How to Improve Loan Origination Automation in Banking for Auto Lending Processes

Loan Origination Automation: A Business Case for Adopting Better Lending Technology

The current banking world is rapidly transforming into a digital one. Lending institutions have been using loan origination automation in banking processes for some time now. But, the banks that want to stay ahead of the game are investing in new lending technologies to remain competitive.

While most banks with auto lending capacity already have a loan origination system or LOS in place, it may not be keeping up with their needs or optimizing their processes efficiently. These days, most people aren’t going into a branch to start a loan application. They are also not walking into auto dealerships either. 

The financial lending industry has had to adapt to people wanting to sit in their homes, fill out an application, and get a quick response on what they qualified for—all before they walk into a dealership or bank.

Now, more consumers prefer not to go anywhere or look at anything to pick up a vehicle. This new buying trend is leaving banks and lenders scrambling to update their technology and their business processes to accommodate this new norm for customer experience.

Barriers For Updating Loan Origination Automation in Banking

One way that banks and lenders are keeping up with consumer demands is by updating their legacy systems to take advantage of the latest advancements in lending tech. In the past, there were two significant barriers to updating a legacy system: the cost for development and the lengthy timeframe for implementation.

But, thanks to cloud-based technologies, banks now have the ability to update their loan origination software quickly. By utilizing configurable solutions, banks can ensure their software is always updated with the latest advancements. 

Here’s a quick comparison breakdown between the old way of building vs. the new option for implementing software:

The supply and labor shortages, the growing demand for mobility, and the dramatic increase in regulations all add up to be a challenging environment. This is why top lenders rely on more efficient software to operate quickly and consistently. The wide range of fintech functionality that modern lease or loan origination software provides helps lenders compete in the fast-paced auto-lending market.

Problem-Solving With the Latest Advancements in Lending Tech

Old Development Model

Updates require expensive in-house or contract expertise to make even minor changes.

Time-consuming development process.

More expensive to maintain overtime.


Lower total cost of ownership.

Robust API layer and API engine for rapid delivery.

Hassle free maintenance. 

Scalable, flexible, stable solutions.

Pre-integrations with third-party data sources.

Regular updates managed by the software provider.


Lending technologies are becoming more flexible and extensible. Modern LOS software requires no coding or programming expertise on the part of the lender, so that going forward they won’t have to make the hard choice of throwing out a legacy system and completely starting over. 

Lenders and banks now have the ability to select specific features that will fill in the gaps and give them the capabilities they need without having to sacrifice their processes. They no longer have to choose between customized software that fits their unique lending needs and quickly implemented third-party software that you have to change your business model to fit.

How the Latest Technologies Improve Lease and Loan Origination Processes

So, updated, modern loan origination automation software is a must for competitive lenders and banks today. But what are the key benefits, and why is it so important to consider using configurable software solutions to achieve better results? Let’s find out:

Automate Compliance Maintenance

It is now possible for banks and lenders to automate their compliance maintenance by configuring regulations straight into their loan origination systems. The best part is that with a configurable system, you can automate your compliance with decision rules—without technical expertise.

With policies rapidly changing, this functionality is especially useful. Instead of banks having to update countless procedures, business users can simply add regulatory revisions to their system. Once the change is in place, it is applied to all applications from that point on. Not only do decision rules play an important role in automating the loan origination process, they also make it easier to maintain compliance. 

Increase Operational Efficiency

When your loan origination software isn’t allowing you to respond as fast as your competitors, it leads to lost deals. Slow lending decisions can have a major impact on profits. Using outdated manual underwriting steps can result in errors or inconsistent lending decisions. Modern lending solutions offer many benefits to help you avoid operational challenges.

Cloud-based implementations of modern loan origination systems are speedy and allow banking professionals to take advantage of the latest functionality using configuration and without periods of time-consuming development. This faster time to market keeps your process up-to-speed so you can capture the applications that fit your lending needs. Cloud-based solutions are also easy to scale so you can expand your operations and meet changing consumer demands whenever necessary. 

Improve Customer Experience

In the fast-paced auto-lending industry, on-sight legacy systems are becoming painfully limited. Even when you’re not doing any major updating, just basic system maintenance or small regulatory changes become an arduous process. Without the flexibility of configuration, you have to hire and maintain expensive in-house or contract expertise to get the changes you need. And with the growing demand for mobility in the loan application process, legacy systems are falling behind.

Cloud-based, mobile-ready systems with easy mobile application integrations will provide a competitive advantage for auto loan providers. Look for lease or loan origination software that will support mobile capabilities like custom drop-down menus, data masking rules, minimum/maximum values, and display logic to guide applicants through the loan application process. With a modern, configurable LOS, you can serve a better experience to clients while also keeping your system agile.

Make Complex Decisions in Seconds

When it comes to loan origination automation in banking technologies, decision rules and automated deal structuring are among the most significant. They lay the foundation for speedy decision-making and the inhuman accuracy behind modern LOS systems.

We’ve already discussed how indispensable decisioning rules are in helping auto-lending comply with regulations. But, decision rules are also responsible for translating repetitive underwriting decisions.

What used to take underwriters several minutes to execute can now be done in a fraction of a second, which is why decision rules have dramatically accelerated the loan origination process and brought an entirely new level of consistency to lending decisions. 

Auto structuring is a technology that extends the concept of decision rules to provide fully-automated loan decisioning. Many loan applications have similar attributes. Banks and lenders can use the auto-structuring process to review loan applications and modify the terms iteratively with the goal of matching one.

The need for this method has been amplified by the fact that banks are now using more advanced tools to get more information on each applicant. Auto structuring can extend the loan term, adjust interest rates, or stipulate a larger down payment. The software will search for a balance between the borrower’s interests and the lender’s needs, but if there’s no match, then it will initiate a decline. These complex decisions are now made in a matter of seconds. 

Seamless Data Integration for Better Lending Decisions

Data integration is the key to unlocking real-time insights into potential customers’ creditworthiness. Alternative credit data helps lenders capture deals that would otherwise have been declined. It also gives lenders greater confidence in loan decisioning. Alternative credit data includes:

Rental records

Bank accounts

Electricity, gas, and mobile phone payments

Real estate ownership

Driving records 

And more

The data behind the lending decision should be as accurate and comprehensive as possible. Alternative credit data can provide valuable insights into how people manage their finances, leading to better lending decisions.

Reduce Fraud and Errors

Machine learning analysis technology helps loan providers identify fraudsters and prevent identity theft. It uses data mining to filter out risky borrowers and provide more accurate predictions on creditworthiness.

Banks and lenders can eliminate fraudulent applications with this technology. For example, it can tell whether someone has committed tax fraud by looking at income distribution records. The technology can analyze large sets of data in a short period of time. Machine learning algorithms are an essential part of the new generation of financial technologies that are revolutionizing the lending industry.

A configurable LOS is the best way to make your business more efficient and improve every aspect of the lease or loan process. Not only for your bank and its employees but also for the people you serve.

Is Your Legacy Software Holding You Back?

If you’re finding it harder to maintain a competitive position in the auto lending market, your outdated lending software could be holding you back. Updating your legacy software with the latest advancements in mobility, data integrations, automation, and decisioning rules could help you gain back a competitive edge.

Getting Started

defi SOLUTIONS provides configurable loan origination systems, loan management and servicing, analytics and reporting, and a wide range of technology-enabled BPO services. So if you’re struggling with the limitations of your current loan origination automation in your banking institution, take the first step in realizing the benefits of modern technology. Contact our team today or register for a demo.

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