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loan origination system market share

Lenders looking for an LOS often start by checking loan origination system market share. That can reveal industry leaders and niche players. You’ll get a high-level overview of software functionality and capabilities, and you might get some insight into each vendor’s market strategy and focus. It’s not a bad approach, but it does have some pros and cons.

The Pros of Selecting a Loan Origination System Based on Market Share

In almost every industry there are established market leaders. They may have been industry pioneers, building their businesses on the strength of early market entry. They may offer several different loan origination products, or integrate products for a best-of-breed solution. Mid-tier vendors focus on small-to-mid-size lender needs. Late-entry, promising players may also be included in the ranking because of a unique market focus or innovative technology.

That said, market leaders have:

  • A large number of customers;
  • Financial strength; and
  • Well-established support services.

Choosing an established market leader can lessen the risk of your software investment.

The Cons of Selecting a Loan Origination System Based on Market Share

Although loan origination system market share helps identify key players, it may not provide the complete picture of the market, nor reflect recent fintech innovations. Consider these factors when evaluating potential vendors:

  • A market share report rarely includes all the relevant vendors. Some may have been overlooked. Others have a policy of not disclosing revenue. Promising startups may have declined the opportunity to participate because of their comparatively modest revenue.
  • Loan origination systems of established market share leaders may be based on outdated technology, a combination of software products acquired and poorly integrated, or cash cow products that have no roadmap for improvements.
  • Fintech innovators are delivering functionality such as fraud analytics, credit policies based on machine learning, and vehicle valuation services that can be easily integrated with cloud-based loan origination systems. Legacy LOS may not be able to accommodate the latest services needed to successfully compete in today’s market.

You can begin your evaluation based on loan origination system market share, but we recommend you expand your search to consider additional vendors, and survey the latest fintech advancements that are improving lending efficiency and decision quality.

Market Share or Critical Requirements for Today’s Lending Market?

Beginning with a review of loan origination systems market share is a start, but at some point, you’ll be evaluating product functionality. In any evaluation of loan origination system vendors, you should consider three capabilities: Cloud-based, fully integrated analytics, and pre-integrated cloud-based lending services—that support lending efficiency, better quality lending decisions, and reduced risk.   

Cloud-Based LOS

Cloud is a well-proven technology, enabling lenders to quickly implement a solution while simultaneously reducing CapEx and Opex. It supports frequent automated software updates that continually enhance functionality and performance. Cloud allows lenders to easily incorporate the latest fintech lending capabilities needed to successfully compete in today’s lending market. If the loan origination system is not cloud-based, it shouldn’t be on your shortlist of vendors under consideration.

Pre-Integration with Cloud-based Lending Services 

Cloud-based loan origination systems facilitate easy integration with cloud-based lending services that can significantly enhance a lender’s efficiency, reduce processing costs, support well-reasoned lending decisions, and reduce risk. Pre-integration with dozens of cloud-based lending services lets lenders select and quickly configure the services they need, without expensive, time-consuming custom integration. These services can include:

  • Application sources;
  • Digital applications and contracts;
  • Credit bureaus;
  • Alternative and trended credit data;
  • Employment and income verification;
  • Fraud detection;
  • Compliance; and
  • Vehicle valuation.

Fully-Integrated Analytics

Nothing has had a greater effect on lenders’ ability to continually improve efficiency, reduce processing costs, and enhance portfolio performance than analytics. Modern, cloud-based LOS capture and generate volumes of data associated with applications, workflow, decisions, delinquencies, defaults, and portfolio profit.

Fully-integrated analytics allow lenders to monitor every step of the loan origination process to identify bottlenecks, track process trends by day, week, month, quarter, and year, compare the performance of underwriters, and to search for process improvement candidates constantly. Analytics can also be applied to evaluate portfolio performance, looking for correlations among borrower attributes, loan terms, and defaults, with the goal of adjusting credit policies to minimize risk.

The Best LOS Does What You Need

Every modern LOS should be cloud-based, with pre-integrated cloud-based lending services and fully-integrated analytics. Compared with legacy LOS, these capabilities offer increased lending decision consistency and can help continually improve credit policies and practices.

Market share is a reasonable way to begin your evaluation for a loan origination system. Just don’t exclude specialists, who can offer both proven technology and the latest fintech capabilities.

Getting Started

defi SOLUTIONS is a pure-play loan origination system vendor. We invest heavily in creating, delivering, and supporting configurable solutions that help lenders compete. Take the next step in your LOS vendor evaluation by contacting our team today or registering for a demo of defi LOS.


Get in touch with us today and get a demo!


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