Pretend your current loan origination system is an automobile. How would you describe it— antique, clunker, ready for recycling, gas hog, eco-friendly, best car I’ve ever owned, or just drove it off the lot?
If it’s any of the terms that indicate an aging, dated auto (or a shiny new lemon), you’re likely considering a new loan origination system. Just like automobile brands and dealers, there are lots of loan origination system vendors. How do you choose the best loan origination system vendor for your business?
Loan Origination System Vendors Selection Criteria
Just as with any other long-term investment, you’ll want to establish a relationship with a vendor who truly understands all the nuances of the lending cycle. One whose employees apply their experience in creating the loan origination system. A modern system should provide all the necessary functionality your organization needs and let you easily configure the system.
Of course, you’ll be looking at the features and functions of the vendor’s loan origination system, but those are based on their industry understanding, technical proficiency, and corporate culture. Here’s how to kick the tires on (what to look for in) loan origination system vendors.
Technologies for Loan Origination Systems
Lending efficiency is directly tied to the loan origination system’s technology. That technology is critical to success in a today’s competitive lending market. There’ve been significant technical advances in lending technology in loan origination systems. A loan origination system vendor should always be evaluating new technologies. That helps them improve implementation times, make system modifications quickly and easily, support compliance, and enhance lending efficiency.
Look for these technologies in particular:
- Cloud-based hosting with web-based UI for quick deployment and software updates.
- Configurations that allow business analysts to quickly make system modifications to meet your specific lending practice and process needs.
- Workflows and decision rules that replace manual lending steps with automated, predictable, repeatable processes that comply with lending regulations.
- Native integration with leading credit data services and solution partners that enhance the efficiency of your lending practice.
- Digital documents that eliminate the cost and delays caused by handling paper documentation.
- Analytics to evaluate current lending process efficiency and apply that insight to continually refine credit policies and processes for improved efficiency and profitability.
An experienced, successful loan origination system vendor does not develop products in isolation. Regular, ongoing engagement with its community of customers is vital to the mutual success of vendor and customers. With customer interaction, the vendor gains valuable insight into actual product usage, potential enhancements, and overall product direction based upon customer consensus. Customers benefit from information, including problems and best practices, shared among the customer community.
Community connects product developers, support staff, system administrators and company executives. Community is one of the intangible factors that play an important role in vendor and customer success. Choose a loan origination system vendor that has created an engaged and vibrant customer community, that is supported by:
- A community portal for customers to “talk shop” with other lenders, get technical support, access a wealth of knowledge, including best practices, and pose questions to the community.
- Customer roundtables that are invitation-only events. The roundtables are opportunities to focus on topics and issues specifically tied to customer interests.
- Annual customer conference that provides an extended opportunity for vendor-customer conversation to learn about product roadmap, share issues, and industry trends. It’s also an opportunity to build community cohesiveness through via formal and informal social events.
Venture Capital Investment
Confirmation of a vendor’s current and future success is not only the length of time in the business, number of customers and business partners, but also investments by venture capital firms. In a highly-selective VC market, a significant investment by a venture capital firm is a solid endorsement of the vendor’s strategy and prospect for above-average market growth. VC investment should give any lender added confidence.
Loan origination systems are available from a wide range of vendors. Some are global behemoths that offer software solutions for nearly every conceivable industry and line of business. Others focus exclusively on the lending industry. Everyone in the organization is dedicated to the development, implementation, support, and continued enhancement of the loan origination system they offer. A vendor focused exclusively on the lending industry gives you a number of distinct advantages in comparison to large, diversified vendors.
- Direct communication with all level of employees who develop and support the loan origination system
- Detailed understanding of industry trends, issues, and needs that impact your lending practice.
- Close, collaborative, iterative efforts among employees to provide a loan origination system to meet your unique lending needs.
Choose the Best Loan Origination System Vendor
Choosing the best loan origination system vendor for your business will take time. We purposefully didn’t get into all the feature and function criteria. Consider only those vendors who have a well-established, exclusive, and sustained focus on the lending industry before you start investigating features and functions.
defi SOLUTIONS invites you to learn more about our loan origination system. We’ve applied more than 20 years of lending experience to develop a configurable, cloud-based solution to help lenders improve their efficiency at every step. The defi SOLUTIONS team welcomes the opportunity to discuss your needs. Contact our lending experts or schedule a demo now.