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The loan servicing software market size is estimated to grow at a CAGR of 10.72% between 2022 and 2027. The market size is forecast to increase by USD 2,130.07 million. The growth of the market depends on several factors, including the demand for efficiency in lending operations, the rise in the adoption of cloud-based loan servicing software offerings, and the rising cost of loan servicing. Loan servicing software refers to software products and applications offering loan servicing solutions, such as transaction processing, banking, investor accounting, collection management, credit reporting software, automated clearing house (ACH) payments, and other collection functionalities. The pricing of loan servicing software is dependent upon the volume, complexity, essential features, and exact requirements in a customer's requested proposal.
This loan servicing software market report extensively covers market segmentation by Application (banks, credit unions, mortgage lenders, brokers, and others), Deployment (cloud-based and on-premise), and Geography (North America, Europe, APAC, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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In recent years, banking and financial institutions have been modernizing their operations by embracing digital technologies to streamline their processes and reduce time-consuming tasks. The lending process involves loan creation, origination, management, collection, and services, and the loan origination process includes pre-qualification, loan application, application processing, underwriting, credit decisions, quality control, and loan funding. Loan servicing, on the other hand, involves collecting and maintaining communication and records regarding interest, principal, and payment amounts from borrowers. In response, financial organizations are implementing loan origination software, loan management software, loan analytics software, and loan servicing software solutions to enhance efficiency and reduce costs.
Loan servicing software helps banks and mortgage organizations administer different aspects of loans, streamlining the timely payment of finances from customers while ensuring compliance with regulations to avoid penalties and over-debts. Moreover, banks and financial institutions are outsourcing loan servicing to third-party agencies, and loan servicing software helps lenders monitor activities from loan processing to the loan being fully paid. Established banks and financial institutes such as Wells Fargo, PNC Financial, Bank of America, and JPMorgan are automating their lending processes using advanced software systems that integrate robotic process automation (RPA). Although RPA has its limitations, loan servicing software optimizes, automates, and improves loan servicing functions, ensuring adherence to regulations and driving growth in the global loan servicing software market.
The global loan servicing software market is being driven by a significant market trend, namely the adoption of advanced technologies by banking institutions. The industry is seeing a rise in the use of new technologies such as blockchain, RPA, and AI. Innovative solutions that integrate blockchain technology are being developed to reduce loan processing and servicing time. Banking and financial organizations are focusing on improving their loan operations by providing better management and processing of loan products and services, thus emphasizing the need for loan servicing software.
Loan servicing software enables lenders and financial institutes to efficiently collect interest, principal, and payments from borrowers. As such, the financial sector's increasing focus on streamlining business and loan operations is driving the integration of advanced technologies and software. This trend is expected to foster the development and adoption of advanced loan servicing software.
The major challenge impeding the global loan servicing software market growth is the threat from open-source loan servicing software. Organizations such as non-banking financial companies and small lenders are the key customers of open-source and free loan servicing software as their purchasing power is low. They have low IT spending, which encourages them to opt for open-source software overpaid, loan servicing software.
With the increase in demand for loan management and keeping track of multiple loans in financial institutes, new vendors offering freeware are expected to enter the market during the forecast period. Hence, organizations are moving toward cost-effective cloud-based offerings. The availability of open-source loan servicing software will be a major challenge for the growth of the global loan servicing software market during the forecast period.
The market share growth by the banks segment will be significant during the forecast period. Banks use loan origination and servicing (LOS) technologies to streamline their daily operations. LOS Solution provides BFSI with an online Interface on their website to help them acquire loan applications. This makes it easier to interact with online loan applicants who are accustomed to utilizing the Internet and Smartphones and prefer to submit loan applications and documents online.
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The banks segment was valued at USD 509.99 million in 2017 and continue to grow by 2021. Essentially, LOS enables BFSI to launch its loan schemes online, as well as self-service Interfaces of equated monthly installment (EMI) calculators, ready reckoners for loan eligibility, and documents checklists, easing the gathering and appraisal of loan applications 24/7. Pre-configured workflows for credit scoring, document checklist, and approvals enable a reduction in turnaround time by up to 50%. LOS also enables applicants and bank management with mobile access to status tracking.
Based on deployment, the cloud-based segment holds the largest market share. Cloud-based loan servicing software offers the following benefits: Lowers the processing cost and enhances productivity Increases profitability by eliminating the need for paperwork Offers customer satisfaction Provides ease of processing a large number of loan applications Innovations in data security are also expected to increase the adoption of cloud-based solutions by large financial organizations during the forecast period.
For instance, OptaCredit Fintech Private Ltd. (OptaCredit), an AI-powered and data-driven online lender, wanted to make its operations transparent and quick so that it could focus on acquiring more clients. Hence, the company selected Q2 Software Inc.'s cloud-based lending products, such as CL Originate, CL Loan, and CL Collections, which are built on the Salesforce app to streamline the loan process and loan service operations.
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North America is estimated to contribute 49% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Buyers of loan servicing software in North America are financial institutions such as commercial and retail banks, credit unions, mortgage lenders, and other lending organizations. All these enterprises in the financial industry, including large organizations and SMEs, are focusing on streamlining their loan process and saving time and costs. The region has major banking and financial institutions such as Wells Fargo and Co. (Wells Fargo), The PNC Financial Services Group Inc. (The PNC Financial), Bank of America, JPMorgan Chase and Co. (JPMorgan), and Citigroup Inc. (Citigroup), which process the bulk of the loan volume. These organizations use loan servicing software, which enables lenders to track the types of loans offered and access loan servicing information, including payment history, escrow and tax information and history, investor reports, and borrower payments.
In 2020, most North American countries were severely affected by COVID-19. However, adopting digital borrowing and lending funds is expected to boost online financing platforms, including loan-serving software. Also, the large-scale vaccination drives administered to every individual in the region in 2021 led to the resumption of business activities. Therefore, the majority of the low-income groups are in the process of establishing small and medium-sized businesses (SMBs) and loans among customers. This accelerates the demand for microcredit and microloans in the region, which will further drive the growth of the market in focus during the forecast period.
The Loan Servicing Software Market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Loan Servicing Software Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Pcfssolutions- The company offers railway ac units such as driver cabin AC of railway engines.
The research report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The loan servicing software market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
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Loan Servicing Software Market Scope |
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Report Coverage |
Details |
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Page number |
163 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 10.72% |
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Market growth 2023-2027 |
USD 2,130.07 million |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
10.36 |
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Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
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Performing market contribution |
North America at 49% |
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Key countries |
US, Canada, Japan, UK, and France |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Abrigo, Applied Business Software Inc, Black Knight Inc, C Loans Inc., Constellation Software Inc., Cyrus Technoedge Solutions Pvt. Ltd., DownHome Solutions, Fidelity National Information Services Inc., Financial Industry Computer Systems Inc, Fiserv Inc., Graveco Software Inc., LOAN SERVICING SOFT Inc, Nortridge Software LLC, Nucleus Software Exports Ltd, Oracle Corp., PCFS Solutions, Q2 Holdings Inc., Shaw Systems Associates LLC, and Sopra Banking Software |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Deployment
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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