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

The auto finance market is rapidly changing, creating an even greater chasm between lenders using legacy and modern technologies. Legacy systems that have long been lagging are more rapidly becoming outdated by cloud-based technology. The legacy systems are simply not equipped to easily manage the regular modifications that are needed to compete with modern features like automated underwriting and compliance checks in real-time.

Older systems are not able to keep up with today’s standards for loan origination features, which has caused financial institutions to spend more on upkeep for these old systems than they would spend on a modern loan origination system (LOS). This loan origination automation business case examines why legacy system users should consider adopting modern lending technology.

Most industries are currently facing unique challenges due to the economic climate, and the lending industry is no exception. But, with recent advancements in loan origination software, lenders are keeping their organizations agile and efficient. 

Let’s explore why modern lending software is capable of handling today’s challenges by streamlining every step of the loan origination process for quicker, more mobile lending. Let’s start by taking a closer look at the current problems faced by the lending industry:

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.

There’s no doubt that automation has permanently changed the landscape of lease and loan processing. But updating a legacy system is a lengthy and often expensive process. Now there’s flexible, scalable, configurable software that allows lenders to use a pivot-and-respond approach to meet future market demands.

Lenders can leverage cloud-based loan origination software that’s regularly enhanced by the software providers. This development in SaaS integrations means evolving a tech stack and upgrading to the latest capabilities is much easier than it used to be. Take a look at a comparison between these two build methods:

Configurability is becoming a cornerstone for taking advantage of all the benefits that modern loan origination software offers. They’re quick to implement, cost-effective, but still provide the stability you need in a reliable LOS.

For this loan origination automation business case, let’s dive deeper into how a customizable and scalable LOS like defi SOLUTIONS can improve efficiency and streamline the origination process, including: 

Accelerating the Decisioning Process

The key to success in lending is to make decisions as quickly and accurately as possible. By utilizing the latest in automation to accelerate your decisioning process, your staff can focus on the more complex decisions that require their expertise. With a modern LOS, lenders have better control over their lending process without devoting resources or time to manual data entry. With defi, users have the ability to:

• Easily define, implement, and modify decision rules.
• Apply decision rules across all areas of your lending process.
• Auto approve or conditionally approve applications based on defined credit policies.
• Use formulas to create complex decisioning processes.
• Automatically maintain a history of decision rules to demonstrate compliance.

Rules support compliance requirements. You can set up your decision rules to prove you’re following regulations. Your decision rules can also demonstrate that your lending processes are non-discriminatory.

Leverage Data Faster and More Efficiently 

Lenders gain valuable insight when analytics are applied to loan origination processes and captured throughout the loan lifecycle. For example, lenders can easily see how well their current loan origination processes are performing. Analytical capabilities specific to defi include: 

• Data exploration and report creation by business users, no IT experience needed. 
• Custom calculations can be created to monitor performance metrics.
• High-level (executive) and detailed (drill-down to an individual loan) analysis can be provided.
• Easily consumed analysis via visualization: maps, charts, and graphs are available

Auto lenders can leverage data to identify borrower characteristics and loan structures that positively or negatively affect portfolio performance. 

Out-Of-the Box Third-Party Integrations

Lenders need to easily integrate with their third-party data providers. If not out-of-the box, an LOS must provide the ability to easily integrate and gather the information they need from application sources, credit bureaus, vehicle valuation sources, such as these and more:

Lenders need to be quickly and easily connected to the resources and regulatory data they need without a long development project. And, as regulations change, make modifications quickly and cost-effectively.

Mobile Readiness

It’s close to impossible to be competitive in the lending industry without loan origination software that’s platform and device-agnostic and that supports mobile applications. A lender’s team needs the ability to stay plugged into their dealers and check borrower application status from the field, using a mobile tablet, phablet, or mobile phone.

And then there are borrower expectations. With the growing adoption of mobility throughout all facets of the borrower’s business and personal life, digital access to their lender is no longer optional but a basic requirement among borrowers. 

Modern LOS providers offer easy, digital, mobile integration and capabilities that streamline and simplify both the lender and the borrower’s experience with features that include custom drop-down menus, data masking, rules, and minimum/maximum values, to accurately capture applicant information.

Keep Up With Regulatory Changes and Trends

Keeping up with regulatory changes and trends requires a modern LOS. These days, lenders have to track regulatory changes and quickly modify their business processes and policies and be prepared to report on their compliance. This requires a system that’s flexible, configurable, and easy to modify. Older legacy systems are difficult and costly to make even small changes. They can’t keep up with the fast implementation of a modern LOS.

The challenges of the current lending climate put pressure on lenders to quickly process all lease and loan applications and adapt to sudden changes in consumer and market demand. When it comes to loan origination automation, modern cloud-based, configurable systems provide the competitive advantage