The Future of Underwriting
Is your Loan Origination System prepared for the future of underwriting?
Nothing changes faster than technology – and loan origination solutions that have been designed and implemented before the times of smart phones, social media, big data, and the expectation of instant gratification are now falling short as user expectations are changing at the same speed as the technological evolution. Not too long ago it was the norm to wait 6 months for a small change to your Loan Origination System (LOS) going through endless Statements of Work, Project Planning and long QA cycles. Technology like YouTube for example, have changed the game completely. We live in a world where every 12 hours we upload to YouTube the equivalent of the Library of Congress. The customer’s expectation of endless bandwidth and instant gratification is the new norm and lenders must strive to deliver that expectation.
Lenders must utilize software that delivers that capability. The Loan Origination System must have tools to enable the lenders to meet the borrower’s expectations. First, the Lender must understand the borrower’s needs. Second, the system must be adaptable to the business processes needed to meet the borrower’s needs and support customer growth. Third, as the lending environment changes the solution must be able to change as the marketplace changes.
To guarantee your LOS is designed with the future in mind, it must contain the following:
Fast and easy configurability without IT resources: If you want your institution to remain competitive and up to date, you can’t waste time submitting a ticket to your LOS provider; it takes a minimum of 2-4 months before those changes are live. You want to be able to make changes to your LOS on your own, and on-the-fly so your update can enhance your business as-soon-as-possible.
A flexible object model for quick modifications: An object model allows you to use pre-built data points or create your own fields to create or modify any data points in the loan origination solution. An object model must be robust enough to not only allow you to create rules and stipulations, but also modify your dashboards, reports, events, roles, analytics, and more. Having your object model be flexible is important and goes hand-in-hand with configurability.
Event Lifecycle: Without an event lifecycle, an LOS is not truly configurable. The event lifecycle manages your workflow like a string of dominos that fall over in the order you set. It’s a sequence of events that tell the system when to pull credit, or when to require stipulations. The event lifecycle is responsible for allowing you to conduct business YOUR WAY and help sets the cadence for the loan. For example, when a new loan is received from Dealertrack, if the loan request has a FICO over 700, it will go through auto-decisioning, but if it’s below the 700 threshold, send it to an underwriter for approval.
Open and secured API: An open API allows your business to connect to any data source, vendor, or lead source you wish to do business with. An open API truly allows you to interact with any third-party. If your LOS does not offer an open API, you may need to alter the way you do business or incur a substantial expense to develop the connection to the third-party. You will need to fit in with your LOS providers schedule which may take months or years. This is very costly and arduous, taking away valuable time and resources.
Powerful Rules Engine: The ability for an LOS to allow you to build and modify your own rules on-the-fly is paramount. It ensures that your institution can quickly adapt to the evolving market. A rules engine allows you to offer special deals to clients or members at a moment’s notice which can make your institution look more appealing to potential clients/members.
Analytics and reporting tools: The ultimate resource for tracking your business performance and compliance are powerful analytics and reporting tools. Without this resource your business will not be able to easily identify areas of improvement, and with analytics you will be able to determine if you’re meeting monthly or quarterly goals. Monitoring your business performance empowers you to have all the information required to stay on top of your operation and helps guarantee you future success.
Giving borrowers the power to do business their way is in line with the technological expectations of people today. If your institution does not adapt, you need to expect that your competitors will, which will hinder your future business. Just as snail-mail was replaced by e-mail, the technology used by financial professionals, like a loan origination system, must evolve with the times, and be built with the future in mind.