Why are many NBFCs changing their LMS?
Updated: Nov 22
Table of contents
Evolution in the financing industry!
NBFCs started around the 1960s in India as the second option for savers and investors, when banks may refuse finance due to restrictions and strict guidelines by RBI. Here the gates for NBFCs get opened. In case of restrictions and RBI guidelines, NBFCs are more agile/flexible than banks and hence those who needed finance but got refused by banks started to approach NBFCs.
Nowadays, these finance companies are growing rapidly in numbers. There are many operations that are critical, such as repayment schedules, Interest calculations, loan restructuring and reschedulement, foreclosure, etc. To handle such critical operations, Loan Management System software plays a crucial role. As the customer size was becoming wider for these NBFCs, it started becoming challenging to manage critical operations.
LMS is the heart of finance companies!
Why is it so? Because the LMS drives the business of finance companies. If LMS stops working or if it doesn’t work properly and accordingly then the business may get affected very badly. You can just imagine, what may happen if the calculation of interest, due dates, and EMI-like everyday operations goes wrong. Well, it is also important that the LMS should be able to do operations for all various loan products that finance companies provide.
LMS and configurability.
Finance companies always expand their businesses with multiple loan products so, many times their LMS vendors fail to support multiple loan products. Here, in such cases, configurability can be the solution. If the LMS vendors are capable enough to configure the system according to the various loan products then the financiers will not have to go to multiple vendors. This is one of the important reasons Why are many NBFCs changing their LMS?
Almost all LMS products that are in the market now, are capable enough and are good with the features too but still, but customers are still not happy with the systems. The reason behind this is the support from their LMS vendors. For little changes, and requirements there will be a dependency on the LMS vendors. If they are not able to resolve the issue within the timelines then the finance company starts to look for another LMS. When the LMS solution can be configurable and customizable then the many problems of the finance companies will be resolved. This is what we may call new-age LMS.
New Age LMS!
The new age LMS is the software solution for lenders which can also support the latest loan products such as Co-lending and BNPL. Standalone LMS which is SAAS-based, having API-first architecture and configurability, can be the solution for the upcoming era and if such a solution hits the market, then this time will be the golden era for the new age of LMS. Such solutions can help the financers to scale fast with powerful integrations and TAT reductions. Sometimes the major pain point of the financers is not having visibility of the current status of the applications. Overcoming such challenges will also improve staff efficiency. This is how this software can create a huge impact on the industry.
Must have features for new age LMS:
Configurable, Scalable, and supportive for various loan products.
Flexible enough for all various Fin-tech integrations.
Fast in Customizations without compromising features.
Ability to handle higher values of loan files.
Payment handling capability happens in various ways.
At Synoriq, we have developed the new age LMS by listening to the problems and needs directly of the clients and named it Synofin LMS. Considering the challenges, we have built a new-age LMS and replaced Nucleus Finn one in multiple NBFCs.
We would like to know your views on this!
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