Posted by MeridianLink | August 10, 2020

8 Questions to Ask Your Loan Origination Software (LOS) Vendor

Finding the ideal loan origination system (LOS) for your financial institution can be an intimidating task to take on. The key to finding the ideal fit, is asking the right questions to each vendor that you meet with. This blog covers 8 questions that every organization should ask an LOS vendor before signing a contract. The questions are:

  1. Is the LOS Positioned to Meet Growing Technological Demands?
  2. Is the LOS SaaS-Based?
  3. Is the LOS Configurable to Your Organization?
  4. Is the LOS User-Friendly and Modern?
  5. Does the LOS Advance Process Improvement
  6. Does the LOS Provide End-to-End Lending?
  7. Is the LOS Safe and Secure?
  8. Does the LOS Offer a Point-of-Sale?

The key to asking these questions is understanding why, elaborating on them, and getting the right answers. Read the complete blog below to be ready for your next LOS vendor discussion.

8 Questions You Should Ask Your Loan Origination System


Many of the tasks, daily goals, and pain points for a financial institution are tied to the lending process within that organization. It’s no surprise, lending makes up a large portion of a bank or credit union’s portfolio. Oftentimes these frustrations may be rooted within the loan origination system (LOS) used by the bank, credit union or independent mortgage lender. When shopping for loan origination software, it seems as though every vendor claims that they are the best, the most trusted, the most preferred, the most secure, and the list goes on and on. Lenders get sold a seemingly beautiful product and several months later they realize that it’s not exactly what they thought it would be.

The LOS plays a vital role within the internal lending process and as a result tends to create a lot of the in-branch workflows for staff. This can either be good news or a nightmare. If your loan origination system is created with industry best practices and intuitively made for lenders, this is a dream come true. But oftentimes those designing the product have virtually no experience originating a loan and the processes that they create may not align perfectly with that of your branch.

Additionally, the loan origination system can give you the tools to provide the industry’s best consumer lending experience or it can frustrate your members and customers. The back-end functionalities that create a well oiled lending machine will also foster a supreme consumer experience both online and in-branch.

The key to purchasing top of the line loan origination software is asking the vendor all the right questions. This will ensure that all functionalities needed to grow your lending portfolio are present. The following section will outline 8 questions every financial institution should ask their loan origination system vendor before signing a contract.

1) Is the LOS Positioned to Meet Growing Technological Demands?

Although innovation is not top of mind for every lender, it is a requirement to stay competitive within the industry. When meeting with your vendor or when shopping around for a new loan origination system, we recommend touching on the subject of innovation and technological improvements.

It’s important that your vendor is a thought leader and forward thinking when it comes to their loan origination software. This will ensure that your organization is constantly providing your members and customers with the best in lending, whether that be in-branch or through digital lending channels. Before locking yourself into a contract it’s important to discuss the roadmap of product enhancements for the next few years, how LOS enhancements are determined, and who spearheads technological innovation within the organization.

2) Is the Loan Origination System Web-Based?

We have long passed the days where a software system needs to be downloaded on to a computer utilizing a disc or CD. There are far better alternatives, like SaaS-based solutions that are completely internet based. A true web-based loan origination system will eliminate the headache of updates and compliance regulations. Additionally, a SaaS-based product can significantly reduce IT costs. It’s important to discuss how the loan origination system is installed, how it operates, and how updates are maintained. Also, it’s vital to reiterate that the LOS is a true SaaS-based platform and not a hybrid of some sort.

3) Is the LOS Configurable to Your Organization?

Lenders come in all shapes and sizes and one platform may seem tailor made for one organization but be completely backwards for another. It’s important to discuss how configurable the loan origination software is to your organization’s processes and other systems that are crucial to daily operations.

It’s important to note how the LOS integrates with your core system. As well as what third-party integrations that are available so you can keep your existing partnerships and seamlessly move from system to system. For example, MeridianLink’s mortgage loan origination system LendingQB offers 300+ third-party integration, ensuring that all essential plugins and systems can be used alongside the LOS.

4) Is the LOS System User-Friendly and Modern?

The usability of the loan origination software can create some serious efficiency gains and process improvements. Unfortunately, it can also wreak havoc on the daily work of branch staff. Be sure to ask as many questions about usability, offering samples of use cases from your staff. For those just shopping around, ask the LOS vendors to demo loans that are more complex to ensure the system is as agile as the sales representative is claiming it is. A modern LOS will be designed for intuitive use and built on principles of industry standards and best practices.

5) Does the LOS Advance Process Improvement

Process improvement is a key component to reducing operational costs within your organization. A great way to incorporate this is by utilizing a loan origination system that is built upon the notation that it should ease and improve the lending process. When talking to your vendors ask about the designing of the product and processes built in. For example, MeridianLink’s consumer loan origination system LoansPQ is constantly updated and improved by incorporating feedback from hundreds of interviews and onsite visits with clients, ensuring that the product is designed to help make lending flow smoother. Additionally, ask about improvements in processes and efficiencies the product has created for current clients.

6) Does the LOS Provide End-to-End Lending?

This is an item that is absolutely important to double check and triple check. There’s nothing worse than signing a contract for years and realizing that it doesn’t exactly do the entire job. This creates a world of problems and significantly slows down the lending process. Be sure to discuss with the LOS vendor that the software can complete the entire lending process, from application to funding, for both consumer and mortgage loans. Additionally, you want to ensure that the system can complete these tasks for digital applications. As creators of industry leading loan origination system, LendingQB and LoansPQ, we understand the features and functionalities that are important in an end-to-end system. Feel free to browse around our website to help ask all the right questions to your potential vendor.

7) Is the Loan Origination System Safe and Secure?

The safety and security of your organization’s data is the foundation of your reputation and retention of your members and customers. Make this point a priority for discussion. Ask the LOS vendor how data is stored, secured, and safeguarded from any breaches. Additionally, it’s important to ask if there have been any instances of data breaches in the past and what was done to ensure they would not occur in the future.

8) Does the LOS Offer a Point-of-Sale?

Although a point-of-sale, digital lending, and online loan applications have been mentioned in several portions above, it’s so important that it warrants its own question. We recommend that you dedicate a significant amount of time to discussing the point-of-sale functionalities within the loan origination system. An important item to go over is how the loan is processed in the back-end and fundeded? Is it a true digital lending process that will allow a consumer to apply and get an instant response or does it require your branch staff to do additional items during work hours? Additionally, for those that require a deposit account to accompany all new members and customers, is the LOS able to fulfill all of these instances in a true digital format. For example, MeridianLink’s technology allows for seamless integration of systems that create a combo application, ensuring that the consumer can quickly get a loan and a required deposit account. This is all done digitally and does not require any branch staff involvement.

Do You Have Loan Origination System  Questions?

We hope this helps you with your loan origination search or gives you some food for thought on perhaps upgrading to a better Loan Origination System. Here at MeridianLink, we pride ourselves on helping our clients improve their processes, decrease operational spend, and increase revenue. We do this by providing leading technology for all digital lending and account opening needs to banks, credit unions, and mortgage lenders. We’d love to help you too!

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