The past few years have seen the larger financial services industry strengthen and markets hover at all-time highs. The lending industry has also come a long way — especially given the arduous journey following the subprime crisis of the past decade. One key element that fueled this growth was an easier, more transparent, and increasingly automated “digital lending” experience for all stakeholders. In fact, a recent J.D. Power study found that increased adoption of digital origination platforms led to a sharp increase in customer satisfaction. This enables wider access to lender services, in turn.
According to a recent report from the Aite Group, many lenders have tried to catch up with this demand by adopting third-party point-of-sale (POS) systems that allow for a fully digitalized customer experience. The caveat, though, is that digitalization on the origination side of the process continues to present opportunities for improvement.
Even when lenders use loan origination software (LOS) in conjunction with a POS, the two systems often struggle to share information effectively or integrate seamlessly, which diminishes the value of digitalization on both ends. In this way, information silos often produce different versions of the truth: what the LOS says versus what the POS says.
To fully capitalize on this digital opportunity, lenders must implement end-to-end digital solutions. Information should be seamless, automated, and used efficiently from initial prospecting all the way through loan funding.
What does 'end to end' really mean?
From the customer's perspective, as long as the ‘end’ they interact with is digital, they'll likely be satisfied.
For lenders, however, being able to effectively digitalize all systems is critical. To find more efficiencies in loan origination, lenders need consistency: consistent compliance, consistent data, consistent transparency, and so on. If a lender deals with different sets of data coming in from its POS and LOS, for example, the reconciliation of the two data sets, leads to not only more risk on the lender's side, but also more inconvenience on the borrower's side. This contributes to the exact problem digitalization is meant to solve.
A true end-to-end solution should preclude these problems. Integrated digital platforms can help automate and standardize workflows, which makes lending easy and efficient for all. Once fully implemented, end-to-end solutions can continue to spur further innovation through application programming interfaces, third-party add-ons, and so on. Similarly, workflows should also be standardized yet scalable for lenders.
An end-to-end loan origination platform can enable the lending industry's complete transition into the digital age. Here are a few key features of those platforms that could help lenders get started:
1. Fully integrated POS and LOS functions
Creating an end-to-end solution starts with having fresh and consistent data to work from. At Wipro Gallagher Solutions, we help lenders achieve this by providing a combined POS and LOS solution. The resulting platform, NetOxygen, fills a niche for lenders whose top priority is to have a single provider for both purposes. (Besides this, it's also uniquely positioned to originate both mortgage and non-mortgage loans.) No matter which platform you use, the goal should be for your POS and LOS to seamlessly integrate and present a single version of the truth.
2. Automation wherever possible
An end-to-end solution doesn't do much good if the lender is forced to manually input information, execute functions, and derive insights. To drive maximum efficiency, ensure your digital systems can automatically carry out previously analog and segmented tasks.
3. Consistency across the board
All lending departments should be comfortable using an end-to-end solution, and the experience for borrowers should be equally seamless. This starts with ensuring consistency before targeting scalability and efficiency. A centralized database that feeds both the LOS and POS is a good starting point.
4. Readiness to build and scale
Change is certain, whether it's new regulations or shifting customer demands. This implies that a loan origination platform can't exist in a vacuum. Making sure your end-to-end solution can easily integrate APIs and other third-party solutions without disrupting the user experience will help you stay agile and relevant.
Although the lending industry might have had a slow start in terms of digitalization, there's still value for the taking. Lenders that leverage integrated digital solutions to meet customer demand will see significant potential for growth and deliver value for stakeholders across the loan lifecycle. If you’d like to see what these digital solutions can do for your business, there's no better time to start testing out loan origination platforms.