Loan processing is among the most multifaceted of a financial institution’s operations and is developed specially to support banks and other financial institutions’ loan application processing needs. Workflow technology controls and monitors various steps in loan processing and uses digital imaging technology to reduce the delays and inefficiencies associated with paper documents.
A comprehensive LOS enables financial institutions to process multiple loan types through a single LOS — effectively serving as a single point of loan origination.
Ideal Loan Origination System
- It should have a structured workflow for automatic routing of applications for different loan products.
- Support multiple loan products and loan types.
- Support different origination channels.
- Easily interface with different external systems.
- Provide internal credit checking, credit scoring and compliance checking.
- Maintain all the application details and provide status updates as and when required.
- Support document imaging and archiving for various loan application-related documents.
Loan and collateral monitoring
Since lending is a key business activity in the financial services sector it can be ranked as the largest asset and a chief source of revenue for banks, but is also a great source of risk to a bank’s safety and soundness. Loan portfolio problems have been among the major cause of financial institutions’ losses and failures this can be due to lenient credit standards, poor portfolio risk management, or weaknesses in the economy. Annual audits of loan portfolios may address these risks but time has revealed that continuous monitoring is the most efficient approach. This problem can be tackled through identifying control breaches, anomalies and high-risk activities at an early stage with the help of loan and collateral monitoring. Employing a firm remediation strategy often prevents and minimizes the impact of any potential portfolio impairment.
Loan Management Software
Loan management software helps financial organizations to manage their processes each of which can differ at various stages. This software is a growing priority for all types of loan providing companies to eliminate manual loan management thus streamlining the procedures. It is a strategic decision taken by the banks to move ahead with advanced loan management application that has simplified the loaning process for the customers as well as has enhanced the productivity of the loan providers.