A loan origination system (LOS) should perform several basic functions to automate and manage the end-to-end steps in the commercial loan process. Providers of loan origination software representing good partners for a financial institution also have specific features. Knowing these elements of an LOS and an LOS vendor is critical for senior financial institution executives either shopping for an LOS for the first time or considering an improvement to their bank or credit union’s current business lending process.
While a financial institution often primarily focuses on securing software to originate business loans, a commercial LOS provides scalability when it offers integrated solutions on one platform to manage all stages of the life of the loan. In addition to origination, the end-to-end software can manage the following:
- Business development, or pipeline development
- Credit analysis and decisioning
- Portfolio risk management
- Allowance for loan and lease losses (ALLL) calculations or a fully compliance calculation under the current expected credit loss model, or CECL
- Asset-liability management