Benefits of Using a Cloud-Based Loan Origination Software – In today’s fast-paced lending environment, financial institutions are continually being tasked with how to improve efficiency, decrease operating costs, and provide a first-class customer experience. Cloud-based loan origination software is one of the technologies positively disrupting lending. While traditional on-premise systems offer some advantages, cloud-based systems have many more that can improve the lending process, improve security, and create profitability. Below, we highlight cloud-based loan origination software (LOS) advantages and provide seven reasons why lenders are increasingly moving to the cloud.
1. Improved Efficiency and Speed
The greatest advantage of a cloud-based loan origination software is the ability to improve the speed and efficiency of loan processing substantially. Manual workflows or outdated on-premise systems often slow lenders down due to operational silos and the resulting inefficiencies. The modern cloud-based LOS can automate repetitive tasks, facilitate paperless processing, and integrate different parties in real-time. Lenders can review, verify, and approve loan applications much faster, which improves turnaround time and overall borrower experience.
This is vitally important in our digital-first world, where consumers increasingly expect quick decisions and seamless experiences.
2. Savings and scalability
Using cloud-based on-premises solutions means less upfront investment in hardware as well as IT infrastructure and less ongoing maintenance. Instead, financial institutions pay a set fee/subscription price, making expenses easier to manage. Also, cloud-based LOS models tend to have scalability built in, meaning whether you’re a community bank, credit union, or financial institution, you can scale up or down to meet demand, without significant additional outlay. This flexibility allows for financing seasonal spikes, or allowing lenders to expand into other markets without being constrained by capacity.
3. Enhanced Data Security & Compliance
Data Security is a crucial concern in the lending industry. Lenders are responsible for managing a significant amount of confidential personal and financial data. Cloud-based loan origination systems come equipped with inherent security measures, such as data encryption, multi-factor authentication, and ongoing monitoring protocols. Top cloud providers follow strict levels of regulation and stay current on the applicable regulations for any industry, including: GDPR, CCPA, or other regional Privacy legislation and regulations.
Cloud-based software continually manages data security as system updates and upgrades generally automatically install critical security patches and fixes. Making timely data security detail decisions may be challenging when your data resides in a legacy and an on-premises system.
4. Improved accessibility and collaboration
A cloud-based LOS allows teams to access the system from any device, at any location, whenever they want, as long as they have an Internet connection. This virtual connectivity allows loan officers, underwriters, processors, and compliance to collaborate in real time. Cloud systems provide a single go-to place where all documents, borrower data, and communications are stored in a secure, real-time updated place. This narrows down mistakes, cuts down on redundancy, and keeps everyone aligned throughout the life of the loan.
5. Better Customer Experience
In what has become a digitized first world, borrowers expect a seamless lending experience. A cloud-based LOS enhances customer experience by allowing customers online portals to upload documentation during the application or loan process, check on the status of their application, and communicate with their loan officer in a more simplistic way. With automation and digital tools, lenders can create a customized lending journey, provide faster response times, and be transparent at every step of the process as it pertains to the client’s loan. This drives customer satisfaction levels and fosters long-term trust and loyalty.
6. Faster Innovation and Integration
Cloud-based platforms are nimble and not rigid like traditional systems. Technology platforms that provide cloud-based LOS systems are built to integrate easily with outside services like credit bureaus, fraud detection services, e-signature apps, and CRM systems. This allows lenders to quickly leverage new technology, deploy product updates, and adjust to fluctuations in market demands. Regular software updates keep the system current – this is quite valuable in a fast-changing business.
7. Business Continuity and Disaster Recovery
Unlike an on-premise system that is susceptible to local hardware failures or disasters, cloud-based LOS solutions have extensive backup and disaster recovery. Data is securely stored in redundant servers across multiple locations, allowing lenders to quickly continue operations with minimal downtime, even in the event of unexpected issues. This inherent resiliency provides lenders confidence and protection of their brand while serving borrowers without interruption.
Conclusion
A cloud-based loan origination software offers benefits that reach far beyond cost savings. Increased operational efficiencies, enhanced safety and security, improved experiences for customers, and increased agility using technology can most certainly change how lenders manage operations in the digital economy. As the lending industry transforms, a cloud-based LOS is now a strategic imperative, not an option, for any institution that cares about remaining competitive, compliant, and ahead of the future.
FAQs About Cloud-Based Loan Origination Software
What is a cloud-based loan origination software?
A cloud-based loan origination software is an online software solution that automates the loan process, from application to loan disbursement, through cloud computing technology. Unlike conventional systems, the LOS is not installed on your server (or servers) but lives in the cloud on remote “servers” and is accessed through the internet (and a secure location).
Will a cloud-based LOS app store sensitive customer data securely?
Yes. Valid cloud-based LOS providers provide highly secure installations, with good security/access controls, encryption, and compliance with laws regarding customer data accident protection or loss. (A cloud LOS provider will do regular security audits and put a policy or statutory requirement on it.)
How does a cloud-based LOS provide smaller lenders a competitive edge?
Absolutely. A cloud-based LOS is a good deal. These systems typically cost less to use or install, and they will be a full solution to the lender’s inefficiency without the aggressive budget of larger lenders. This will help to equalize the playing field and provide smaller and medium-sized lenders with applications to better address loan processing that is contemporary, efficient, and customer-friendly.
What is the timeframe to implement a cloud-based LOS for a lender?
Implementation time will depend on a number of factors regarding how complex the lender’s operations are and how deep in customization the lender is interested in moving forward with. In any case, implementation should only take weeks to months as opposed to years. Keeping in mind that these systems typically offer the lender limited day-to-day disruption when implementing/starting to use the system.
