By Bruce Callen
While there are a number of Loan Origination Systems (LOS) that tout intuitive, configurable, compliant and efficient solutions, integrating a new LOS platform often proves challenging. This is due, in part, to the fact many LOS platforms are operating on technologies that are in some cases 20-years old. As a result, quickly adopting new features, such as scoring models from credit bureaus designed to detect fraud, is difficult.
For credit unions looking to adopt a forward-leaning, cloud-based LOS platform adhering to the following three steps will result in a rewarding discovery process.
- Ensure that respective business needs are cross-referenced with the capabilities of the LOS vendor. Additionally, it’s imperative to research the vendor’s history and ask the vendor not just for a reference list, but a client list (call on those clients asking specific questions). After all, a credit union must feel comfortable and confident with the vendor as an LOS contract may last between two and five years.
- Purchasing an LOS platform should not only be an executive decision. Loan officers, loan processors and funding personnel should be included in the process. A team approach is required because an LOS platform needs to meet today’s needs as well as be able to grow with the credit union into the future.
- To ensure compliance, SOC 2 and SOC 3 audits are required that address security, encryption, reliability and data integrity issues, among other variables. The audit should be done on both the vendor’s software and its cloud-based platform.
A cloud-based LOS solution streamlines operations and has countless benefits, chief among them is reliability. Due to geographic irregularities, such as severe weather events, credit unions can no longer rely on a single data center. Cloud-based LOS platforms are geographically replicated throughout the nation. Additionally, data is backed up in real time down to the microsecond, not just daily, and housed in numerous data centers strategically located throughout the country.
An LOS provider can only move as fast as the credit union. Determining how long it will take to adopt a new LOS platform, therefore, depends on how many integration points exist between the credit union’s core system and its other solution providers, such as document signature and online storage system vendors. In most cases, integrating a cloud-based LOS platform takes between 90 days to nine months, and once rolled out, the benefits are immediately realized.
Bruce Callen is CFO and Chief Development Officer for the Austin, Texas-based Sync1 Systems, a fintech CUSO providing a sophisticated loan origination system, internet banking and account opening solution designed specifically for credit unions.