Choosing the Right Loan Origination System

Your customers want to hear “your loan has been approved” immediately after applying for a loan. However, your loan origination system (LOS) champions the adage of “slow and steady wins the race.” It sends messages like “The bank has received your application and the process will take 10-15 business working days. Thank you for your cooperation.” In today’s digital world, everything is quick. And, in the era of instant gratification, customers prioritize quick results. They are not concerned about how dated or slow your loan origination system may be. The speed and responsiveness of your loan origination system are critical to be ahead of their expectations.

Establishing the Significance of an Ideal Loan Origination System

To address these challenges, there’s a pressing need to adopt a robust loan origination software for financial institutions. An ideal

In this blog, let’s uncover what typically act as stumbling blocks in managing the loan origination process. And, let’s gain insights into the core capabilities that you must consider, prior to investing in a loan origination system. These capabilities will certainly help your users save a significant amount of time and simplify your loan origination process.

Factors Slowing Down the Loan Origination Process

Inadequate visibility into loan lifecycle

• High turnaround time for onboarding, approval, disbursement
• Lack of adherence to compliance
• Manual data management and credit risk analysis
• Disjointed processes

Considerations for Choosing an Ideal Loan Origination System

Given the sensitive nature of transactions managed by the users of financial institutions, the chosen loan origination software must be tailored to meet rigorous standards. You need a solution that is adaptable and can navigate in maneuvering the ever-changing business and process dynamics. This can be achieved if your loan origination system workflow is equipped with the following capabilities:

The backbone of the loan origination process. The loan origination system must automate end-to-end tasks, such as data entry and risk assessments. The solution must have strong rules-based decisioning capabilities to expedite the overall process without manual intervention. This will minimize the probability of errors and ensure a seamless workflow across different stages of application processing—from initiation to disbursal. Additionally, such a loan origination system will drastically minimize the average cycle time.

To improve operational efficiency, the LOS should integrate seamlessly with the core banking and legacy systems without requiring custom-coding. Automating tasks, such as credit score validation, lead management, and blacklist checks help employees gain detailed insights and process the application at speed

Underwriting is a crucial part of the loan origination process. One mistake can lead to inaccuracies and delays. The loan origination system software must determine an applicant’s credit worthiness, eligibility and risk factors based on internal or external scoring, minimizing errors and expediting the overall process.

This is a non-negotiable feature in a robust LOS as it helps run modern operations in a seamless manner. The interface should allow customers to start, save, and complete the filing or submission of applications from across various channels—in-branch, online, laptop, and tablet. This paperless approach helps deliver a consistent user experience.

This is one of the key features of the loan origination process. The loan origination system software must allow for quick and easy capturing, generating, and extracting documents systematically. This helps in maintaining and segregating different types of documents and generating loan packages, thereby reducing overall cycle time

Given the stringent regulations in lending, a comprehensive dashboard with real-time monitoring feature equips credit managers with relevant information. Furthermore, it empowers credit managers to make right decisions, which are in alignment with regulator mandates.

Moving Towards Happy Customers with the Right LOS

With a robust loan origination software from a renowned LOS vendor, you can eliminate operational silos. Not only that, but you will also get to witness a significant reduction in turnaround time. The streamlined loan origination process will give your customer a happy and hassle-free experience