. A wallet system linked to virtual accounts is a great way to do this.

This would require an integration with a virtual accounts provider and a payments provider to transfer the money to the borrower’s actual bank account. A virtual account number will be generated for each customer that onboards your platform and this account will be tied to their virtual wallet. The wallet stores their money and is used only for transactions within the platform such as loan disbursement and repayment. 

Automated collections

You’re not making the best use of tech for your lending business if the only way you can get repaid is if customers manually repay their loans. As a lender, an effective collections system should be top priority for you. This is your bread and butter. Customers have the option of funding their wallets by making a transfer to their virtual account and then the system can automatically debit the wallet to repay the loan. 

However, this is not the only way. Integrating with a payments provider such as Remita and Paystack allows you to trigger automatic debits from the debit card tied to the borrower’s profile on your platform.

Reporting

Do you know how well or poorly your business is doing? Running a lending business, especially digitally, means that there are a lot of moving parts and components that need close monitoring. Some indicators have to be monitored hourly or in real time to ensure everything is on track. Attempting to collate these reports manually is an  impossible task and might just be like trying to fill up a basket with water. 

Your loan software should be able to keep you on top of the affairs of your business at all times. This allows you to course correct wherever necessary.  

Blacklist

If you’ve taken the pain to ensure a collection system that lets you get your money back, a system to keep bad actors out is equally as important. Integrating your loan software with a blacklist service and the credit bureaus is a decision you won’t regret. This gives you even more control over the quality of the borrowers who can access your loan facilities and gives you the chance to also report and block the bad guys who somehow snuck onto your platform. 

When picking out a loan software, it’s important that all roads point towards profitability, risk management and fraud prevention. We understand that trying to put all these requirements together from scratch can be mind-numbing and seem like a near impossible task. That’s why Lendsqr is here to help lenders like you. We’ve done all the work to make you succeed already. Just sign up for free and start lending of Lendsqr’s LaaS platform in minutes. 

You can also reach out to us at growth@lendsqr.com to know more about what our loan software offers.

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