A Guide to Loan Origination Software
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Originally Posted On: https://www.centrexsoftware.com/blog/a-guide-to-loan-origination-software/
Loan origination software is an important tool for financial institutions to manage the application and document collection process for corporate and/or consumer borrowers. It is both a forward facing, and internal facing software that handles loan products and it is the first point of contact between financial companies and borrowers.
What Is Loan Origination Software?
Loan origination software is a fintech platform used as the point of first contact between borrowers and lenders. This type of fintech is used by lending institutions, advance funders, banks, and other financial institutions to manage the loan application process from start to finish.
Some of the tasks that loan origination software is responsible for handling really depends on the loan product the lender or broker is offering. In most platforms these days you will find loan process management tools such as:
- web form integration
- document management
- electronic signature
- calendar and appointment setting
- client communication tracking
- financial data analysis
- credit data analysis
Not only do these tools make the process more efficient and user-friendly for borrowers, but this also reduces manual errors and speeds up the process. That’s something both lenders and borrowers very much want.
What Are Loan Origination Software Features?
The loan origination software platforms that are available today have aspects that are the same and also have aspects that are very different. The best loan origination software will be the one that can add the most value to the borrower and to the lender and or broker operating the finance company. Whatever the needs and values are of the financial institution, loan origination software features can bring several benefits including:
1. Increased Productivity
Loan origination software automates many of the manual processes involved in loan application, underwriting, and closing. Automated loan origination platforms also reduce the risk of errors in data. They ensure data is consistently entered in the same format, which can improve accuracy and reduce the risk of fraud.
By automating many of the manual processes involved in loan origination, the software can free up loan officers and underwriters. Human resources can focus on more high-value tasks, such as analyzing loan applications and communicating with customers with greater speed and consistency.
2. Better Customer Experience
Loan origination software often includes a user-friendly interface for loan management. The objective is to create an environment where it is easier for customers to apply for loans and track the status of their applications. This can improve the overall customer experience and increase customer satisfaction.
3. Improved Data Tracking and Reporting
The best loan origination software can provide real-time data and analytics. This makes it much easier for financial institutions to track loan performance and make informed decisions about their loan portfolio.
Financial institutions are responsible for complying with regulations that govern operations and the handling of client data. What loan origination software does is prevent oversights and manual errors that can result in non-compliance.
A loan origination system can help financial institutions comply with regulatory requirements by automating compliance checks. This will help by ensuring all loan applications and documents are properly stored and tracked.
Our Approach to Loan Origination Software
The problem with other loan origination platforms is that they don’t offer the flexibility or features to give the borrowers a great experience. First impressions matter. They form the foundation of trust between borrowers and lenders. This will shape future interactions and whether or not there will be a continued relationship. This is why our loan origination platforms takes this approach to loan management.
Platform economies are the future of fintech and loan origination software is one way of becoming a modern financial institution. This approach puts a heavy focus on producing outcomes for the borrowers. Financial institutions are undergoing a digital transformation which should revitalize the approach to being more customer-centric by using technology to deliver better experiences and customer outcomes.
The importance of this model is highlighted by Paolo Sironi in his book “Banks and Fintech on Platform Economies”It speaks directly on the the rapidly changing environment of the outcome economy and the rise of Banking-as-a-Service platforms.
Our goal is to introduce loan origination software that enhances the customer experience, allowing financial institutions to take advantage of the anti-fragility that comes with being platform-based and delivering on customer outcomes.
1. High-Engagement End-User Interface
With a customized workflow, you can manage tasks to keep the end-user engaged. What exactly does this mean in loan origination software? This means creating a one-stop place for customers to see interact with you.
A centralized dashboard makes it easier for lenders and borrowers to see the process from start to finish. Borrowers can see tasks that are assigned to them so they can submit the required information with our task manager. Notifications can be sent to their phone for alerts on these tasks.
2. Automated Workflow
Document tracking is difficult without a solution to manage things. A clunky process is a slow one and this isn’t effective for financial institutions. The goal of loan origination software is to manage the entire pipeline and customer experience for borrowers. Different organizations have different workflows and approaches to managing their pipeline.
Some companies have a PDF document that applicants must fill out or a form on their website. In some cases, the borrowing process is a hodge-podge sequence of steps. For institutions that have manual processes, loan origination software creates a system for delivering an efficient workflow. Loan origination software streamlines this process so financial institutions can manage their pipelines more effectively with automated processes.
These automated processes can complete background checks, credit checks, and monitor prerequisites for loans. This will automatically determine eligible applicants for loan servicing.
3. Ease of Use
Loan origination software should make things difficult for the borrower. During the loan application process, there can be a lack of engagement on the borrower’s end to submit all the required information to proceed. Instead of making this difficult, Centrex simplifies the end-user’s process with integration to Plaid.
This integration allows our software to aggregate data from bank statements and have the crucial information delivered to you, the lender. Your customers don’t have to take time to download bank statements and compile the necessary documentation to deliver them to you.
While other loan origination software companies build with the lenders in mind, we focus on making things easier on the borrower’s end. This is important for small businesses with loan origination software as it enables smaller companies to onboard and manage clients at a lower digital cost. An easy-to-use interface makes it much easier for borrowers to engage with lenders to the portal, speeding up the process.
The Future of Your Financial Institution
Loan origination software is absolutely essential for financial companies looking to streamline their lending processes and stay ahead of the competition. By automating manual tasks and providing a centralized platform for managing loan applications, you can save time, reduce errors, and improve the overall customer experience.