Whether you’re a bank, a credit union, or another mortgage-lending institution, your ultimate goal is clear: Provide an awesome experience for your borrowers throughout the entire process. Buying a home is stressful enough; lenders should do whatever they can to streamline the process and ease a little bit of that anxiety.
However, this worthy goal becomes tricky when mortgage lenders themselves are struggling with processes.
Efficiency is often the challenge most commonly cited by banks. The best staffing, most imaginative marketing, and finest customer service means nothing if it takes longer to process mortgage loans. Customers can become frustrated, and, ultimately, lenders can lose business.
At the root of many efficiency problems is loan origination software (LOS) that doesn’t match the financial institution’s business model. A large bank might be saddled with a solution with insufficient functionality to handle its operational requirements. Or, an LOS may be too complex for a smaller bank that really just needs core, easily accessible features.
Here’s a closer look at how to choose mortgage loan origination software depending on your company’s business model and other defining characteristics:
What Are Your Needs?
The first step in choosing an LOS: Don’t focus on what a solution offers, but rather, examine what your bank needs. Areas to consider:
- Type of institution and volume of mortgages originated: Obviously, a major financial institution brings different business goals to the table than a community bank, which in turn has different goals than a credit union. Mortgages might be a prominent part of one bank’s strategy and barely register on another institution’s radar—and that must be factored when choosing an LOS. For comparison, that $2,000 camera with a telescopic lens might be nice, but if you are just taking an occasional picture of your cat, a functioning smartphone may work just as well.
- Business model: Your overarching business model drives every decision you make—decisions that must be properly addressed with the loan origination software chosen. Wholesale lenders might be all about efficiency and compliance when considering an LOS; retail lenders might be more consumer-focused with the software they choose. And lenders that offer multiple models need a comprehensive solution—something that covers every base.
- Size: Similarly, the size of a financial institution factors into its software needs as well as its underlying goals. Large banks could require advanced software capabilities that smaller credit unions simply don’t need and will never use.
- Long-term plans: The current needs and business strategies of a lender are rarely static, so keeping in mind future plans is critical when choosing the right mortgage loan origination software.
Completing this first step positions you to better assess LOS solutions as you research them. This is where the fun really begins …
Align Needs with Solutions
Business model, institution type and size, and scalability factor so heavily into choosing loan origination software because each institution requires its LOS of choice to deliver different things. For example, a massive bank chain solely focused on wholesale lending is probably set in terms of security and compliance—areas that a one-branch community bank with a small retail lending portfolio might be struggling with and actively looking for in an LOS.
So what exactly should mortgage loan origination software offer? Your needs may vary, but some features are universal:
- Full audit trails
- Business management and workflows
- Management reporting
- Strong, customizable compliance capabilities
- Enhanced security features
- Easy implementation
- User-friendly platform
- Automatic file synchronization
- Remote access to data and templates
Likely, at least some of the items on this list fulfill needs your institution and your business model have—and some may be wholly unnecessary. And of course, cost comes into play; feature-rich solutions may be overkill, while more basic LOS options may not bring enough to the game.
By comparing your needs with a solution’s feature set—as well as a provider’s ability to customize its software for any special requirements—you can narrow in on loan origination software that increases efficiency and doesn’t break the bank—literally or figuratively.
Pick a Perfect Partner
Just like no two financial institutions are alike, no two loan origination software providers are the same, either. Some may have great solutions, but ultimately, the best providers understand banks of all sizes and business models to deliver scalable software perfectly paired with your needs. These technology partners truly are partners—not vendors who sell you the solution and step away, but allies that anticipate your needs, solve any problems, and ensure their solution delivers value for your organization and your customers.
The bottom line is never far away from any business decision, especially at a financial institution. Ultimately, whatever mortgage loan origination software you choose must be cost-effective. A solution that doesn’t address your business model wastes time and money. Recognizing that an LOS must work with your organization’s goals, and not against them, makes the selection process easier—and the likelihood of the solution’s success greater.
