With changes in technology, new options are becoming available to users of loan origination systems (LOS). The most advanced, feature-rich, and cost-effective LOSs’ are now starting to leverage the cloud for what is popularly known as Software-as-a-Service (SaaS). These LOS solutions are making businesses more competitive—and, as many in the industry already recognize, staying competitive has become an uphill task with the need to consistently deliver a better experience along with mounting margin pressures. SaaS LOS provides a sigh of relief that the modern loan origination industry needs in the era of digital.
How far behind the SaaS LOS curve is your organization? One rough-and-ready way to estimate where an organization is in its SaaS journey is to review SaaS costs per employee. While SaaS spends vary, based on the size of an organization and number of employees, one study found that in 2018, the average SaaS subscription cost per employee (across subscriptions) was $2,884[i].
While LOS specific SaaS spends are indicative of how competitive you can expect to become, the smart LOS user is asking more pertinent questions:
- Am I paying more than I should for the SaaS LOS service?
- Is the market offering more than what I am getting?
- Am I getting all the features that my business needs?
- Can the features be customized for my business?
The SaaS-based LOS of the future
While achieving business goals is top priority, lenders also aspire to have a seamless, paper-free, fully digitized, end-to-end lending process that brings down costs and meets the growing complexity of regulatory requirements, all of it while delivering a state-of-the-art borrowing experience to borrowers and lenders alike.
An equally important requirement would the ability to integrate the sprawling loan ecosystem for services that range from credit ratings, appraisals and fraud checks to default management.
Our experience from implementing NetOxygen’s SaaS-based best-in-class lending technology to fast-growing lenders suggests that an intelligent, future-proof LOS must be marked by three distinct characteristics:
- Right pricing: The market has a number of end-to-end LOS providers and with the growth in competition, providers are also offering more for less. It doesn’t take long to compare features with pricing to know that you could be making a substantial saving by looking at current options that offer broader coverage.
- Feature-rich, enterprise class: The LOS should be feature rich and fully configurable in order to meet the needs of every customer type. The features you get should go beyond conventional services, providing for aspects like construction lending, piggy back loans, flexible repayments and change in repayment terms – in essence, taking your LOS from being product centric to being customer centric.
- Next-Gen borrower experience: Borrowers should have a seamless experience across channels with automation used to complete forms quickly and accurately, provide loan calculators with different scenarios that help the buyer make informed decisions, and access to expert advice from experienced loan originators or to intelligent 24X7 chat bots.
- Enable straight through processing: The system should re-imagine customer journeys and use hyper-automation for the origination process that includes lead management, point of sale, processing, underwriting, closing/ funding, post-closing and secondary marketing, online application, chat support, documentation, document verification, e-closing, repayment, fraud detection, account management, etc. The goal should be to support more customers while reducing loan approval cycle times.
Don’t settle for less: Go for outcome-based pricing
SaaS-based LOS providers offer a variety of pricing models that make business sense as they are based on optional features and actual consumption (users don’t have to pay a fixed price for a solution or an application). However, lenders should aim to lower their risk further. Our recommendation to achieve this is to opt for a provider who offers a commercial model that is additionally based on outcomes.
While the most visible and obvious benefit of SaaS-based cloud-hosted LOS is that it eliminates a dependency on hardware, software ownership and maintenance, lenders know that it is the ongoing costs that need to be managed. Ultimately, that is where the game is going to be won or lost. However, operational savings must not come at the cost of reliability, performance and customer experience.
For lenders who are debating a LOS change, the time to take action is now. New cost-effective solutions are placing greater power into the hands of lenders and buyers. If you are still running a dated LOS, you could be missing out on substantial savings and on building a strong base of happy customers with each passing day.
To understand how to upgrade your solution, make it feature rich and get more for what you pay, get a demo of our award winning NetOxygen SaaS LOS.