Top Benefits of Using a Loan Origination System

Top Benefits of Using a Loan Origination System

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Loan origination systems such as Oystr Float are known to speed up loan processes and mitigate credit risk for lenders. Although this automated service backed with AI & ML only began a few years ago, it already has major significance in the finance industry.

Initially, traditional banks and lenders always had seemingly appropriate mechanisms. Then, they replaced manual documentation, verification, and underwriting with their antiquated software.

As new technology arose, their ineffective, old loan management system fell behind the times.

Fintech drove the transition from mainframes to cloud-based, customizable loan origination systems. Artificial intelligence (AI) and machine learning (ML), as well as other disruptive technologies, began to gradually provide flexibility to a previously inflexible and error-prone human operations process.

In this article, we'll discuss the top benefits lenders experience by switching to us o loan origination system(LOS) and why lenders should consider it over manual processes. Read on.

4 Benefits of Loan Origination System (LOS)

A Loan origination system has multiple benefits for lenders but here are the top four (4) steadily impacting lenders and their customers.

1. Cloud-Based Services

The process of updating complex, proprietary software that ran on-premises servers took several hours, resulting in substantial financial and time losses for enterprises.

Moreover, the only plausible choice for lenders was to migrate to a system that was less complex, required less maintenance, and could incorporate changes within hours. As a result, we currently utilize a cloud-based loan origination system that was formerly a loan management system that was migrated to the cloud and then extensively updated.

The lending business has been infused with transparency and collaboration thanks to cloud-based loan origination technologies. Its significance is widely seen across financial organizations, and the market for cloud-based lending origination software is estimated to reach $10.6 billion by 2028

2. Speed in Loan Processing & High Customer Satisfaction

Several degrees of automation, such as speedier verification and underwriting using (ML-based predictive models) and fewer downtimes, are available with LOS. As a result of its regular and timely software updates, lenders can handle more loan applications in less time and with greater accuracy.

By proxy, the speed in loan processes has caused more satisfied customers. Loan processes that took days and even weeks are done in minutes while still mitigating risk. In addition, the process of underwriting, credit analysis, and more are all automated with even higher accuracy than human procedures.

We're seeing increased market penetration, client base, and revenue streams with lenders using LOS.

Moreover, Using loan origination software has enabled borrowers to apply for and receive loans from the convenience of their mobile devices. Before now, lenders used on-premise servers, and outdated software required applicants to visit the bank in person to complete the application and verification processes. Now lenders can provide enhanced user experience by guiding customers through the application process with minimum assistance.

3. Smoother Authentication and Verification

Loan management systems are agile by design as compared to their legacy counterparts. As such, rolling out constant and quick updates that require little to no downtime makes the system much more up-to-date. This is especially useful in AI and ML solutions to boost their efficiency levels in processes such as verification and credit scoring (underwriting).

Oyster Float, among other loan origination and processing systems, can automate the entire verification process, verify applicant-provided documents via traditional and alternative sources and ensure all documentation is fulfilled.

With automation in loan processing, there's a revenue boost for lenders, a reduction of manual errors, and more competitive interest rates. In addition, lenders are experiencing easier identity verification, better credit risk analysis and an error-free underwriting process.

4. Higher Transparency

Lenders no longer need to be concerned with high-security risks, resulting in the loss of critical customer data and a loss of credibility and business. With LOS, data is stored in a secure and encrypted server environment.

Moreover, most cloud-based loan origination systems employ strong security measures to prevent unauthorized access.

Additionally, because of the application's ease of use, both borrowers and lenders can monitor the current status of their files in real-time and from any location. This transparency yields streamlined cross-location teamwork, streamlined resource allocation via access control features, and streamlined access.


Given the highly competitive nature of the lender market and the abundance of loan origination system providers in the fintech industry, lenders need to provide better services to stay ahead of competitors.

Thus, it is now more important than ever to move away from obsolete technology and proprietary applications and embrace better LOS technology like Oystr Float.

With our software, you can process loans, get an accurate view of a customer's creditworthiness, disburse loans faster and experience ease in debt collection. Want to know how Oystr can help your lending business? Visit our website today!