A loan origination system (LOS) has become a common banking buzzword among banks and credit unions in recent years. However, the term LOS can have different meanings to bankers across the industry.
For some, an LOS is a compilation of software solutions that automate commercial loan origination workflows at a financial institution. For others, it is a magical tool that leads to growth and improved borrower experience. Some might say it is merely a buzzword. But with the lending landscape growing increasingly competitive and the loan process as frustrating and time-consuming as ever, it’s important to understand what a loan origination system is. It’s also important to understand how an LOS may be able to help your bank or credit union.
An LOS is defined as a system that automates and manages the end-to-end steps in the loan process – from the application, through underwriting, approval, documentation, pricing, funding, and administration. While these steps may vary at each institution, every bank or credit union works through a similar process to approve loans and maintain a lending relationship.