Thanks to the recent era of tech innovation, banks and lenders are no longer constrained by the antiquated tools offered by legacy providers. 

Commercial lenders can commission customizable lending software that caters to their exact needs. There are also plenty of excellent out-of-the-box solutions to choose from, which lenders can purchase and start using as they are. 

But which is better?

In the battle between customizable vs out-of-the-box software, we’ll give the consultant’s answer: it depends. In this article, we’ll offer a detailed definition of both, together with their pros and cons—the final decision is yours to make.

How Technology Has Changed Lending

Eliminating the need for paper and expediting loan applications has been one of the great triumphs of financial technology. But many lenders continue to juggle paper forms/physical documents when processing loan applications. 

At first, much of the innovation in lending tech focused on speeding up the applicant experience. Fast applications, fast decisions, fast disbursement!

These changes were a boon for lenders, but many loan processes are disjointed—on the lender side, many still rely on lots of manual effort, clunky spreadsheets and legacy products. This is especially true for commercial lending.

However, today’s loan management software offers elegant capabilities such as automated risk assessments, data-enhanced decision-making, and a delightful user experience for both applicants and lending teams alike. 

When it comes to choosing which solution to implement, customizable lending software seems to be the gold standard. After all, it offers the possibility to deploy a bespoke version, according to very specific needs.

But for organizations that find them too expensive or complex,  out-of-the-box lending software can be a great option. Sure, it might feel more rigid, but it’s still much more powerful than legacy tech—and it’s easier on the wallet.

What Is Customizable Lending Software?

Imagine building a car to your exact specifications, every detail unique to your vision. It’s powerful, fast, one of a kind, and fits you like a glove. That’s customizable lending software in a nutshell.   

A customizable software solution is developed specifically to meet your requirements, and that version of the software is only used at your organization. When you want a new feature, you ask for it. When a bug pops up, it’s up to you to get the right people working on it. 

While there are degrees of customization (some are customized based on an existing “naked” platform, others are built from scratch), customizable lending software is powerful because it allows you to solve the problems and automate the unique processes of your organization

For some organizations, customizable software is how they differentiate and gain an edge over their competitors. For others, it’s a source of constant headaches because it requires you to understand software development. 

Pros of Customizable Lending Software

Tailored to your company’s unique needs.It’s built to your specifications. Instead of changing your processes to fit the tool, you get a tool that fits your needs exactly.
Drives long-term growth through differentiation.It’s complicated for your competitors to copy the software, especially back-office functionality. 
Solves complex business challenges.You can create new efficiencies and integrations that no one else has.

Cons of Customizable Lending Software

Long development lifecycle.As every aspect of the product has to be developed on a very basic existing framework, it can take a long time before you can implement a working version.
Cumbersome to maintain.You pay for every hour of development time, and you also depend on the general vision of the vendor that builds your tool.
Dependent on your vision and leadership.Product management isn’t a core competency many lenders have in-house. It can be costly, and inefficient if not done right.

What Is Out-Of-The-Box Lending Software?

Back to the car analogy. You know what you’re getting if you walk into a Chevy dealership and buy a car off the lot.

Chevrolet has spent billions of dollars to create manufacturing, supply chains, engineering teams, and safety processes that result in reliable cars that meet most people’s driving needs.

They don’t make or sell Formula 1 cars—they deliver sturdy machines that work for everyone.

Fundamentally, the car requires the same driving skills as every other car on the road. 

In other words, out-of-the-box lending software is built for stability, ease of use, and easy repair. 

When you purchase an out-of-the-box software solution, it’s ready to work almost immediately—implementation should be a breeze.

You receive regular maintenance from a team of software engineers who know the code intimately., and the features work as advertised—your employees can operate it with minimal training. 

Pros of Out-Of-The-Box Lending Software

Cost-effective.The software provider can defray the development costs across their client base. You pay for a small fraction of that expense.
Budget-friendly.The ongoing costs are usually clear and predictable. 
Quick implementation.Because the work has already been done on someone else’s timetable, you can implement the product very quickly.
Streamlined product support.The support team has experience with the software across the client base. You benefit from the collective knowledge built over time.

Cons of Out-Of-The-Box Lending Software

Functionality gaps.The software is built for a theoretical use-case that covers standard features. It may not do everything you wish that it could. 
Pricing doesn’t scale.As your business grows, your costs may increase faster than you would like.
Limited integration options.Universal integration doesn’t exist. Even an API-friendly platform may require special development to work correctly with your business processes.

SPARK: A Lending Platform That Adapts to Your Business

Based on our comparison of customizable vs. out-of-the-box software, you might think it’s a binary choice.

You might consider that either one or the other fits your organization’s needs perfectly—and that’s fine. After all, this comparison is meant to help you make a decision.

However, many lenders find that there’s a bit of a gap between both options. One might be too expensive, and the other a bit limited in functionality.

Thankfully for lenders in the market for their next loan management software, there’s a third option: SPARK.

SPARK offers the best of both worlds with a configurable approach: the structure of hard requirements where necessary, plus the flexibility of adding the features that your business needs.

Configurable means that with the SPARK lending platform you can process a loan on day one, and five weeks after you’ll also get a tailored product, unique to your specific needs.

Over 10 years of working with clients have given us the experience to purpose-build a solution for all commercial lenders, and the technology to make it efficient down to the last detail for each lender.

In short, the SPARK lending platform delivers everything your commercial lending team needs now and can adapt to the needs they’ll have tomorrow.

Schedule a demo today and discover what SPARK can do for you.


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