With a surge in big data and technological advancements, countless businesses, and even banks are jumping on the bandwagon.

Good news for anyone getting into loan management solutions. According to a recent report by Allied Market Research, the global loan management software market, which was valued at $5.9 billion in 2021, is now projected to reach $20.9 billion by 2031, growing at a CAGR of 17.8%.

Let’s Define Loan Management Software

If you’re not entirely familiar with loan management systems, in a nutshell, they are digital, often cloud-based solutions that process and provide services for loan origination, underwriting, data assessment, risk management, and loan lifecycle management.

A range of businesses and financial institutions are seeing the benefits of leveraging the technology to boost efficiency and streamline operations. There are a few key factors that have led to this, so let’s break them down.

Where on the Map Is This Happening?

North America contributed 34.58% to the global loan origination software market, with the US being the largest contributor. In 2022, about 20 million Americans took out personal loans. 

Meanwhile, in the Asia Pacific, loan origination software usage is growing at a high CAGR of 11.63% with a projected net increase of 2.12% by 2030. Lending criteria is stricter in America, but in China and India, it’s a little more relaxed. So much so that the Chinese government has introduced reforms to increase credit access for small to medium sized businesses. Rapid industrialization is taking place in India and has led to a serious demand for both household and business loans. 

4 Major Market Drivers

With the advent of more and more cloud-based software, businesses are naturally gravitating to software that works seamlessly within their suite of existing applications. But it’s not just the business side. Lending software leverages tech in a way that puts its customers’ feelings front and center. But that’s just the tip of the iceberg. Here are three major drivers that are creating shifts.

Tech

Big data, AI, and machine learning. These are not more buzzwords. Digital lenders need processes that are safe, scalable, and free of human error. Cloud computing helps businesses stay ahead of the game in the fast-changing digital world. Safety is also a critical matter. With features like biometrics and digital authentication, borrowers are kept safe and secure.

Customers

This is two-faceted. Firstly, just like any business, customer experience is paramount, and the loan industry is no exception. Better and more streamlined processes allow customers a smoother application process. In fact, many “Gen z-ers” value online user experience above anything else. Enhanced mobile-based user experiences have become as simple as a few taps on a screen, leading to an upswing in the user-base. Secondly, data helps businesses better personalize customer experiences. This, of course, results in more satisfying relationships and increased brand loyalty.

Easy Implementation

Cloud-based deployment is a popular choice in the global loan origination software market due to its low upfront investment costs, lack of licensing fees, and the only requirement being access to the internet. In fact, it held a significant 62.40% segment share in 2020, with the potential to generate revenue of $3,503.26 million according to Astute Analytica study. 

Banks

According to the study, banks are responsible for generating over 45% of revenue of the global loan origination software market. The BFSI (banking, financial services, and insurance sector) is increasingly adopting global loan origination software to enhance productivity and improve the client experience. With banks entering the picture and exploring retail and commercial lending to small and medium businesses, the demand is skyrocketing. Not to mention mortgages. As customer needs evolve, this sector will continue leveraging innovation at scale to meet their customers needs and boost operations. 

How can you take advantage?

In a sea of loan management software, how do you as a business, big or small, find the right one? While several factors, such as lending type, target audience, and frequency, are crucial to consider, what matters most is how to leverage technology to provide enjoyable and memorable experiences to customers. The answer to achieving this, no matter the industry, is adaptability. 

Tarya Fintech understands the importance of customization and offers a suite of powerful tools that enable businesses to create a unique and tailored lending technology platform. 

Led by a team of finance professionals and technology experts, Tarya Fintech allows businesses to pick and choose, mix and match components that align with their goals and customer requirements. With Tarya Fintech, businesses can deliver an unparalleled customer experience and stay ahead of the competition.

Check out which solutions from Tarya Fintech can help you.