Everything You Need To Know About Loan Origination Systems

Loan management systems have become much more sophisticated since lenders have adopted their use to streamline the lending process. Before adding this commercial loan origination software to their arsenal, lenders relied on manual processes to handle loan applications, approvals, disbursements, and collections. This process lacked efficiency and was often error-prone. Now, loan origination systems are bringing this tedious process into the 21st century and changing the game for financial institutions.

What To Look For In Commercial Loan Origination Software

There are many options for LOS on the market today, which can make it difficult for lenders to find the best loan origination software for their organization. However, there are four key functionalities that loan origination systems should have before you even consider purchasing one. Keep reading to learn which basic attributes a LOS should have to make your lending practices more efficient.

  • Streamlining loan origination – before you invest in commercial loan origination software, make sure that it will streamline the loan origination process. Any LOS that you consider for your team should automate workflows with intelligent decision-making algorithms. Key functionalities should include the ability to digitize documents and integrate with credit bureaus and other data sources.
  • Enhancing underwriting and risk assessment – loan origination systems can enhance the underwriting and risk assessment portions of the loan process. Lenders can use LOS to leverage data analytics and algorithms to assess a borrower’s creditworthiness with accuracy. Using an LOS to analyze income statements, credit scores, and other relevant factors allows a lender to make informed decisions regarding loan approval or rejections much more quickly than in the past.
  • Automating loan servicing – a lender’s work doesn’t stop after a loan is approved; instead, they will need to manage the disbursement and collection processes. Some of the best loan origination software includes a loan servicing component, allowing lenders to automatically generate repayment schedules, track payments, and calculate interest accruals. This feature reduces administrative tasks and streamlines the workflow for lenders.
  • Monitoring collections effortlessly – managing the collection process of loans is one of the most challenging aspects for financial institutions. By utilizing a loan origination system that features a loan management component, lenders can automatically send reminders, track delinquencies, and communicate with borrowers. This improves recovery rates and reduces the risk of default.

Three Key Benefits Of Loan Origination Systems

Still not sold on today’s commercial loan origination software? Implementing a loan origination system to help you manage the lending process offers many benefits for financial institutions. The most important benefit is that it will improve operational efficiency by reducing manual work and streamlining administrative processes within your organization. This, in turn, will lead to faster turnaround times, increased productivity, and cost savings. Loan origination systems will also improve your organization’s risk management capabilities. By employing data analytics and automation. You will be able to minimize the chances of a borrower defaulting by assessing risk before you approve a loan. Perhaps most importantly, the best loan origination software improves overall customer experience. Borrowers will benefit from faster loan processing times, transparent communication, and self-service options through online portals or mobile apps.

Finding The Right LOS For Your Business

Today’s borrowers want loans approved in just a few clicks. Using manual processes or other legacy loan origination systems can negatively influence customer experience with longer turnaround times. Commercial loan origination software can help you improve customer experience and streamline your workflow.

The first step in selecting the right loan servicing software is to understand the specific needs and requirements of your organization. Consider the size of your portfolio, the types of loans you service, and the level of automation you want to utilize. Make a list of features you need to have and a second list of features you’d like to have to help you narrow down your options.

Here are a few more tips that will help you find a system that is right for you.

  • Customer onboarding – make sure your loan origination system can onboard customers across multiple channels. Today’s borrowers want the flexibility to apply for a loan from their desktop, phone, or other mobile device. Investing in a system that allows users to move seamlessly between devices is necessary in today’s competitive climate.
  • Process automation – automating the manual processes of the past allows lenders the opportunity to scale up their business as the volume of loans increases. Integrating paperless documentation and automated screenings into the loan process allows loan officers to engage with borrowers and assist them during the application process, rather than simply pushing paper.
  • Easily customizable – the best loan origination software should be easily customizable to your business. This means that you should be able to configure key components based on your unique business requirements and that the system is not rigid, with a one-size-fits-all approach.
  • Security and compliance – with the rise of digitized processes comes data breaches. Lenders who want to automate their processes need to choose a loan origination system that guarantees the safety of sensitive financial data through robust security measures.
  • Integration capabilities – to stay current with the latest software trends, your LOS needs the ability to collaborate with third-party service providers. Make sure you select a LOS that can support a range of API integrations.

Assess Your Needs Before You Buy!

Before you invest in commercial loan origination software, make sure you are choosing the best loan origination software for your business. Carefully assess your needs as well as the needs of your clients, and make sure the system you purchase is customizable. Investing in this forward-thinking technology will help you grow your business, so contact us for more information about our products today.

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