Modern Loan Origination Software Makes Lending Automation a Piece of Cake

Kristie Heinmann
September 20, 2011 — 1,747 views  
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Loan origination can be a long and demanding process for financial institutions (FIs) and customers alike. Manual underwriting makes the process longer and more costly. The changing market environment makes modifying business logic a recurring necessity which can require many IT hours and other resources to complete with legacy systems. Modern loan origination software, however, makes lending automation more efficient and cost-effective. These new loan origination solutions help to eliminate manual processing when it isn't required and can seamlessly transition from manual to automatic processing. Also, new loan origination software gives control of business logic changes to the business user instead of requiring IT. Now, FIs can have their cake and eat it too.

Lending automation helps FIs cut costs and increase customer satisfaction by decreasing the amount of time and resources it takes to complete the loan origination process. Modern loan origination software allows FIs to automate more steps in the process by offering connections to a variety of data sources. With access to alternative data, FIs create a holistic view of their customers and can eliminate the need for manual underwriters to connect the dots. The average cost of one manual review is said to be $6-12 so if a FI's loan origination software can eliminate even a small number of manual reviews, it could save a great deal of money throughout the thousands of applications a FI analyzes each month.

With outdated legacy systems, an application that is taken out of the automatic process for manual review is often re-evaluated from the beginning of the application process once the manual review is complete. Newer loan origination software can pull the application out of the automatic workflow for manual review and, once the stipulation is cleared, can put the application back into the process where it left off. Lending automation becomes inefficient when an application must go through an automated process multiple times.

Our economic environment changes every day so FIs must be able to adjust their business logic in order to react to things such as changing consumer behavior and interest rates. With custom loan origination software, or in-house systems, changing business logic and workflows requires IT to search through loads of coding to find the lines that need to be changed. After the correct changes are made, testing is required to verify that the system still works correctly. Changes can take weeks, months, or years and by that time much has changed in the economic world. Cutting-edge loan origination software enables the business end user to change business logic within hours, days, or weeks. These solutions are created with change in mind. With this amount of flexibility, FIs can react quickly to the market to continue making smart lending decisions.

Lending automation saves FIs time and money, but if the FI is using out-of-date loan origination software, lending automation can become inefficient and costly. Modern loan origination software reduces the amount of manual review required, automates all possible processes, and allows FIs to react quickly to market changes. This creates positive customer experiences and enables the FI to make better lending decisions in a shorter period of time. Who knew lending automation could be a cakewalk?


Kristie Heinmann

Zoot Enterprises

Kristie Heinemann is an online marketing specialist at Zoot Enterprises in Bozeman, Montana. She holds a BS in Marketing and Spanish from the University of Wisconsin La Crosse.