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

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 Legacy systems that have long been lagging are more rapidly becoming outdated by cloud-based technology.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.

A Loan Origination Business Case: Adopting Better Automation 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:


Competitive Market

Lenders are facing an increasingly competitive market. Pandemic-driven chip shortages have led to a reduction in inventory. The pressure to close deals quickly (and accurately) is higher than ever. Running a tight ship is crucial for capturing the right opportunities, especially when fewer deals are happening.

Another shortage affecting lenders is limited staffing. On top of fewer deals, fewer staff members are available to process them. Effectively automating as much of the loan origination process as possible will reduce the time and effort necessary in the decisioning process.

Consumer Demands

Consumer expectations have changed dramatically due to mobile technologies. The demand for convenience in every business transaction continues to grow.

Speed and ease of use are now expected, especially among younger demographics. In an Amazon-dominated world, lease or loan origination software must support mobile applications in order to be competitive.


Regulatory Compliance

With regulatory pressures continuing to increase, lenders have to make sure their house is in order with respect to their processes.

The latest lending technology plays a critical role in creating a culture of compliance. Technology collects and performs an in-depth analysis that helps identify and minimize compliance risk. In addition, technology standardizes processes, ensuring procedures are followed so organizations can keep up with new regulatory changes.

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

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.

Customizable software is the popular choice for lease or loan origination software. 

But, “customizable” can be subjective with some vendors’ version of customization requiring a long process and an experienced software engineer. Depending on the number of changes, this process can take anywhere from weeks to a year. This limits a lender’s ability to keep up with the industry trends and regulatory requirements.

Building your system using a truly customizable software through configuration gives you the stability with the ability to drag and drop from a configuration menu. Modifications only take a few minutes and can be done by system administrators.

This method lets you quickly modify the system to meet your specific loan processing requirements, unlike legacy systems which require costly and time-consuming programming to make changes.

How a Configurable and Scalable LOS Streamlines the Origination Process

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:

AUL Corp

Automotive Leasing Guide (ALG)

Black Book



Credit Union Direct

Data Oceans


Digital Matrix Systems (DMS)







J.D. Power

Kelley Blue Book

LexisNexis Risk Solutions

Open Dealer Exchange (ODE)

Open Lending




Solutions by Text



Zest Financial

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.

How a Configurable and Scalable LOS Streamlines the Origination Process

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

Getting Started

defi SOLUTIONS provides configurable lease or loan origination systems, loan management and servicing, analytics and reporting, and a wide range of technology enabled BPO services. If you’re struggling with the limitations of your current lending technology solutions, as demonstrated by this loan origination automation business case, take the first step in realizing the benefits of modern technology. Contact our team today or register for a demo.

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