community bank lending workflow


The defi Team defi INSIGHT, Originations

Unprecedented technological advances in the last decade or so have driven efficiency in the auto industry. Design, prototyping, and manufacturing techniques, along with innovations like voice recognition, built-in GPS, adaptive cruise control, and advanced diagnostics, have redefined the car ownership experience. Similarly, modern technology is now turning its eye to auto lending and loan origination software.

Auto loan origination systems (LOS) that were developed and deployed a decade or more ago are now inadequate. They can’t effectively handle the current needs of either lender or borrower throughout the lifecycle of a loan. Today’s cloud services provide lenders with increasingly flexible loan origination platforms that optimize efficiency. Let’s take a deeper look at some key features and the immense benefits they provide to savvy lenders.

The Key Features of a High-Performing Loan Origination Platform

The decision to replace an outdated loan origination system with a more modern one is a massive undertaking for any lender. Yet a LOS designed to streamline processes, meet regulation compliance, and be easily configurable to a lender’s needs is now possible. For lenders dissatisfied with the performance of their current LOS or concerned with high operational and support expenses, it’s probably time for a replacement.

A well-designed loan origination platform offers many benefits. Recent technological advances enhance performance while reducing operational costs. Rapid implementation also allows lenders to realize a faster time-to-value. By making configuration simple, lenders can easily modify the system to align with their unique business practices. The ability to access data sources and services additionally helps lenders make faster, better decisions.

For lenders just beginning the process of selecting a new loan origination platform, the following are imperative:

  1.   A strong heritage: Any company that offers its own version of a LOS should be well-established, have sufficient expertise and knowledge of the industry, and be able to confirm its successes with a multitude of clients.
  2.   Up-to-date technology: The vendor should be able to adequately explain its strategy for evaluating and incorporating new technologies in order to ensure 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: A new LOS shouldn’t require expensive, custom programming to meet a lender’s needs.
  4.   Native integration with data: A vendor whose system easily integrates with all consumer and other financial data sources available will help lenders make better decisions.
  5.   Rapid implementation: Implementing and customizing a new loan origination platform shouldn’t take months and cost a small fortune. A LOS should allow a lender to realize the benefits of a new system as quickly as possible.

A Well-Established Loan Origination Heritage

Before evaluating the technical capabilities of a new loan origination platform, a lender must consider a vendor’s heritage. How many of their employees have on-the-job lending experience? Have these employees actually used the software the vendor sells in a business setting? Is the company exclusively focused on providing lending solutions, or is it a huge software conglomerate offering a wide range of business products for many industries and applications?

After deciding to meet with a vendor, it’s important that lenders note whether or not the vendor’s account representative:

  1.     Intimately knows a lender’s business
  2.     Speaks the language of the lending industry
  3.     Understands the nuances of loan origination

When a vendor has a singular focus, everyone in the company works in unison to benefit a lender’s business goals. A third-party vendor should have a team of highly-knowledgeable employees with a background in lending as well as hands-on experience using the LOS being promoted. When a vendor has all this, it can then significantly enhance how a lending system is supported, along with its design and development.

A discerning lender will recognize such expertise in the very first meeting. When a vendor immediately grasps a lender’s needs, has a common vocabulary, and takes a consultative approach when discussing requirements, that vendor and its products should be carefully considered.

Another important aspect of this choice is how eager a vendor is for the business. It’s more reassuring dealing with a vendor’s CEO who welcomes a customer’s phone call rather than dealing with a personal assistant who requires several weeks advance notice before setting up an appointment with the head of the company.

The Most Current Origination System Technologies

A lender’s investment in a new LOS shouldn’t just deliver efficiency and configurability solutions that solve immediate issues. The LOS should be able to integrate new and emerging technologies as soon as they become viable. In fact, the three technologies with the most potential to significantly improve efficiency and profitability immediately while paving the way for future innovations are:

  • Cloud/SaaS: Thousands of businesses are moving to cloud computing, which encompasses not just the software, but service as well. This software-as-a-service (SaaS) approach has proven more beneficial economically and operationally for lenders than on-premise IT infrastructure and the legacy software of outdated loan origination solutions. Cloud-based SaaS brings benefits that include quicker implementation, better 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 LOS that gives lenders real-time access to the loan approval status will help optimize all phases of the loan process. For auto sales, this includes crucial details like a vehicle’s sale price, interest rate, terms, loan-to-value (LTV), and probability of closing on the loan. This innovation keeps 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 a lender’s operations. Pre-loaded reports and configurable dashboards provide detailed analysis of current application performance, deal quality, reasons for competitive losses, and many other factors that help lenders continually optimize all phases of loan origination.

Simplified System Configuration Processes

No two lenders have identical processes. Each one develops procedures based on past success, portfolio performance, market dynamics, and compliance with evolving regulations. Outdated lending systems require programming expertise and months, if not years, to make even minor modifications.

When meeting with a SaaS vendor’s account representative, key questions to ask include:

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

A new LOS should be easily configurable, allowing business users to make rule changes while also enabling dashboards, drop-down menus, display fields, and access permissions that meet a lender’s ever-evolving operational needs.

Pre-Integration With Key Data Providers

Cloud computing gives lenders access to a growing list of consumer and financial data providers such as Digital Matrix Systems, LexisNexis Risk Solutions, Equifax, Point Predictive, and TruDecision. These sources help lenders make better-informed decisions by reducing risk and improving loan performance.

Before selecting a new LOS, it’s important for lenders to carefully consider the data sources they rely on now and into the future. It’s essential to ask the vendor’s account representative about the extent (or limitations) of these relationships with the data sources currently being used and those a lender intends to use in the future.

A LOS should provide seamless integration with leading information providers, allowing lenders to take advantage of these resources immediately. For this reason, lenders should identify key data sources and ask whether the vendor provides native integration with them. Otherwise, linking them through a major or custom integration to the new LOS may take considerable time, with significant additional costs.

Rapid Implementation of the Loan Origination System

If deploying a new system becomes a protracted process, all of the aforementioned features will have limited or delayed value for a lender’s team. In the past, it was often time-consuming, frustrating, and costly to implement a new LOS. These days, the time it takes to implement a modern LOS has been considerably truncated.

Before going with a SaaS vendor, it’s imperative that a lender know how long implementing the LOS typically takes. If it will take several months, or even years, that’s too long to wait. The lender needs to ask the right questions, including:

  • Who is the main point of contact, a single individual or a small team?
  • Will they be readily available for questions?
  • Does the company’s size and bureaucracy, range of products, and potential for unexpected personnel changes add an unacceptable level of risk to the implementation process?

Rapid implementation accelerates the transition to a new system so that lenders can start using it to improve their business quickly. A single point of contact backed by an experienced team is what’s needed. Both the contact and the team should understand the lending industry intimately while also being dedicated to a lender’s success. This isn’t just critical to a smooth implementation of a software platform but also helps ensure a positive and profitable relationship develops between a lender and SaaS vendor.

Key features of any modern LOS should be based on years of experience working in the lending industry. It takes an intimate understanding of the current needs of lenders to truly create a technologically-based product that offers the necessary capabilities. For lenders to embrace a new LOS, it must deliver faster time-to-value, streamlined lending processes, and better-quality decisions throughout the loan lifecycle, along with making modifications easier when reacting 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.

defi SOLUTIONS offers a total solution for a lender’s complete loan or lease lifecycle. Partnering with captives, banks, credit unions, and finance companies, defi’s market-leading solution helps lenders exceed borrower expectations. From digital engagement through the complete lending lifecycle, defi sets new standards for flexibility, configurability, and scalability in originations, servicing and managed servicing defi SOLUTIONS has the backing of Warburg Pincus, Bain Capital Ventures, and Fiserv. For more information on our cutting-edge loan origination platform, please visit

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