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The defi Team auto loan origination software, defi INSIGHT, defi LOS, Loan Origination Software

Loan Origination Platform

Unprecedented technological advances in the last decade have sparked great efficiencies in the auto industry. Design, prototyping, and manufacturing techniques, as well as innovations like voice recognition, GPS, adaptive cruise control, and advanced diagnostics have redefined the car ownership experience for consumers. Similarly, modern technology is now turning its eye to auto lending and loan origination platforms (aka loan origination software, or LOS).

Auto loan origination systems developed and deployed a decade or more ago are simply inadequate; they cannot effectively handle contemporary loan lifecycle needs. In the age of cloud services, lenders have been given a not-to-be-missed opportunity: loan origination platforms that are significantly more efficient and increasingly flexible. Let’s take a deeper look at the key features—and the immense benefits—these modern systems must deliver to savvy lenders.

The Key Features of a High-Performing Loan Origination Platform

The decision to replace an outdated loan origination system with one designed for streamlined processes, regulation compliance, and system configurability can be a massive undertaking for any lender. However, consider the loan origination system you use now. If you’re dissatisfied with its performance or concerned about ever-growing operating and support costs, then your company’s overall success and profit are taking a hit. It’s time for a replacement.

A well-designed system brings a host of benefits. Recent technological advances enhance performance and reduce operating costs. Rapid implementation brings faster time-to-value. Easy configuration lets lenders modify the system to their unique business practices. And access to lots of consumer and economic data sources and services helps you make faster, better decisions throughout the loan lifecycle.

As you begin the selection of your new loan origination platform, these are the must-haves:

  1. A strong heritage: Look for a company that “grew up” in the lending industry and has well-established lending expertise confirmed by a multitude of successful clients.
  2. Up-to-date technology: Ask the vendor to explain its strategy for evaluating and incorporating new technologies that enhance system functionality well into the future. Implementing current technologies as they become available is a must for reducing operational expenses and improving process efficiencies.
  3. Simplified configuration options: Your loan origination must be easily configurable in order to meet your process needs without expensive, custom programming.
  4. Native integration with data: Choose a vendor who provides native integration with the increasing number of consumer and financial data sources available to help you make well-informed decisions.
  5. Rapid implementation: You likely spent months implementing and customizing your current loan origination platform. With rapid implementation, you’ll forego that costly process and realize the benefits of your new LOS as quickly as possible.

A Well-Established Loan Origination Heritage

Before evaluating the technical capabilities of a new loan origination platform/LOS, consider the vendor’s heritage. How many employees have had on-the-job lending experience? Better yet, have they actually used the software in a business setting? Are they exclusively focused on providing lending solutions, or are they a huge software conglomerate, offering a wide range of products for almost every conceivable industry and application? If you wanted to talk to the CEO, would that require a formal appointment weeks away or a simple phone call?

After you have made the decision to meet with the vendor, take note of whether or not your account representative:

  1. Intimately knows your business
  2. Speaks your language
  3. Understands the nuances of loan origination

When a vendor has a singular focus, everyone in the company is working in unison for your benefit. A team of highly-knowledgeable employees with a background in lending or hands-on-experience using a loan origination system can significantly enhance the design, development, and support of a lending system.

You can recognize this expertise from your very first meeting. Look for an immediate grasp of your needs, a common vocabulary, and a consultative approach in discussing your requirements. And in the event you have a pressing question, it’s reassuring to know the CEO welcomes your call.

The Most Current Origination System Technologies

Your investment in a new loan origination system should not only deliver increased efficiency and configurability now, but should be architected to take advantage of new and emerging technologies as they become available. We’ve identified three technologies with the most potential to significantly improve efficiency and profitability for lenders now, and to pave the way for future innovations:

  • Cloud/SaaS: Thousands of businesses are moving to cloud computing, aka Software as a Service (SaaS), because of the proven economic and operational benefits over on-premise origination of IT infrastructure and software characteristic of outdated loan origination systems. The benefits: faster implementation, increased scalability, secure access from virtually anywhere, reduced operational costs, and frequent software updates from the vendor.
  • Mobile access: With more business conducted via mobile phones than ever before, a loan origination system that gives lenders real-time access to loan approval status, as well as crucial details like sale price, interest rate, terms, loan-to-value (LTV), and probability of close, can help optimize all phases of the loan process—and keep everyone who needs to know up-to-date on a loan’s status.
  • Analytics: Analytics provides an increased understanding of the efficiency, performance, and profitability of your loan operations. Pre-loaded reports and configurable dashboards can provide detailed analysis of current application performance, deal quality, reasons for competitive losses, and many other factors to help continually optimize all phases of loan origination.

Simplified System Configuration Processes

No two lenders have identical procedures. You’ve developed your lending processes based on past success, portfolio performance, market dynamics, and compliance with evolving regulations. Outdated loan origination systems require programming expertise and months—or years—to make even minor modifications.

In your meeting with an account representative, key questions include:

  1. What level of technical expertise is needed? Can a business user make configuration changes?
  2. Is there support for decision rules? If so, what is the process for creating and modifying rules?
  3. How granular are configuration options? Can you configure to individual user needs?

Your new loan origination system should be easily configurable, allowing business users to make changes to rules, dashboards, drop-down menus, display fields, and access permissions in order to meet ever-evolving operational needs.

Pre-Integration with Key Data Providers

By virtue of the cloud, lenders have access to a growing list of consumer and financial data providers such as Digital Matrix Systems, LexisNexis Risk Solutions, Equifax, Point Predictive, TruDecision. These sources can help lenders make better-informed decisions, reducing risk and improving loan performance.

Before selecting your loan origination system, consider carefully the data sources you rely on—now and in the future—and ask your account representative about the extent (or limitations) of their relationships with the data sources you use or intend to use.

A loan origination system should provide seamless integration with leading information providers, allowing lenders to immediately take advantage of these resources without the time and cost of major or custom integration. Identify your key data sources and ask if the vendor provides native integration with them.

Rapid Implementation of the Loan Origination System

If system deployment is a protracted process, all of the aforementioned features will have limited or delayed value for your team. Recall the time-consuming, frustrating, and costly implementation of your current system. Avoid a repeat at all costs.

Ask your potential vendor how long a typical implementation might take. If it’s going to take several months to a year or more, you’ll have to wait to use those shiny new features. How about your point of contact during the implementation—will it be a single person or a small team? Are they readily available for questions? Does the company size and bureaucracy, range of products offered, and potential for unexpected personnel changes add an unacceptable level of risk to the implementation process?

Rapid implementation accelerates your transition to the new system, so that you can start using it and improve your business quickly. A single point of contact backed by an experienced team that deeply understands the lending industry—and is deeply dedicated to your success—is critical for a smooth implementation, and a positive and profitable relationship with your vendor.

These recommendations for the key features your new loan origination system must have are based on years of lending industry experience, an intimate understanding of current lender needs, and an ongoing evaluation of established and emerging technologies. Your new loan origination system, featuring incorporated key technologies and designed by lending industry experts, will deliver faster time-to-value, streamlined lending processes, better quality decisions throughout the loan lifecycle, and easier modifications in response to market dynamics. The sum of these parts equates to a lending team armed with the most advanced tools in the industry—and healthier, more stable profits to prove it.

defi SOLUTIONS is a lending industry leader. Our loan origination and origination software experts would love to begin a conversation about your specific lending needs. When it comes to the lending process, we are professional problem solvers. Take the first step toward greater lending process efficiency and profit by contacting our team today or register for a FREE demo.

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