Finezza Blog

Our Thoughts on Simplifying Lending Lending Lifecycle Management and Fintech in India

You are here: Home / Search for "loan origination system"

Search Results for: loan origination system

Loan Origination System vs. Loan Management System: Understanding the Differences

Loan Origination System

Loan applicants today expect a quick, convenient financing process from the first step to funds arriving in their account. Lenders now rely on ever-evolving technology to meet these expectations. For example, they leverage reliable systems to track each step of the process through origination and its payment lifecycle.

A sound understanding of loan origination and management processes helps financial institutions provide a seamless borrowing experience to customers. The Loan Management System (LMS) and the Loan Origination System(LOS) are two specialised systems that tackle different stages of the loan lifecycle but work together to handle loans effectively.

Let us explain how the LMS and LOS work and focus on the difference between both.

What Is a Loan Origination System (LOS)?

A loan origination system helps financial institutions streamline the complex processes of sanctioning loans. It automates the workflow and manages the document collection and approval process digitally, significantly lowering delays. Leveraging data and rules helps make preliminary loan approval decisions faster.

The loan application process for different loans and various lenders may vary slightly.

The Loan Origination Process: A Step-by-Step Breakdown

  • Application and Data Capture: The customer initiates the loan process, and LOS securely collects their information.
  • Credit Review and Verification:  The institution assesses borrower creditworthiness and verifies provided data.
  • Risk Assessment and Decisioning: Lenders analyse risk and use scoring models for loan approval decisions.
  • Document Management and Workflow: LOS automates forms, document collection and tracks the approval process.
  • Interest Rates and Loan Terms:  The tool also determines rates and terms based on risk, and the customer receives a proposal.
  • Compliance and Risk Mitigation: LOS safeguards regulatory compliance, generates reports, and helps minimise fraud.

What Is the Loan Management System (LMS)?

The loan management system triggers after the loan is disbursed to the customers. A LMS provides lenders visibility into all aspects of the lending cycle after loan origination.

The system helps lenders track the loan status, gain insights based on the collected data, and provide borrowers with the support they need when making payments. Lenders can identify existing gaps (if any) in their loan servicing infrastructure before they become a problem.

Key Features of a Powerful Loan Management System (LMS)

  • Account Creation and Management: The LMS meticulously tracks loan details and payment activity.
  • Delinquency Tracking and Collection:  Proactive delinquency management with automated alerts and communication.
  • Reporting and Analytics:  In-depth insights into loan performance for data-driven decision-making.
  • Compliance Management: Adherence to regulations with streamlined compliance reporting.
  • Borrower Self-Service: Secure online portals for borrowers to manage their loans independently.
  • Customer Support and Retention: Tools to address financial hardship and enhance the borrower experience.

Difference Between Loan Origination Software and Loan Management Software

Both systems help improve the borrower’s journey and contribute to the overall health of a loan portfolio. However, they handle different stages in the loan lifecycle and serve distinct purposes.

Here are some of the major differences between LOS and LOM:

1. Functionality

The loan origination system focuses on streamlining the loan origination step, while the loan management system concentrates on managing loans post-disbursement.

LOS handles tasks like verifying borrower information, calculating loan terms and so on, from the initial loan application to the approval. LMS is more about ongoing loan management and takes over after loan approval and funding.

2. Utility 

The LOS helps lenders expedite the loan approval process through faster document verification, automated decision-making, and compliance with regulatory requirements. On the other hand, the LMS caters to long-term loan management by providing services like customer support, predicting defaults, and sending reminders.

So, the LMS can be imagined as the customer service department for loans, while the LOS is the sales department.

3. Benefits

The LMS enhances loan servicing efficiency, customer engagement and satisfaction, while the LOS accelerates funding processes and reduces delays due to inefficiencies or manual processing.

A loan origination system helps lenders conduct due diligence and comply with regulatory standards more effectively and offers the following benefits:

  • Faster loan processing times
  • Improved underwriting accuracy
  • Enhanced customer experience

The loan management system helps lenders provide borrowers with customised payment reminders and on-demand access to information on loans. Lenders get better visibility, which helps them understand the nuances of the lending cycle.

The key benefits include:

  • Operational efficiency improves
  • Better compliance with regulations and reporting
  • Enhanced customer service for loan repayment

In Conclusion

Despite focusing on different stages in the loan lifecycle, the loan origination system and the loan management system help lenders manage loans seamlessly. In summary, both are essential tools for lenders, and understanding their differences helps them employ the right means to optimise lending operations.

Finezza offers a robust Loan Origination System suited for this tech-driven era that caters to lending needs and helps provide a better customer experience. Automatic document identification, easy integration with APIs, loan eligibility estimator, 360° customer profile assessment, and more are some of its unique features.

The Loan Management System supports multi-loan types, flexible repayment frequencies and payment modules and provides bank payment reconciliation.

Call now to learn more and book a free demo today!

Digital and Advanced Loan Origination System: A Lender’s Lifeline in the Digital Era

Loan Origination System

The Indian financial ecosystem is witnessing rapid changes thanks to the increasing demand for technology integration into conventional financial operations.

Traditionally, although most banks and other financial institutions claimed to offer top-notch customer service and experiences, the reality painted a different picture.

Despite these reassuring claims, banks were gradually – for the wrong reasons. The problems? Long queues for routine tasks, frequent branch visits to fill out various forms, week and even month-long waits to secure loans and a need for streamlined customer support channels.

As a result, customers were exploring other alternatives to avoid these barriers, offering fertile grounds for non-banking financial companies (NBFCs) and Fintech companies to capitalise on the situation.

This article delves into the transformative impact of digital advancements on loan origination systems. It highlights how the entry of innovative Fintech companies and startups, coupled with evolving consumer behaviours, is revolutionising the lending landscape.

Loan Origination Systems: Accelerating Digital Lending 

Modern loan origination systems offer a clear understanding of a borrower’s financial performance and fast-track loan documentation and ensure they comply with relevant regulatory and legal compliances.

In the past, securing loans could take a few weeks and even months, making it a cumbersome affair for borrowers. The advent of technology, the surge in the number of NBFCs and the increasing push toward enhancing the customer experience have trimmed that time to a few minutes.

Let us elaborate on how loan origination systems enable lenders, especially NBFCs, to provide spotless customer experiences and help customers secure loans without any delays.

1. Accurate Customer Segmentation for Faster Loan Approvals

NBFCs have managed to amass significant popularity in India due to the prevailing credit availability gap, particularly for small to medium-sized enterprises (SMEs) and other underserved customer segments.

However, new-age and advanced Fintech startups are gradually marking their presence in the lending sector with aggressive marketing, innovative product offerings, and a focus on customer convenience. The increasing number of digital lending platforms and channels makes it even more crucial for NBFCs to up the ante and embrace the customer-first approach.

One way to do that is by optimising their sales cycles and reducing the turnaround time for loan applications by harnessing loan origination systems. Customer segmentation has remained one of the biggest hurdles for NBFCs and other lenders due to insufficient customer data.

  • Loan origination systems address this issue by allowing lenders to segment their customers based on different factors, including
    • Income
    • Loan amount
    • Spending patterns, and more
  • Segmenting customers paves the way for faster loan approvals, offering lenders insights into which documents are required for which customer segment and more.

2. Improving Operational Efficiency

Loan origination process is not as straightforward as it seems. It involves multiple steps, including:

  • Lead management
  • Loan documentation
  • Background checks
  • Compliance
  • Loan disbursal

The legacy systems are not only ill-equipped to expedite loan applications but also error-prone and manual, making them less favourable in comparison to the sophisticated and modern loan origination system.

Additionally, as more and more customers look for convenience and fast loan approvals, it appears that legacy systems may need urgent overhaul aided by loan origination systems.

3. Document Management

One of the major and probably the most important applications of loan origination systems is document management. These include deeds of trust, promissory notes, and several other documents for borrowers and lenders.

Before the arrival of loan origination system, lenders relied on templates to create the mentioned documents, leaving room for inadvertent errors. Additionally, the process was time-consuming, affecting the lender’s bottom line and unsatisfied customers.

Loan origination systems replace manual loan documentation, ensuring a range of benefits such as regulatory compliance, swift and accurate document generation that aligns with the borrower’s profile and requirement, and more.

Apart from generating documents accurately, loan origination systems also help lenders store and manage all the documents efficiently. This eliminates the burden of storing documents in hard format.

4. Simplifying the Life of Non-credit Trained Credit Officers

Loan processing is incomplete without credit officers. They oversee several critical aspects of loan processing, including underwriting, making final credit decisions, and more. In short, lending and other financial institutions require credit officers for timely and error-free loan processing.

However, credit officers may not be available at times, creating resource constraints and slowing down the entire process. A loan origination system can resolve this issue by empowering non-credit-trained employees to process loan applications without any difficulties. This allows lenders to process loans even when credit officers are not available or occupied with other critical tasks.

Parting Notes

Loan origination systems have quickly become one of the most critical components of a loan processing application as they bridge the gap between borrowers and lenders. These systems facilitate streamlined loan origination right from when the application is submitted to loan disbursals.

At present, lenders need to go above and beyond to serve their customers, minimise turnaround times for loan approvals, and stay relevant.

Finezza’s cloud-based, all-in-one loan origination solution is developed to cater to the evolving needs of lenders who are looking to establish a solid foothold in the lending space and aim to offer a spotless customer experience.

Our robust tool is packed with several features, including automatic document identification, credit assessment tools, threat detection and more.

Book a demo today to learn more.

How to Reduce Friction in the Loan Origination System with Automation?

Loan Origination System

Customer experience is one of the major talking points for customers dealing with businesses operating in the retail and hospitality sectors. However, that was hardly the case in the finance industry, especially in lending.

However, the times they are a-changing.

Modern customers are ready to ditch the traditional, inconvenient, and time-consuming process in favour of advanced, convenient, and, most importantly, banking services that provide seamless experiences. Therefore, many financial institutions are increasingly focusing on improving customer experiences across multiple touchpoints.

Additionally, financial technology (Fintech) companies have played a pivotal role in transforming the dynamics of the current Indian financial landscape. For example, applying for a loan is one of the most common interactions customers make with financial institutions.

In this context, loan origination systems with intuitive automation can speed up the process and minimise lending risks.

In this blog post, let us explore the importance of a streamlined loan origination solution and why automation is the key to ensuring flawless customer experiences.

Loan Origination System: Why Is It Lenders’ Much-need Ally 

It is no secret that the traditional loan origination process was complex and far from being straightforward. It was not only time-consuming for borrowers but also for lenders who faced numerous obstacles to being efficient and customer-centric.

Digitisation and increasing calls for convenience from customers have now paved the way for automated loan origination systems that play a pivotal role in improving a bank or a lending institution’s bottom line.

Let’s look at the key areas where automated loan origination tools are helping financial institutions and lenders alike:

1. Eligibility Evaluation

Onboarding is the first step in securing a loan. At this stage, the borrowers provide useful details, including the type of loan they are interested in, income details, and other personal information.

Advanced loan origination systems powered by artificial intelligence (AI) expedite this process via online portals and web forms. Additionally, real-time evaluation and background checks ensure borrowers provide accurate information, leaving no room for discrepancies.

The loan origination software takes these details into account before providing instant results based on pre-set criteria, including loan amount, interest rate, and whether the borrower is eligible or not.

2. Application Processing

To optimise service delivery, many financial institutions are concentrating on minimising human intervention and improving decision-making. Application processing is one of the most critical stages of securing a loan, as all the details and other information the borrower provides are verified.

Additionally, borrowers also instantly verify whether all the information is provided accurately and rectify if something is missing.

While this used to be predominantly a manual process, the arrival of loan origination system has automated verification, eliminating the need for human intervention. Automatic data-checking, identifying errors, and instant alerts in case something is missing ensure faster and error-free loan application processing.

3. Credit Scoring

Credit scoring has witnessed a remarkable evolution in recent years due to several factors. The significant rise in transactions made via smartphones, widespread adoption of financial products, and advancements in data analytics are some of the top reasons why credit scoring has witnessed a transformation in recent times.

Modern loan origination tools rely on algorithms and machine learning models that go through vast data sets to determine a borrower’s creditworthiness. These systems analyse a borrower’s credit history, digital transactions, income statements,  and other financial indicators to assign a credit score.

While traditional credit scoring processes took weeks and even months to complete, lenders can determine a borrower’s credit score within seconds today.

4. Seamless KYC and Anti-Money Laundering Checks

As the financial sector opens its arms to welcome innovative and technologically advanced financial tools and systems, it also opens doors to financial fraud and cybercrime. Additionally, it is not uncommon for many bad actors to misuse the advancements to launder money and engage in similar illicit crimes.

‘Know Your Customer’, or KYC, has emerged as one of the most effective strategies to combat this financial crime and build a more transparent and secure financial landscape. Traditionally, customers had to visit a bank or meet the authorising agents in person to initiate and complete the KYC process. While this approach was not only inconvenient, it was very time-consuming.

Modern loan origination systems eliminate the need to visit a branch physically as they combine different databases, including government and transaction records of a customer, to verify their identity.

Additionally, these tools can also flag potential risks and notify the concerned authorities if they detect something unusual.

5. Prompt Customer Communication

Timely and transparent communication is one of the key parameters that can turn a lacklustre customer experience into a positive one. Loan origination system send out consistent automated notifications at every step of the loan origination journey to ensure customers know the current status and all the critical information they should be aware of.

AI-powered chatbots can also serve bank customers and answer their queries 24/7. These systems document and log every instance of communication made with borrowers, ensuring transparency and accountability at all times.

Final Note

It is impossible to ignore or sideline the impact of automation in the lending sector, and its rising adoption is a testament to its effectiveness and efficiency. Customer experiences have become one of the key differentiators that shape a lending or a financial institution’s bottom line, making them practically indispensable in the current scheme of things.

Lenders that are already harnessing these automated tools carry a competitive advantage over lenders who are hesitant to embrace this innovation.

As India’s leading Lending Lifecycle Management platform and Credit Evaluation Services provider, Finezza has the perfect solution for you.

Our modern and robust loan-origination system offers accurate and actionable insights into a borrower’s credit history and, most importantly, improves the lending process significantly. It can also facilitate smooth and efficient lending from a loan eligibility planner to a 360° customer profile assessment.

Book a Demo today to know more.

How AI-enabled Loan Origination System Enhances Decision-making for Lenders

Loan Origination System

The lending industry in India is expected to play a major role in helping the country reach the $ 5 trillion economy milestone. Adequate and timely access to capital can help businesses grow faster, drive employment, and operate at the cusp of innovation.

However, lenders face a number of challenges in their daily operations. For instance, the continued reliance on manual processes and the lack of innovative solutions in assessing creditworthiness restrict their ability to scale as quickly as they need.

This is where combining modern technologies like Artificial Intelligence (AI) with an agile loan origination system can enable lenders to make data-driven decisions and scale faster.

In this blog, we explore how banks, Non-Banking Financial Companies (NBFCs), and digital lenders can strengthen their processes through the use of an AI-driven loan origination system.

What Is A Loan Origination System? 

A loan origination system is a tech-enabled solution that automates the loan origination process end-to-end. This solution leverages multiple technologies such as Artificial intelligence (AI), Machine learning (ML), And automation to value-add in multiple ways.

For instance, a loan origination system can be customised to meet the needs of diverse lenders such as banks, non-banking finance companies (NBFCs), and alternative lenders.

By leveraging such a platform, digital tenders can expedite the loan application process and serve more customers accurately and efficiently.

Digital Lending: Size of the Market and Opportunities

In 2022, the digital lending market in India was estimated to be worth $ 270 billion. The market size is expected to rise to $ 350 billion in 2023. But the true opportunity is projected to be closer to the tune of $ 1383 billion by 2030.

Underserved areas such as rural financing, green financing, and secured loans, especially requiring large-scale financing. However, this milestone market size can only be achieved provided lenders upgrade their loan origination system to bring efficiency, accuracy, access, and speed to operations.

Loan Origination System: A Snapshot of Current Challenges

While the number of loan applications is increasing daily, lenders find it difficult to keep pace and ensure a quick turnaround on loan processing.

Here is a list of common challenges:

1. Lack of Efficiency and Accuracy

Manual processes used for the loan origination workflow reduce the turnaround time for loan applications. As the number of loan applications increases, there is scope for more errors and data duplication.

Also, a large number of loan applicants submit incomplete documentation. Manual follow-ups consume time and can lead to applicant drop-offs.

2. Risk of Loan Fraud

In Financial Year 2022, the total number of bank loan frauds amounted to a ticket size of INR 58,303 crore. In FY23, this trend continued, with INR 18,746 crore of loan fraud already reported in the first half of the year.

Using manual processes leaves lenders at risk of red flags in bank statements and other documentation being overlooked. These oversights can have long-term consequences, such as the growth of loan fraud and non-performing assets. Furthermore, lenders risk being embroiled in criminal cases.

3. Lack of Access

A large number of followers do not have a credit history. Yet, they may have a profitable business. By sticking only to traditional data points, lenders lose out on being able to finance creditworthy borrowers without a credit history. There is a need to identify alternate data points and serve these customers.

4. Compliance Issues

The financial services industry is getting increasingly regulated due to the growing incidence of loan fraud. Lenders can often not apply new compliance guidelines to their existing processes seamlessly.

5. Inability to scale 

These collective limitations result in the inability of lenders to scale operations. On the other hand, the sheer number of loan applicants is rising, resulting in missed opportunities and an inability to capture more market share.

Major Benefits of AI-driven Loan Origination System

The introduction of AI enables a loan origination system to deliver higher value to lending outcomes. It brings not only efficiency and speed but also flexibility and insights.

Here are some of the key benefits:

1. Speedy Loan Approvals

AI automation enables the various steps in the loan origination system workflow to be fully automated. For instance, massive numbers of bank statements can be analysed accurately and efficiently within minutes.

Identifying missing documents and follow-up notifications issued to loan applicants can be automated. Process automation enables lenders to expedite loan application processes and drive conversions.

2. Fuelling Access 

The use of AI enables multiple possibilities to service underserved customers. Say a borrower’s business is profitable but has no credit history.

An AI-powered loan origination system can recommend alternate data points such as a Goods and Services tax return (GSTR). This data point can easily help verify the company’s performance and establish creditworthiness.

3. Fraud Detection Capabilities

AI has advanced pattern recognition capabilities when processing large amounts of data. It can catch irregularities in transactions, income statements, and banking statements, which are not visible to the human eye. This valuable capability, especially, helps in fraud detection.

4. Customised Products 

A one-size-fits-all no longer works for businesses which have such diverse needs. In this context, another outcome of an AI-driven loan origination system is that lenders can customise products at scale and speed.

Based on the data available, AI-driven insights help lenders deliver customised products that serve the business’s specific needs.

5. Data-Driven Decision Making 

Using AI-powered loan origination systems enables lenders to make comprehensive, accurate underwriting decisions based on all the accessible data in play.

It can serve deserving first-time borrowers, and turn down borrowers with a fraudulent business history and cooked books.

Lenders also have access to massive amounts of data from customers. The dashboard can be customised and analysed to build superior products and services for future customers.

Final Takeaway 

Today, the lending business has become a competitive space. Banks, NBFCs, fintech, and neobanks are vying for similar audiences.

In this scenario, lending businesses that digitise their processes and leverage an AI-driven loan origination system will have a comparative edge.

The best approach is for lenders to partner with a technology specialist to access the right solutions for your lending framework. A one-time investment in the right technology can help lenders scale faster and capture more market share in a dynamic space.

Finezza offers comprehensive fintech tools and solutions to manage your lending portfolio. Our end-to-end lending management solutions are trusted by brands like ftcash, Hiranandani Financial Services, gromor Finance, and UC Inclusive Credit, to name a few.

Finezza’s intuitive loan origination system is geared to analyse bank statements quickly and accurately and detect potential fraud.

Book a demo to know more.

How To Choose The Right Loan Origination System For Your Business?

Loan Origination System

Consumer behaviour in the lending industry is evolving fast to match the paradigm shift in financial markets. Borrowers today expect instant loan approvals on the tap of the button, in a single click. Legacy loan origination systems and traditional processes that warrant manual intervention do not allow such levels of sophistication at the time of loan issuing. They feature elaborate workflow of sub-processes that are time-consuming, require human-resources and physical-space. Moreover, there is an additional cost associated with the legacy loan origination process that is incurred due to the need to maintain the workflow efficiently. Further, the involvement of a large workforce at various stages of the loan origination process opens it up to a widened scope of errors and frauds.

However, modern technology presents various creative solutions to eradicate any procedural errors or scope of potential frauds. Thanks to avant-garde tech solutions, lending companies can build a robust, error mitigating, and automated system that could process loans in a fraction of time at a substantially lower cost. Taking a broader perspective, it wouldn’t be entirely wrong to say that technology-backed lending organisations will thrive and dominate financial markets due to their low-cost-high-efficiency operations and brilliant customer service.

UI design and service delivery can be the distinguishing factors that make a particular loan origination system stand out, among others. After all, it is the lender’s choice of loan origination system and tools that differentiate them from the rest of the players in the financial market. Other factors that determine the choice of loan origination system include implementation time, degree of automation, integration scope concerning other technology solutions, and regulatory compliance it adheres to. In the modern competitive financial markets, lenders can only optimise their performance with a flexible, dynamic, and innovative loan origination system. Technological capabilities like artificial intelligence, digital APIs, machine learning algorithms, deep learning, advanced automation, and user-friendly point-of-sale functionality also affect the choice of lenders when buying a loan origination system. In the end, the right loan origination system is the one that adapts to the evolving requirements of growth-oriented lending operations.

How To Choose The Right Loan Origination System For Your Business? 

A perfect loan origination software solution, or LOS, would optimise the stages of a borrower’s journey from origination to disbursal. Modern borrowers face a dilemma of choice when choosing lenders. They become biased towards lending companies that pose reasonable and promise prompt loan servicing.

Here is how to choose the right loan origination system for your business:

Easy Customer Onboarding

We are a mobile-first economy. Needless to say that the mobile phone penetration in India beats education accessibility. A desirable loan origination system would be the one that redesigns the customer journey and eliminates lethargic break-points for customers with simplified initiatives such as OTP based E-KYC, E-signature, E-mandates, E-stamping, etc. Such a system would enhance the overall customer experience for the lender and reduce the workload off the front end staff’s shoulders.

Flawless Automation

A loan origination system that boasts of automation capabilities can make the lending platform profitable. Automation functionalities help lenders manage processes quickly while effectively reducing the overall cost incurred per borrower. Systematic robotic process automation allows loan origination systems to execute several high-volume, repetitive tasks without any manual intervention at each step. Lending businesses can scale with enhanced ease with loan origination systems that come with seamless automation. They omit out the need to spend a lot of time handling routine paperwork, manual evaluation, and verification processes, thus leaving loan officers free to engage customers.

Adherence to Compliance 

Indian lending environment comes highly regulated, necessitating the need for a quality check during the lending process. Only a loan origination system that runs loan applications through the quality control queue for auditing purposes and ensures compliance with guidelines issued by the RBI provides a beneficial solution. Thus lending businesses must choose a loan origination system that offers strong support for regulatory compliance. It is because loan-level compliance testing is of prime importance to the lending process. An easily configurable Loan Origination System that can be efficiently embedded into the lender’s workflow.

Multi-faceted Functionalities

State of the art loan origination system is the one that supports all of the critical steps in the loan origination process. An ideal platform would cover all phases of loan origination right from the point of sale, including post-closing to ease the burden off a lending officer’s shoulders. A loan origination platform can also make the process error-free.

What Makes Finezza’s NBFC Software Special?

Any lending business that places customer convenience above all things else; is swift to embrace technological upgrades like loan origination software. They ease the process of lending, but they also make the process of applying a tad bit more comfortable.

The choice of a Loan Origination System or an NBFC software is a long term investment for lending businesses. Lending officers can breathe a sigh of relief thanks to loan origination systems that integrate easily with existing lending frameworks and ensure that all the needed documents are put in place before the process of credit assessment begins. Modern lenders look out for capabilities like streamlined workflow, fast processing, and regulatory compliance when they lookout for a loan origination system. A loan origination system assists a lending business in intelligent and highly customised decision making. New-age Loan Origination Management solutions allow the inflow of loan applications through multiple channels resulting in high volumes. High volumes of loan applications necessitate the use of data analysis in a loan origination system for the strategic decision on loan applications. All in all, only lending businesses that leverage loan origination solutions to create value earn loyal customers through a focus on customer service.

Finezza is an accessible loan origination and lending lifecycle management software that facilitates well-aligned loan disbursal for lenders and excellent customer experience for the borrower. The framework comes equipped with unique capabilities that streamline lending workflows, making it more transparent for the borrowers. It leverages data to produce strategic insights for lending companies.

The framework aids lending stages like pre-qualification, application processing, underwriting, credit decisions, and quality checks with great ease.

How to Find the Right Loan Origination System for a mid Sized Operation?

Loan Origination System

One of the most crucial stages in the process of loan servicing, loan origination, has seen a revamp in recent times. UI design and service delivery have become essential considerations for lenders choosing loan origination systems for their lending platforms. A lender’s choice of loan origination process is what makes them different from the rest of the players in the market.

Narrowing down onto a Loan Origination System for a mid-sized operation can be as tricky as it gets. There are plenty of loan origination system vendors in the market today. The financial lending business must consider factors like the implementation time, degree of automation it promises, scope of integration with other technology solutions, and regulatory compliance it caters to.

Given modern competitive markets and fluid mortgage lending environment, mid-sized lending businesses can optimize operational performance with a flexible, dynamic, and innovative origination system with capabilities such as artificial intelligence, digital APIs, advanced automation, and user-friendly point-of-sale functionality.

The most suitable loan origination system vendor is the one that meets many of the above-listed criteria. Moreover, it is fair to conclude that the right choice of loan origination system for a mid-sized lender must adhere to the challenging requirements of a growth-oriented operation.

How to Find the Right Loan Origination System for a Mid Sized Operation?

While loan origination software optimizes stages of a borrower’s journey throughout the lending process. There are no doubts about the fact that business borrowers are spoilt for choice when it comes to choosing a lending partner. While reasonable interest rates are the prime factor that helps them choose a lender, prompt loan servicing counts too.

Here are some critical factors that all mid-sized business lenders must consider in order to find the right loan origination system:

Lending Lifecycle Management Trends for 2020

Fast Deployment and Low Costs of Implementation

Along with suitable functionalities, mid-sized lending businesses must choose an origination system that comes with the convenience of rapid implementation. The time taken for integration and the pricing can be chief determinants for the choice a lending business makes.

Comprehensive Functionality

State of the art loan origination systems for mid-sized lending companies must come with support for all of the critical steps in the origination process. The ideal policy covers all phases right from the point of sale through post-closing to ease the burden off a lender’s shoulders and enable error-free processes. The chosen method should also address compliance requirements and reduce the overall costs associated with maintaining separate systems.

Seamless Automation 

A loan origination system that comes with flawless automation capabilities can be an invaluable addition to the lending platform of the business. Not only do they help lenders manage processes in a streamlined fashion, but they also effectively reduce the overall cost incurred per loan.

With suitable robotic process automation, loan origination systems can efficiently execute several high-volume, repeatable tasks without human intervention at each step. The mid-sized business enjoys the perks of seamless automation in order to scale with ease. With LOS, loan evaporators need not spend a lot of time handling routine paperwork, technical manual evaluation, and verification.

Ease of Integrations

A desirable loan origination system would also integrate well with other software systems that a lending company counts on. Build to feature embedded APIs the chosen LOS must be capable of easily incorporating document providers, point-of-sale solutions, product, pricing and eligibility technology, and title production software as well.

Regulatory Compliance

Given the highly regulated Indian lending environment, a quality check is a vital aspect of the lending process. A loan origination system that forwards loan application to the quality control queue for auditing to ensure compliance with guidelines issued by the RBI.

Choosing a loan origination system that offers robust support for a lenders’ regulatory compliance helps the lender in steering profitable operations through its lifecycle. Conducting loan-level compliance testing is crucial to the lending process. It’s best if the lender opts for an easily configurable LOS that can be directly embedded into its workflow.

AI Capabilities

Rapidly advancing technologies and innovations have lead consumers to harbor almost surreal expectations from the real world. These can be detrimental to the mid-sized lending business who face extreme pressure to meet customer expectations in the face of limited budgets.

Choosing an origination system with AI capabilities is an affordable way to leverage advanced features and functionality, such as ML, digital point-of-sale capabilities for lenders. AI makes the performance of a LOS more accurate when compared to manual methods by allowing real-time interactions with consumers to collect information, remote document uploading, and instant data validation.

Conclusion

Choosing a Loan Origination System is a long term investment for every mid-sized lending business. Mid-size businesses benefit from integrating loan origination systems that can easily track funding and ensure that all the needed documents are put in place before the assessment begins.

Factors like advanced workflow capabilities, fast processing, and regulatory compliance make a loan origination system that’s suitable for mid-sized businesses. Thanks to efficient loan origination systems and allied technological advancements, lenders benefit lenders from intelligent, customized decision making.

Times call for the use of loan origination systems that rely on data analysis to make strategic decisions on behalf of the lender. New Loan Origination Management solutions allow receipt of loan applications through multiple channels and touch points.

A business that values their customers continually welcome technology upgrades like as new-age loan origination software to ease the lending process and provide superior customer experiences to its users. Companies must leverage loan origination solutions that create value and thus earn loyal customers with excellent service.

Finezza is a unique loan origination and lending process management solution that makes it possible for lending businesses to achieve well-aligned loan disbursal and excellent customer experience. Not only it streamlines lending workflows, but it also improves process visibility for the customer.

The way Finezza leverages data helps it produce strategic market insights for mid-sized lending companies. Right from pre-qualification, application processing, underwriting to credit decisions, and quality check, it performs all functions that are required of an origination system with great ease.

Want to know more about how Finezza can help you optimize your lending business? Get in touch!