Three major trends have dominated the lending space for consumer banks. The most obvious has been the trend of digitization, followed by automation. Between the two, the goal is to improve customer reach, provide superior customer experience, reduce origination costs, speed up time to close and enhance services on the back of partner integration. The third trend of adopting a single Loan Origination System (LOS) for all loan products is further impacting reach, experience, costs, speed and services. We expect the trend of adopting a single LOS for all loan products to rule 2020.
Driven by a breed of astute bankers, disparate and clunky systems for all loan types (personal, home, auto, education, small business, etc.) are being replaced by a single, robust, flexible, centralized and future-ready enterprise-wide solution.
The reason for the trend to gain traction is that such a system has already captured a customer’s personal details with the first loan application and it understands the customer’s liabilities and assets. Such a single and centralized LOS presents six key benefits:
1. One-stop shop for all borrower needs thereby yielding higher customer loyalty. The bank can offer customized and personalized attention to the borrower while reducing the friction of applying for loans through automation and improved processing speed.
2. Seamless and consistent user experience for all stakeholders (internal and external) across all asset classes and product lines. The inefficiency associated with disparate systems for loan products is significant. With a single system, uses don’t have to struggle with multiple IDs and can quickly and accurately complete tasks because of the familiar look and feel.
3. Upsell and cross-sell opportunities through a single, digital platform. With customer data available to all loan products, there is the opportunity for sustainable growth by intelligently offering products across the customer relationship lifecycle. For example, after a customer has taken a housing loan, the bank could offer a loan for interiors, an auto loan, for travel and so on.
4. Higher efficiency through shared resources along with higher accuracy at lower costs. In an environment where technology implementation and maintenance costs need to be contained, a single system makes eminent sense: It is easier to upgrade and maintain.
5. Cloud-based scalable solution capable of rapidly adapting to changing market conditions. Today’s markets are unpredictable. Using a single cloud-based solution that can respond to changes is critical to staying competitive and leveraging new revenue opportunities.
6. Outcome based pricing models that minimize capex investments. Cloud-based systems are attractive for banks as the commercial models are outcome based, thus avoiding sunk costs and wasteful expenditure.
The idea of a single platform replacing disparate, high-cost systems has one advantage that is often overlooked: It eliminates the teeth-grinding pain of managing multiple vendors.
To start your journey on a single LOS with a single vendor, listen to our on-demand webinar ‘One enterprise; One LOS’ webinar by clicking here, where our experienced consultants will put you on the path to a simpler and better loan origination system.