Recently, loan origination systems have become a buzzword among banks and credit unions. However, the word LOS might be interpreted differently by lenders throughout the industry. For some, a loan origination system is a collection of software systems that automate commercial lending origination processes within a financial institution.
For some, it is a miraculous instrument that fosters growth and enhances the borrowing experience. Some may argue that it is only a buzzword. But because the financing landscape is becoming more fierce and the loan procedure is more stressful and time-consuming than ever, it is essential to comprehend an LOS.
In addition, it is essential to comprehend how an LOS could be able to assist your credit union or bank. An LOS system manages and automates the end-to-end loan process processes, beginning with the loan application and continuing through approval, underwriting, paperwork, funding, pricing and administration.
Although these steps may differ from institution to institution, all banks and credit unions follow a similar procedure to approve loans and sustain lending relationships. Here are the three hidden benefits that have been most frequently noted throughout the discussions.
Guarantees regulatory compliance by:
Applications for business loans are complex. These lengthy paper forms are tedious to complete and frequently request the same information. The lender already has information on their borrowers. In addition to being irritating, they are also perplexing for the ordinary business owner.
When borrowers are puzzled, they are more likely to leave fields blank or supply incorrect information. If bankers and credit officers do not identify these errors, a bank may be out of compliance issues and subject to penalties.
Digital loan origination technologies resolve both of these issues. A high-quality digital LOS will digitize and pre-populate an application with all the borrower information already available to the financial institution. This makes the form simpler and quicker for the client to complete.
Moreover, a strong digital LOS will not permit a borrower to file an incomplete petition or financial report, ensuring that credit unions and banks comply with business lending requirements.
Facilitates credit access:
Qualifying for credit as a company owner may be extremely scary, involving lengthy applications, lengthy trips to the bank, and piles of financial documentation. Given the demanding timetables of most company borrowers, applying might be a mammoth task.
A digital LOS can make loans more available to corporate borrowers by radically simplifying the procedure and integrating it with an industry-leading user interface. Leading digital LOSs of today provide borrowers with web apps and omnichannel support, allowing them to initiate a request through a self-service route and only involve a banker when it is most appropriate.
This enables banks to meet their corporate clients wherever they are and when they require it, enhancing the value of the human touchpoint.
Enhances the status:
Unlike past LOSs that was developed for the backroom, today’s LOS is optimized for the whole borrower experience. Although this innovation can automate the complete end-to-end business loan process, it is not intended to replace bankers. Rather, a successful digital LOS will liberate a banker to perform additional tasks.
Providing bankers with best-in-class technology enables them to give best-in-class service by minimizing the time they spend on mundane chores such as correcting borrower paperwork and locating financial statements, allowing them to devote more time to the client experience.
As the market for small business loans gets hot in 2022, lenders will compete on factors other than interest rates. With company owners placing a premium on the borrower experience, credit unions and banks will seek to incorporate competitively advantageous technologies.
