The technological disruption in the financial services industry has spurred financial institutions to take a pause and take notice of their many gaps. Gaps in the form of process inefficiencies, errors, poor turnaround times, increased dependencies on human intervention, unscalable business models, and worst of them all poor customer experience.
Customer experience has rarely been a forte or focus when it came to the banking and finserv industry. Having people make multiple visits to the bank; long, convoluted and seemingly never-ending application processes had become usual when it came to banking. But with tech disruption and ever since consumer delight came to the forefront became the be all end all for the service industry, financial services couldn’t stay away from jumping on the fintech ship before long.
How they made the transition was based on each company’s stage of growth, kind of market, market share, and financial status. While bigger financial services companies and banks launched their own fintech arm or acquired fintech companies to start building their proprietary AI/ML-powered systems, smaller and medium lenders, bankers, and finserv companies started using fintech SaaS to support their current business models and scale as and when needed.
Irrespective of the path chosen by either, the destination was the same: providing their customers with delightful service experiences while boosting profits with better revenues and minimizing overheads.
Loan origination services are a very good example of how this growth panned out for lenders and fintech service providers at the same time.
Loan origination is core to the lending process. Following are the various stages in the loan origination process:
Different lenders might use a combination of these steps or all the seven in their entirety.
Before loan origination services came into the picture, all these steps were managed manually, end-to-end. This led to longer loan processing times, errors, process gaps, and ultimately to higher loan origination costs and poor customer experiences.
With the arrival of loan origination software (LOS), also known as lending management software, the lending industry has made a 360-degree turn in both aspects. With these AI/ML-powered fintech tools, lending companies can now churn out loan applications in a matter of days, and in some cases, hours, as compared to the earlier case of taking months to do the same.
With increased transparency and the ability to apply online and see the process of their loan application moving steadily, borrowers and applicants have now become more confident of the otherwise obscure process of loan origination.
The various features offered by LOS such as quick online verification, decision making, automatic underwriting with zero bias, digital signature processing, and multi-lingual capabilities have made customers aware of the kind of borrowing experience they can expect from fintech lenders.
It is now up to lenders to find the right fintech lending partner aka lending origination software provider to give their lending services and revenues a boost.
When looking for the right loan origination service partner, lenders need to look for the following must-have features:
Apart from the obvious requirements of being tech-forward, feature-rich, and enabling a smooth user experience, your loan origination software provider should be a trusted leader in their space. Not only should their SaaS speak for itself through its quality and execution, but also their experience in the space should enable them to look beyond and come up with features and updates that will ensure that their lending clients are always ahead of the curve when it comes to the market.
Thorough experience in the space, be it from the tech point of view or understanding of the market, lenders should choose an LOS partner that can fill in both gaps they might have right now. This is the reason why finding the right partner who is not only in charge of delivering the SaaS experience but also investing in the client’s growth and know-how through their experience is crucial.
An LOS provider who has been around long enough will not only ensure the very best of features but also take care of the implicit requirements such as compliance and regulatory issues that might crop up, or the need to introduce manual underwriting in some unique cases and ensuring such an override is allowed in the LOS.
A trusted LOS partner can go beyond being just a service provider to a fintech lender’s trusted advisor when it comes to looking ahead and making room for changes even before the market starts heading there.
Tech lies at the heart of fintech, and innovation lies at the heart of success. Lenders should choose LOS partners who are known innovators in their space. Partnering with an LOS partner who is ahead of their times and provides features that are otherwise in MVP for other LOS providers will put the lender ahead in the industry. They can introduce features and services for the end consumers (loan applicants and borrowers) that their competitors might not be ready to dish out yet. This will give an early mover advantage to all those lenders who choose innovative LOS partners for their fintech lending journey.
As the business grows with a trusted LOS partner by the lender's side, they will feel the need to scale. The lending origination software should allow the lenders to scale up and down based on demand and never give in to the pressures of increased traffic or workload. Frequent and timely upgrades, updates, and innovations along with the ability to scale rapidly should be a must-have feature in LOS partners.
Help should be at hand when needed. A lending origination software lies at the core of lending businesses. At no point in time should it see any kind of downtime or errors. Even if it so happens, LOS partners should provide 24*7 customer service to extend necessary support and set the wheels in motion in no time.
The financial services space needs added levels of trust and security as this space handles large amounts of confidential data of users, banks, and vendors among others. Having strict security protocols and a trusted LOS partner who ensures transparency without compromising on security is a must for every fintech lender who wants to grow and create a mark in the financial services industry.
It is only through their evolving business models supported by the innovative, scalable, and trustworthy lending origination software that they will be able to achieve their objective of making space and growing market share in an otherwise crowded and super competitive industry.