Are you seeking a top-notch loan management system for your credit union, small regional, or community bank? Does the time-consuming process of researching the numerous features make you want to hide your head in the sand? The right digital loan origination system can help your financial institution streamline every step of the loan servicing process. Understanding what features to look for is your first step to finding the best solution for lenders and borrowers.

Benefits of loan origination software

The lending process, from loan application to disbursement to loan management, is complex, time-consuming and can hurt the customer relationship at any point in the loan life cycle. Overloaded loan officers are at risk of making mistakes in the pre-qualification, credit decision, and document management processes. In addition, human error may lead to compliance failure with the numerous regulations imposed upon the financial services industry.

Loan origination software automates and streamlines these processes while providing data collection to improve lenders’ insights and the customer experience.

The benefits of loan origination software include the following:

Removing human error

While accuracy is vital in all steps of the loan application and lending process, unfortunately, traditional loan origination methods are fraught with the risk of human error at any stage of the workflow process. Digitization and automation eliminate human error in the loan origination process, so lenders and borrowers don’t have to recheck and verify the information.

Saving time in the application process

Onboarding during the loan application process requires many time-consuming procedures and attention to detail. Manual business processes burden loan officers with unnecessary tasks when their time could be better spent offering other loan products to build your organization’s portfolio. A digital lending platform can save your team from many tedious duties.

Avoiding payment delays

Customers’ creditworthiness can change over the loan life cycle, which might put the bank at risk for collecting a debt. Manual loan management can make it extremely difficult to recognize when this occurs. However, digital loan servicing systems use API (application programming interfaces) to communicate with third-party platforms, which helps financial institutions get an entire picture of customers’ financial health before it becomes a problem.

Report automation

Another significant benefit of digital lending platforms is the tools that automate one of the most highly labor-intensive processes in commercial lending—regulatory reporting. Because lenders frequently request an accounting, including tax reports and other documents, a digitized loan origination system can automate the entire regulatory reporting process end-to-end. 

Loan origination software allows any financial institution to streamline procedures so lenders can process more applications, manage more loans, and increase revenue.

7 Top features of a loan origination system

1. Cloud-based accessibility

Understanding the complete picture of a customer’s financial needs and products that can provide solutions is crucial to any loan officer hoping to offer the best customer experience. Using a cloud-based system with optimal security features enables users to access essential data from a centralized storage server accessible during every stage of the loan process.

2. Banker dashboard & reporting

As mentioned above, having the right digital lending platform allows the lender to create accurate reports for regulators and the bank’s use. A user-friendly dashboard with easy-to-learn applications makes for more efficient, real-time bank performance tracking. Look for dashboards with easy-to-customize components.

3. Ability to service various loan types

Whether your organization specializes in commercial loans, mortgage loans, or small business lending, make sure the lending platform you choose can adapt and handle a variety of loan products. The more loan products you offer, the bigger your target market.

4. Credit risk assessment

State-of-the-art loan origination software must be able to directly connect with credit bureaus to measure credit risk before making any credit decision. Top lending platforms receive frequent credit data updates and access all credit scoring data to determine the creditworthiness of potential borrowers.

5. Customizable to bank’s rules

A critical feature of a loan origination system is the ability to customize the platform to your institution’s credit policies and guidelines. Look for digital lending platforms with configurable parameters to either weed out undesirable applicants or offer the most appropriate loan products for the customer’s specific needs.

Not only is the ability to configure the platform to your financial institution’s needs a crucial feature, but customization is the foundation for boosting customer experience. In addition, you can find loan origination systems with fully customizable user journey designs, including brand logos, style, and custom layouts—all of which contribute to building brand recognition for your financial institution.

6. Banking analytic modules

Another feature to look for is the built-in banking analytic modules employed in the platform to help ease decision-making for lenders. Banking analytic modules use AI (artificial intelligence) to collect and analyze data, so market trends are recognized and reliable predictions can be made. The data from banking modules helps produce more accurate reports and provides insight into consumer behavior so lenders can develop improved products and services.

7. Customer experience

Today’s banking customers expect a seamless digital loan journey on their mobile devices and desktops. Innovations in digital lending platforms allow financial service providers to deliver this for their customers so applicants can access their loan status without making human contact.

Digital lending must guarantee that the loan process is simple and efficient, with a faster turnaround at all stages—from application to loan disbursement. Digital channels such as web and mobile apps provide loan servicing; however, the loan origination system must offer a robust CRM (customer relationship management) system so lenders can also employ email and SMS texting.

Lenders’ best tool

Although it’s possible to create your own loan origination software platform, pricing and time constraints make shopping for an existing platform a wiser decision. In addition, third-party vendors not only provide features most organizations find especially valuable in a loan processing system, experienced loan software vendors back their products with high-level security guarantees, ongoing maintenance, and helpful customer support and training. Also, because platform developers service several banks and credit unions simultaneously, they can better inform your financial institution when updates and changes are needed.

The Biz2X Platform offers enhanced loan management, servicing, risk analytics, and a configurable customer journey. Find out today how Biz2X is helping lenders run their lending operations at scale.