Finding Your Business’ Loan Origination Soulmate

Is your current Loan Origination Software (LOS) the One?

When the time comes to pick a LOS, you can really commit to, there are several factors to consider. The product, onboarding experience, and the vendor themselves will play into your decision. With that in mind, have you met your perfect match?

First, let’s look at the product – it should have the basic expected features to capture an application, make a credit decision, calculate pricing, verify the borrower, and complete the paperwork.  Beyond the basics, there are several key considerations.

User Experience (UX)

The User Interface (UI) is typically the first thing you’ll notice during a demo. Do the screens look modern, with a clean, intuitive layout? The User Experience (UX) encompasses not only enticing screens (UI), but also the user’s broader experience with the software. Ask yourself if the software is easy to navigate and clearly telling you why you’re not allowed to do something, with instructions on how to rectify it? A good UX is built a combination of a good design (UI), an understanding of your users, and the business rationale behind individual features.

Digitization

The solution should be digital-first, with the option for manual intervention as required by the business. Every aspect of the loan origination process should offer a digital option – whether the borrower is applying directly or indirectly via a dealer. You should be able to offer a same-day fully digital loan origination experience for both the borrowers and dealers.

Configuration

Your LOS should have a variety of configuration options. These range from the basic options (users, dealers, branches, screens, credit policy, programs) to the complex options (scorecards, pricing logic, and workflows). With great power comes responsibility – the LOS should have role-based restrictions built into the configuration options, with a full audit trail and the ability to revert the changes easily.

Customization

You may need a LOS built exactly to your specifications because the vendor doesn’t have the feature on their product roadmap. In these instances, the software should have the flexibility to build a custom feature that is specific to your instance. Customization of any kind typically results in a higher cost to build and maintain.

Pick and Choose

Modern software solutions are built using a modular, component-based approach.  Implementing a new LOS shouldn’t be an all-or-nothing decision – you should be able to pick and choose the components for your business needs. If you’ve invested heavily in a customer database, scoring models, pricing strategies, or other key areas, you should be able to retain these existing components by integrating them into your new solution. After implementation, you should be able to opt-in to new features as needed without hassle.

Compliance

With the excitement of finding your LOS soulmate, make sure not to overlook the importance of compliance-related features. Your vendor should be able to articulate how the software meets the compliance requirements of your industry using configuration, controls, and audit trails.

Hosting

Modern software should be available in the public cloud. Confirm that your shortlisted solutions can be deployed in the cloud and that the vendor has the engineering know-how and experience to execute. Your vendor should also make an on-premise option available, with the option for a vendor-managed solution in a private cloud.

Once you’ve examined technology and product requirements, it’s then time to think about the onboarding experience through practicalities of implementation and support.

Industry Expertise

Your LOS vendor’s technical expertise should be paired with domain expertise. Captive Auto, Subprime Auto, and Subprime Consumer finance are all niche areas of lending with very specific business needs. Subject matter experts should not only be able to articulate their understanding of the industry, but also explain how the software handles industry-specific requirements.

Team

Purchasing critical software like your Loan Originations solution isn’t just an investment in technology; it’s also an investment in the vendor’s team. Once the sales cycle is concluded, you’ll want a strong team working with you to implement your new solution and provide training. Consider asking vendors to meet the team that will be working on your implementation.

Support & System Availability

The LOS vendor’s support model is a key consideration. The support cost should reflect the services provided – dedicated support, weekly releases with a 99.9% uptime that will naturally cost more than general support, and quarterly releases with a low uptime. The support team’s availability should cover your business’ time zones and operational jurisdictions.

Pricing

Price is important – as is the vendor’s flexibility with the pricing model. A pay-as-you-go model that has a volume-based pricing tier built-in is ideal for a growing company. If predictability of cost is important, then a recurring flat fee should also be available as an option. In addition to flexibility, transparency is also important. Be sure to examine whether the pricing is all-inclusive as there may be additional costs for specific integrations, features, training, etc.

References

It’s always a good practice to request references to understand your prospective vendor’s experience working with companies like your own. Vendors should not only be able to share a list of existing customers, but also arrange various reference meetings with key customers.

Finally, a modern technology vendor should not just be a provider of services but should also be a long-term strategic partner.

R&D Investment

Top technology companies keep up with the latest advancements; your LOS provider should be no different in this aspect. It is always a good idea to ask for the product roadmap with an explanation of the strategy behind it. A good vendor will continuously invest in their product to add new features, technologies, and integrations. The roadmap should also reflect customer feedback, so be sure to ask about the process behind it.

Partnership

Absence doesn’t make the heart grow fonder: you want a vendor that responds to your inquiries in a timely fashion and proactively keeps you informed of new product features and fixes. Taking this one step further, they should regularly check in with you to fully understand your current business’ priorities and long-term objectives. These discussions should then feed into the vendor’s product roadmap.  Make sure that you don’t get stuck with a vendor who forgets about you after the implementation of their product but rather one that supports your business needs and requirements on a daily basis

Once you can find the marriage of your ideal LOS features and provider requirements, you’ll have the makings of your perfect LOS and a vendor relationship built to last.

Next steps

Capture the right data and make the right credit decisions fast. CALMS enables you to seamlessly manage and maintain the entire contract lifecycle.

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