Shopping for new loan servicing software can be a daunting task. Sometimes it’s difficult to know where to begin. This list of seven questions will get you started.
1) What are my company’s needs?
Be sure your requirements are well defined and documented. This means you’ve created a list of the functions your new software must perform. Also, be specific about any special requirements not typical to your industry. Ideally, the software you buy should be able to satisfy your three to five year company plan, not just your immediate needs.
Remember, just because you’re doing a function or process one way now doesn’t mean there isn’t a better, more efficient way. We’ve seen situations where customers have certain processes they keep doing even though the process is outdated or no longer needed. They just kept passing along stale knowledge.
2) What is our wish list above and beyond our basic needs?
Of course, your new software must have a minimum level of functionality, but if the sky was the limit, what else would you want? For example, if you’re an on-line lender, would one of your wish list items be to make quick decisions on loan applications, including auto approval and auto denials?
How can the software help you with this? Another example, if you’re a commercial lender, does the software allow for different interest rates and fee structures you may want to incorporate? Do you want to offer an incentive if they pay on time for a particular period or pay via an automated method?
What automation with third parties would make your business more efficient? Perhaps there are pricing services you would like to incorporate to value your collateral, or third party lead generation services, or alternative credit bureaus. Does the system have a robust set of APIs and web services to make these types of integrations easy to add?
3) What needs to be part of “Phase I,” and what can be added later?
Prioritize your requirements. What is the minimal functionality you need to go live on the new software? What automation can you add later? Tiered implementation may help make buying and implementing new software a smoother process. For example, you might want to add a borrower portal so your customers can go online and make payments. Maybe in the future, you’ll want to add features and functionality once the initial system is implemented. Custom interfaces and custom reports can be added later; just be sure the software you choose can handle this.
4) Will the software grow and scale with us?
Choose a software that will allow you to expand and grow your business. An enterprise solution will scale with you. Be sure there is an industry standard back-end database for extensive reporting and a robust set up of APIs for integrations. What are your growth plans and objectives? Will the new software accommodate this?
5) Can we expand our services or product lines with the new software?
Are you thinking of adding new products lines? Or do you hope to expand into new geographic areas? Maybe you are an auto lender wanting to expand into title and floor plan loans. If you are a business lender offering a term-type product, are there opportunities to offer a line of credit? If you are a direct lender, might you want to expand into the indirect market – or vice versa? Again, make sure the software can help you achieve these expansion plans.
6) What is my budget?
Software should never be purchased based upon price alone, but if a system is way out of line with your budget, then keep looking. But don’t just purchase a software package on price alone; be sure it does what you need it to do now and into the future. The lowest cost solution is not always the best, nor is the highest cost solution.
In general, software that is a core part of your business shouldn’t be thought of as a regular expense or cost of doing business. It is more of a partnership and long-term commitment than anything else. Moving from system to system is costly and time consuming.
7) How well do we know the vendor?
By the time you choose your software, you should be well acquainted with the vendor. Make sure you’ve vetted them properly. This means you’ve talked to their references, completed several demos, and checked out their longevity in the business.
Also, do they participate in industry conferences so they’re current with rules and regulations affecting your business? It’s not necessarily the vendor’s responsibility to keep you in compliance, but they MUST provide you the tools to do so.
You might also want to speak to more than just one person in the company. After the sale, you will be dealing with support, trainers and possibly implementation specialists. Be sure the vendor has adequate resources to get you implemented successfully and in a timely manner.
