Key Questions for Banks Choosing a Consumer Loan Origination Solution

Choosing the right loan system is one of the most important technology decisions a bank or credit union can make. It is key to growth, customer experience and efficiency. Here are crucial points for lenders to cover when evaluating LOS capabilities.
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Loan origination systems (LOS) can be simply defined as a digital platform that facilitates the lending process from application through the disbursal of funds.

While the definition may be straightforward, comparing different LOS platforms will reveal numerous feature gaps, integration challenges and implementation roadblocks. Knowing the right questions to ask LOS vendors can help banks and credit unions select the best solution.

Modernizing your lending origination requires seamless integration with your core system. While many core systems offer some loan origination functionality, these systems can be challenging to integrate with the third-party solutions driving today’s digital transformation. This contrasts with many LOS vendors who deliver more modern, robust features that have a clearly defined integration strategy.

For the most seamless experience, an origination system should originate both loans and accounts under one platform. The system should be able to originate a wide variety of loans (vehicle, personal, credit card, home equity) and accounts (savings, checking, certificates, IRA’s, youth), as well as provide cross-sell options. Here are some key questions to ask when evaluating modern digital LOS capabilities:

  • Can the system bring all consumer lending and account origination under a single platform?
  • Will the LOS work with our core platform and scale as our needs change?
  • Does the LOS integrate and/or provide an API structure to support third-party solutions required for a modern experience?

Additional Resource: Exceeding Expectations with a Single System

Configurability for Lending Control

A credit union or community bank is as unique as the consumers it serves. Therefore, the institution’s origination platform must be flexible, scalable, and configurable to leverage your competitive advantage. A loan origination system should allow for quick and easy configuration changes when lending strategy changes — without ticket requests, costly consultants or additional fees.

This level of customization can be accomplished with drag-and-drop options for workflow configurability. The result is increased efficiency, fewer errors and the control to build and self-manage the experience consumers and staff expect — and maintain a competitive edge. Here are important questions to ask related to LOS configurability:

  • Is the system configurable to our specifications?
  • Does the system allow for quick configuration changes without ticket requests, support services, or hiring additional staff?
  • Are drag-and-drop options available for a no-code configurability experience?

Lending Automation is Vital

At the heart of any modern, digital lending origination system is automation. Loan automation streamlines manual processes, workflows and decision-making, which generates efficiency, accuracy and customer satisfaction.

Choosing a single origination platform with the capability to automate loans, as well as new accounts processes, allows you to ramp up cross-selling efforts, deliver faster account openings, and eliminate the service gaps that can lower net promoter scores.

Doing everything quicker, and with increased accuracy leads to greater insights, allowing for LOS optimizations and improving lending performance.

The following questions will help confirm automation capabilities:

  • Does the LOS provide decision engine feedback to facilitate system decision?
  • Does the LOS provide the ability to automate decisioning without the need to hire additional staff to manage the decision engine?
  • Does the system include assigned workflow tasks to prompt staff with next steps?
  • Does the LOS automate both loan and new account opening processes?

Additional Resource: Successfully Navigate the LOS Experience to Meet Goals

Implementation Requires Collaboration

A successful implementation begins with the LOS vendor providing a project team to identify needs and create a detailed plan. A valuable best practice is for the LOS provider to start by building the system for the client with a configuration made specifically for them. This team should be able to work collaboratively and guide you through the entire implementation process.

Expect an implementation team to provide staff training not just during the first month but ongoing. Ensure your LOS support team will continue to be available to answer any questions, guide you through new releases and enhancements, so you can continue lending at peak performance. Here are key questions to ask about the implementation process:

  • How long does the average implementation take?
  • Does the vendor provide dedicated project leads and hands-on training?
  • What on-going LOS training and support is available?

The Right Questions Lead to the Right LOS

Choosing the right loan origination system takes careful consideration and research. Look for a vendor who will not only guide the digital transformation needed to remain competitive, but will stay with you long after implementation to ensure your continued growth.

If you ask the right questions, you can identify the right partner that stands out with the winning solution, purposefully built with and for your credit union or bank, and providing the capabilities necessary to remain competitive in today’s marketplace.

Additional Resource: Infographic: LOS Features for Breakthrough Performance

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