Posted by MeridianLink | June 16, 2020

The State of Loan Origination Software

Banks, credit unions, and mortgage lenders must be backed with a robust loan origination system in order to succeed. There have been significant innovations within technology and there are many options for lenders. But, where are we and what features should lenders be looking for?

This article examines the state of Loan Origination Software in 2020 and a several features that a modern LOS should have and why it may be time to switch.

Must Have Feature and Functionalities and LOS should have

  1. Digital Lending
  2. Complete End-to-End System
  3. Complete Integrations

Is It Time for a New LOS?

  1. Issues with consumer satisfaction
  2. A much needed tune in up in processes 

The State of Loan Origination Software in 2020

The State of Loan Origination Software eBook

The world around us is constantly evolving and changing, sometimes in a positive manner and others not so much. Today we are living through a global pandemic and every person’s life has been altered in one way or another. Although restrictions vary all over the country, everyone is doing their best to maintain social distancing and stay safe while fulfilling their basic needs of life.

Lending, whether that is in the mortgage sphere or consumer is still very much a necessity even in this trying time. And because of this the landscape has become even more competitive and standards and regulations seem to be changing at a faster rate. Those lenders who understand how to meet the needs of today’s consumer are the clear winners and those who fall short will be overlooked.


Running a successful lending operation in today’s world is not an easy task, as there are many moving parts and nothing can be overlooked. The key to a well-oiled lending machine lies within the loan origination software (LOS). No matter the financial institution, whether bank, credit union or mortgage lender, a reliable LOS is a requirement for continuous lending growth and organizational success. The proper technology will allow lenders to focus on what’s really important, assisting the members of their community live better lives.


In this blog we review the main features functionalities that a LOS should have and when it may be time to update your technology.


Must Have Features and Functionalities of a Loan Origination Software (LOS)

The lending process has grown tremendously and there is technology available for all lenders to be able to provide a straightforward and efficient lending process to their borrowers. One of these main innovations that has come to be from this is the growth of digital lending. For example, borrowers now have the ability to use their cell phone to apply for just about any type of loan.


There are several features within the LOS that have significantly improved throughout the years. Let’s take a look at some of those below.


Digital Lending

Digital lending is no longer just a trend within the financial industry, it’s the new normal. Today, more than ever we can see the life saving benefits of a robust point-of-sale. The system should be able to provide a true digital lending experience, one that the borrower can complete from start to finish on their mobile device, tablet or computer. A form feature or a partial online application that requests the applicant to call the branch or visit a physical location is a sure way to lose business.


Complete End-to-End System

A LOS is a vital investment for a financial institution. It is important that the solution whether it is a consumer or mortgage loan origination system can properly fulfill all of the needed tasks to complete the entire lending process. The ability to use one system to perform all actions and duties of the application, pricing, processing, underwriting, decision, closing and funding of the loan is a key piece to running an efficient and streamlined lending operation.


Complete Integrations

A large variety of quality integration options is an important feature for a strong LOS to include. A wide range of integrations will open the door to new tools and plugins that will further streamline and enhance the lending process. Additionally, having an integration to your core system is a vital component of creating an easy loan application process for staff and consumers. A core system integration will eliminate manual work and data entry by feeding data directly to the system and pulling existing information out.


Is It Time for a New LOS?

Many lenders are hesitant to switch to a new LOS as they have significantly invested in their current system, starting the process all over again just seems wasteful. Not to mention, there are plenty of uncertainties currently going on and adding another one is not ideal.. Change is never easy and the thought of switching to another second rate system may be a reason for hesitation. But an upgrade to a modern LOS can be a pleasant surprise.


In this section we will look at a few items that may indicate that it is time to switch your LOS technology.


Consumer Satisfaction

Consumer satisfaction whether it is in branch or online is a key indicator of the success of a financial institution. Borrowers have many options available and because of this no longer settle for a less than an excellent experience. Your LOS will either provide an environment for your staff to deliver an excellent lending experience or create a frustrating and confusing one. If consumers are leaving your branch or website irritated it is time to look at a new solution that will create a simple and stress-free lending process no matter the application source.  


Process Improvement

Gaps and bottlenecks within your lending processes waste money, limit your lending volume and create a not so desirable consumer experience for the borrower. It is definitely time to switch to a new LOS if your lending processes are overly complicated and inconsistent. A modern system will help automate and streamline processes, ensuring that the same steps are always taken and the right individual is notified of a task. 


Loan origination systems are complex and there are more items to consider as you think about an upgrade. To learn more about a robust loan origination and additional functionalities that must be included, please download the white paper below. This white paper gives an overview of the key features a loan origination system should have.

The State of Loan Origination System - Download eBook

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