In 2019, The Business Research Company, benchmarked the global lending industry at a valuation of $6,875.4 Billion with a CAGR of 4.9% since 2015. While several patrons predicted the industry to suffer amidst the pandemic, in reality, it experienced a boom like no other and Berkshire Hathaway highlighted the same by benchmarking the 2021 valuation of the industry at $6932.29 Billion with a CAGR of 14.8%.

This and several other metrics from acclaimed journals and observers are proof of the fact that there has been no better time than now to pilot a lending business. However, while there are many aspects which determine your success, one that triumphs over everything else is your loan origination system of choice.

As consumers of today and tomorrow continue their transition to a hybrid borrowing ecosystem, you need to equip yourself with the right loan origination system, such that you can not only service your customers better but increase your profitability and productivity in the process.

But the question remains, how can you choose the best loan origination system for your business needs? That is exactly what I will be answering in today’s blog post.

Without further ado, let’s get started.


Table of Contents

  1. What is a Loan Origination System?
  2. 5 Features to Look For
  3. Conclusion
  4. The Reference Shelf

What is a Loan Origination System?

One of the first and most important aspects we need to understand is the meaning of a loan origination system. In simple terms, loan origination can be understood as the process through which a borrower applies for a loan; the lender checks the eligibility of the borrower for the loan and ultimately arrives at a decision of either granting or rejecting the application.

Thus, a loan origination system can be understood as a software solution, which helps you, the lender, to automate the entire loan origination process, right from lead generation and initial customer onboarding, all the way to credit assessment and handover to the loan management system.

Loan Origination System
Finflux Loan Origination System

Prior to the introduction of cloud-based loan origination systems, most lenders depended on legacy solutions to onboard borrowers, which significantly contributed to higher loss of leads and, thereby, revenue.

On the other hand, the loan origination systems of today are mostly cloud-based and come equipped with a full suite of automations and integrations, which not only allows the lender to take better control of the entire loan origination process but also increase their overall efficiency and profitability.

5 Features to Look For

Now that you have a better understanding of the essence of a loan origination system, the next aspect you should focus your attention on are the 5 must-have features in your loan origination software.

  1. Ease of Use

One of the first and most important aspects you should take into consideration, is the actual ease of use of the loan origination system you invest in.

Post-installation and demonstration by the provider, the system needs to be ultimately operated by your employees, and thus it is crucial that the system has abundant ease of use both in terms of implementation as well as usability. One of the key factors you can take into consideration to accurately estimate the efficiency of the loan origination system is to record how much time it is saving you across the entire loan origination process.

Over and above a user-friendly design, the software needs to enable and empower your employees to service customers better, thus making this a must-have feature.

2. Security & Confidentiality

In a recent case study published by PwC, it was estimated that one of the most imminent threats currently challenging fintech is cybersecurity, and this goes on to show the immense importance of strict security and confidentiality in your loan origination system.

Irrespective of the provider you choose, the loan origination system should be able to distinguish and effectively control access between granted, moderated and revoked files with ease.

Over the above, the standard AES-256 encryption, it should be equipped with predictive technologies such that both present and future threats can be mitigated with ease.

In contrast to other businesses, where security can be a second thought, in the lending industry, your clients will regularly trust you with highly sensitive information, thus making it your responsibility to protect it at all costs and only share access with key stakeholders.

3. Holistic APIs & Integrations

Gone are the days when software solutions could function independently and yet perform their tasks with ease in isolation. Today, every business software you rely on should arrive with the ability to not only effectively communicate with the user but also with other applications you regularly rely on.

As a majority of the processes involved in the modern lending value chain are collaborative in nature, it is crucial that your loan origination system arrives with a wide array of APIs, allowing you to leverage holistic integrations.

Over and above cross-functional platforms, loan origination systems today should arrive with feature-rich collaborative integrations for you to leverage and service the end consumer better.

4. SaaS & Future-Proof Technology

As I shared in an earlier paragraph, before the introduction of modern loan origination systems, lenders used to rely on legacy systems which were mostly constrained to on-premise hardware. This invariably contributed to inefficiencies in the lending value chain, as these premise bound systems regularly arrived with several shortcomings.

However, one of the most important features modern loan origination systems share, is a SaaS framework. A SaaS or “Software as a Service” framework ensures that you have the complete flexibility and freedom to access and use the software anytime, anywhere, irrespective of the device you operate. Since modern loan origination systems are completely hosted on the cloud, it guarantees you the agility to not only service loans faster but also operate a future-ready technology.

Softwares hosted on the cloud can not only be updated faster with the latest technologies, but it also arrives with superior capabilities, which ultimately have a positive impact on your bottom line.

5. Domain Expertise

Last but not least is domain experience.

Today, one search on the internet and you will come across multiple providers who specialize in developing loan origination systems; however, although you might find one which is affordable, it is important that you cross-check the domain experience of the provider before you make an investment decision.

The simple reason behind this is, in contrast to other industries where small errors might not accumulate severe financial losses, in the lending industry, even a minor flaw in the software might tarnish your reputation among your borrowers and result in severe financial loss.

Along with this, ensuring beforehand that your provider has a credible reputation in the market will not only guarantee you peace of mind but also a long and healthy business relationship.

In Conclusion

As the global lending industry treads the path of becoming an $8809.55 Billion behemoth, it is crucial that you equip yourself with the best loan origination system the industry has to offer.

Schedule a free demo with Finflux today and experience the leading loan origination system trusted by 60+ global clients.


The Reference Shelf

  1. How To Find the Right Loan Software Provider for Your Lending Business? [Link]
  2. Security challenges in the evolving fintech landscape [Link]
  3. Loan Origination System: Improve Lending Efficiency [Link]
  4. Global Lending Market Report 2021: COVID-19 Impact and Recovery to 2030 - ResearchAndMarkets.com [Link]
  5. Lending Market - By Type (Household Lending, Corporate Lending, Government Lending), By Interest Rate (Fixed Rate, Floating Rate) And By Region, Opportunities And Strategies – Global Forecast To 2023 [Link]