Loan Servicing Market

Market Overview

The global loan servicing market is expected to grow at a CAGR 10.7% during the forecast period, 2023–2031.

Loan servicing is a software service provided to manage all the loan and mortgage-related operations for a financial organization operating as a money lender entity. The loan servicing helps the lender organization collect the due or overdue principal amount, interest on the loan, and escrow payments from the borrower.

The loan servicing system is used to collect the debt amount from the borrower party, carefully redistribute the shares of the lender parties involved in the transaction, and pass along the amount. Furthermore, the loan servicing system provides virtual assistance to the customer by managing its financial transactions and maintaining its balance sheet for profitable mortgage loan operations. 

Market Dynamics

Reduce Possibility of Financial Risk and Intimates about the Current Debts

Many companies succumb to the experimental investments made to explore various opportunities, which fail to provide prominent returns.   Loan servicing software is capable of identifying such financial risks and provides timely implications about the critical situation. This service helps the customers to quickly take stern actions and provide timely remedies helping the organization to avoid unfortunate financial loss due to lack of judgment. The loan servicing also helps the customer to identify the delinquent accounts before the account enters into a serious situation of bad debts, creating serious financial risk for the lender. Additionally, the software can help the organization to list out non-performing assets, reduce the operational cost, and obstruct the annual financial losses.

The organizations operating in finance-related services or money lending business can effectively utilize loan servicing facility to maintain their balance sheet. The software creates payment schedules and continuously reminds the borrower by using text messages of E-mail communication to have a timely recollection of the funds.

Development of Innovative and Interactive Products and Systems Is Attracting Customers towards Loan Servicing Market

Many loan servicing system providers are looking to manufacture innovative and interactive products for customers. These types of the system help the organization of customer manages the mortgage operations and related financial transactions more easily and transparently. The development of new loan servicing solutions has a great emphasis on three important aspects intended to benefit the customers. These three aspects are elevating the extent of profit from the operations, providing a solution to save considerable time, and reducing the cost of operation for the customer organization. These advantages offered by the loan servicing solutions are expected to provide a significant boom for the loan servicing market across the globe.

According to the manufacturers, the loan servicing solutions provide a substantial improvement in the working conditions and also help to elevate collective business performance. For instance, prominent loan serving solution provider Computershare Limited has developed a LOAN FINDER tool that can help the customer to identify whether refinance can prove effective in achieving its financial goals. The development of such tools and solutions certainly helps the company to enhance its working standards and help to improve the profitability and strength of the business. Such advantages and the ability to help the customer in achieving higher profitability is expected to provide healthy growth for the loan servicing market during the forecast years.

Segmental Analysis

According to our analysis, by deployment, the cloud-based segment is projected to attain substantial growth over the forecast years in the global market. The preference of customers in availing the loan servicing using the software of the private fintech companies is expected to elevate the market share of cloud-based services at a rapid pace. Additionally, using the cloud-based software in any organization for loan servicing eliminates the time investments in tedious and cumbersome tasks, such as posting unpaid, partial, or late payments, recalculation of payment schedules, making entries on the charging of processing fees, etc. The time-saving perk of the cloud-based loan servicing software is anticipated to propel the development of the market.

Furthermore, cloud-based services effectively optimize the revenue generation of any organization by providing services, such as keeping track of outstanding loans and aid identify risks to successfully drive the financial operations of the companies. The loan servicing software also capable of automatic account and balance monitoring, which helps the customer to keep track of outstanding payments and receive payments faster. Additionally, the use of advanced loan management software provides revenue projections for short-, medium-, and long-term operations to give the customer perspective for its further course of action. The organization can make strategic decisions for revenue optimization, thereby helping the customer achieve the estimated revenue targets. The loan servicing software can be used to predict and maintain the cash flow for the organization to keep the liquidated funds at hand for the seamless operation of the enterprise.

Regional Analysis

Geographically, the loan servicing market is categorized into five different regions, namely North America, Europe, Asia-Pacific, the Middle East and Africa (MEA), and Central and South America and the Caribbean. Among these, North America is projected to account for the major share in the global market share in 2020 and is expected to retain its dominant value share across the global market over the assessment period. Asia-Pacific is identified as the fastest-growing region in the market due to the increasing operations of the Fintech organizations in countries, such as China and India.

China and India have also witnessed record increment in the establishment of new start-up organizations across its regional market. To liquidate funds for the new establishments, many entrepreneurs followed the trend of loan against property mortgage. This scenario in the Asia-Pacific region to promote an optimistic trend for the market.

In North America, the effective operations of the public government-sponsored enterprise (GSE) play a major role in the development of the loan servicing market. The establishments such as Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA), Federal National Mortgage Association (FNMA), etc., are operating as a financial service provider organization.

The strong financial situation of these entities' activities and mortgage operations backed by the government in the region is encouraging customers to avail of loan servicing against their fixed assets. In the U.S., during the great depression, where the country witnessed a steep downfall in the cash flow and serious decrement in the national economy, Federal National Mortgage Association (FNMA) was founded to effectively regulate the economic operations by the expansion of the secondary mortgage market in the country.

Freddie Mac and Fannie Mae are identified as the two major organizations responsible for the substantial share of the region in the global loan servicing market. Thus, favorable government policies and ease in securitizing mortgage loans by using mortgage-backed securities (MBS) are estimated to provide numerous opportunities for loan servicing development in North America.

Loan Servicing Market Segmentation

By Deployment

• On-Premise
• Cloud-Based

By Loan Type

• Private Money Loans
• Hard Money Loans

By Lender Type

• Local Bank
• Government-Sponsored Enterprise (GSE)
• Private Organization

By Region

North America

• The U.S.
• Canada
• Mexico

Europe

• The U.K.
• Italy
• France
• Spain
• Germany
• Rest of Europe

    The Middle East and Africa (MEA)

• Saudi Arabia
• Egypt
• South Africa
• Rest of MEA

     Asia-Pacific

• India
• China
• Japan
• Australia
• South Korea
• Rest of Asia-Pacific

Central and South America and the Caribbean

• Columbia
• Chile
• Peru
• Argentina
• Rest of Central and South America and the Caribbean