Why Community Bankers Need a Loan Origination System
In a industry that is rapidly consolidating, community bankers face continual pressure to become more efficient. The good news is that most community banks haven’t scratched the surface when it comes to driving meaningful productivity improvements in their lending process. Since lending serves as the bank’s primary revenue driver, incremental improvements in the cost of loan delivery can have massive returns on the income statement.
The big banks figured out how to systematize their lending process long ago and are now realizing the benefits on their bottom line. Until recently, many of these Loan Origination Systems (LOS) technologies were out of reach to the community banks due to cost and complexity. But thanks to the advancement of cloud computing and the re-emergence of Fintech solution providers, such as Hawthorn River, community banks have a chance to level the playing field.
For the purpose of this discussion, Loan Origination System (LOS) is defined as the software that manages the end-to-end processing steps that occur from the time of a borrower request to the time of funding. This includes activities such as the loan application, credit underwriting, approval, documentation, closing, and booking. While these steps may vary slightly based by bank, they a representative of most common LOS activities.
Today, many Community Banks rely on a patchwork of disconnected tools and communication channels to support the loan origination process. The standard tools of the trade include Word, Excel, Emails, and Phone Calls. As a result, bankers often wrestle with a tedious process for each and every loan they originate (including all those pesky renewals). Bankers have limited visibility into their loans in process and find themselves (or someone on their team) re-keying data multiple times along the way. While time tested for decades, this manual approach to loan origination is increasingly difficult to sustain as regulatory complexity increases, borrower expectations transform, and operating margins tighten. These problems compound with growth and the constant changes in regulations.
Loan Origination Software attacks these challenges head-on by delivering systematic workflows to guide bankers through the process of originating the loan. Rather than re-keying data into multiple tools, an effective LOS allows the banker to enter data one time and then flow this data through the process. An LOS also reduces regulatory complexity by proactively identifying potential triggers and requiring specific actions to be taken, such as the delivery of a disclosure to a borrower. In addition, the training and on-boarding of new employees is greatly simplified by leveraging an LOS since the bank can provide tools to the banker that allows them to be more productive while and better positioned to manage regulatory risks.
Hawthorn River helps community banks streamline lending by automating manual tasks, proactively monitoring compliance, and standardizing unruly and chaotic processes.
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Hawthorn River is Community Banking Software designed by Community Bankers.