Choosing the Best Loan Origination System

Choosing the Best Loan Origination System

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Every day, the financial industry searches for ways to improve the borrower's experience. To succeed in today's competitive financial market, banks need to rethink the traditional banking model and provide customers with a lending experience that goes above and beyond what is currently expected.

Without a doubt, loan origination systems help to remove barriers, streamline processes and provide consumers with a complete, easy-to-understand loan experience. They deliver value through a unified platform built from the ground up to support line of business initiatives, enhanced user experiences and a focus on multi-channel operations.

Inevitably, more financial institutions are searching for software that reduces loan processing time, predicts creditworthiness, and enhances disbursement processes. Although an excellent loan origination system like Oystr Float can help provide optimum solutions to lenders across the globe, having the wrong LOS can be detrimental to your company's growth.

In this article, we'll discuss the criteria for choosing the best loan origination system to enhance your lending processes.

What Is a Loan Origination System?

A loan origination system helps financial institutions automate and streamline the process of originating and processing loans. It helps manage the entire loan lifecycle, from application to disbursement, and even post-disbursement activities such as repayment and default management.

Factors To Consider In Choosing The Best Loan Origination System

In today's competitive financial market, choosing the right loan origination system is crucial as it can significantly impact the efficiency and profitability of the lending process.

It's essential to consider these factors when choosing the best loan origination system.

1. Ease of use

The best loan origination system for your financial institution should be easy to use and navigate for both the lender and the borrower. In addition, it should have a user-friendly interface and clear instructions for completing the loan application process.

Having this will make it easier for both the lender and the borrower to complete the loan application process. Lenders will experience a reduction in the time and effort required to process loans, ultimately improving the lending process's efficiency and profitability.

Moreover, there'll also be reduced frustration and confusion in loan applications, which leads to higher loan application completion rates.

2. Customization

The best loan origination system should allow for customization to fit the specific needs and requirements of the financial institution. Therefore, you'll need a LOS that enables the addition or removal of fields, loan products customization, and workflow process configuration.

For example, a financial institution may need to add a field to collect additional information from borrowers or may want to offer a specific type of loan product unavailable in the system.

In addition to customization of the loan application form and loan products, your LO should also allow for the configuration of workflow processes. For example, based on specific criteria, the lender can set up the system to automatically move the loan application through different process stages, such as underwriting and disbursement. This can help streamline the loan origination process and reduce the risk of errors.

3. Integration Capabilities

In streamlining processes and reducing manual errors, it's imperative to look for systems that allow seamless integration with other systems and platforms, such as the core banking system, CRM, and the credit bureau.

Integration capabilities are an essential factor to consider when choosing a loan origination system. For example, if the loan origination system can integrate with the financial institution's core banking system, it can automatically pull in borrower information such as account balances and transaction history. Inevitably, it reduces the time and effort required to complete the loan application process and risks.

Similarly, integration with a customer relationship management (CRM) system can help the lender access information about the borrower's interactions with the financial institution, such as past loan applications and customer service inquiries. With this, lenders can make smarter and more informed lending decisions.

Additionally, integration with a credit bureau can help the lender access the borrower's credit history and score. Thereby allowing lenders access to the borrower's creditworthiness. Ultimately, this feature will help improve the efficiency and profitability of the lending process.

4. Scalability

Scalability is important as it refers to the system's ability to handle a high volume of loan applications and adapt to the financial institution's growth.

A scalable loan origination system will be able to handle many loan applications without experiencing delays or other performance issues. This is particularly important for lenders who process a high volume of loans or expect significant growth in the number of loans they originate.

As your lending business grows with more applications and market share, your LOS should seamlessly adapt without causing high downtime or issues in applications,

5. Compliance

Financial institutions understand that compliance with relevant laws and regulations is essential for any loan origination. The Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations are two examples of crucial compliance requirements lenders need to consider.

KYC regulations require financial institutions to verify the identity of their clients and assess their potential risks for money laundering or financing terrorism. This involves collecting and verifying information about the borrower's identity, such as their name, address, and date of birth.

Therefore, your preferred loan origination system should be able to collect and store this information securely and verify it through various means, such as electronic databases or documents provided by the borrower.

AML regulations, on the other hand, require financial institutions to monitor their clients' activities to identify and report any suspicious activity that may indicate money laundering or financing terrorism. Therefore, your software needs to have the capability to flag any transactions or patterns of activity that may be suspicious and to alert the appropriate parties for further investigation.

In addition to being compliant with KYC and AML regulations, you'll need software with security features to protect sensitive borrower information. This could include measures such as encryption, access controls, and secure storage of data to prevent unauthorized access or tampering.


Although not all LOS have these features, Oystr Float has them and more, enabling a seamless process from the origination of loans to disbursement and even collection. As a result, as a lender, you can significantly cut down your loan disbursement timeline without expanding your risk.

Want to find out how Oystr Float can streamline your business? Visit our website today!