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Finding the Right Balance: The Pursuit of a Better Loan Origination System

Topics: Customer Acquisition and Retention, Customer Service, Operational Efficiency
Tagged: ,

Bankers are trying to find the right balance for their business, but it can be difficult, especially when working with a legacy loan origination system (LOS). Many think they need to sacrifice efficiency to improve customer service. With a modern LOS they can have both—no sacrifices need to be made in the pursuit of a better system.








Improving Customer Service

There are many challenges that can occur with a legacy LOS that otherwise would be addressed with a more modern system that streamlines the loan origination process. For example, imagine a customer sees a credit card advertisement on TV offered by their financial institution. The commercial does an excellent job of selling the product by encouraging them to go online and apply for the card. Once the consumer has provided the appropriate information, they are informed that their application has been referred for further review and they will receive an answer in the mail within two weeks. Later that week the customer stops in a branch to inquire about their application. The teller informs the customer they are unable to find their application in the system.

Quite a disappointing experience for the customer, wouldn’t you say?

In this situation, the marketing strategy used by the issuer worked as planned (the customer was engaged and acted) but the rest of the process didn’t. By using an LOS that includes an offer repository, the teller would have been able to look up all of the products the customer had been offered and applied for, through every channel. The issuer could then tell the customer their application is under review and when they should anticipate a response. This feature not only supports a comprehensive view of the customer, but also enables successful instant prescreen and cross-sell offers.  Additionally, no more “lost” applications results in positive customer experiences and more products sold.

Saving Time with Instant Decisions

Consumers are always in a hurry, trying to put in hours at the office, with their family and friends, and for themselves. Because of this, they demand instant results in almost everything they do, and applying for a loan is no exception. They don’t want to wait for what they perceive as an unreasonable amount of time, to find out if they were approved for a loan.

I recently applied for a store credit card and was surprised when it took 5 minutes to learn if I had been approved. I would have been happier with my decision to apply if the credit card issuer had given me an instant decision. A modern LOS automates the majority of the origination process and allows for seamless manual review, only when necessary. After manual review is complete, the application can be put back into the origination process where it left, instead of having to start from the beginning. By eliminating inefficient transitions between manual and automated processes issuers can speed up the origination process and reduce errors that can happen when an application only undergoes a manual review process.

Finding Balance

Having a loan origination system that automates the majority, if not all, of the origination process will prove to be more efficient for the issuer than a legacy system. An efficient LOS will also result in improved customer service. All of these will increase profitability for the issuer. No one wants to believe they have to sacrifice one thing over another, especially when looking for a loan origination system. By investing in a more modern LOS, issuers will be able to find the right balance of efficiency and customer service.

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Zoot Staff Contribution

About Zoot Staff Contribution

Everyday, Zoot employees are working with the largest, most sophisticated banks in the world to solve their complex business problems. As Zoot employees gain new insights into the financial industry, they will share them with you as a Zoot Staff Contribution to ZootBlog.

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