The Digitization of Loan Origination Process and Its Benefits


The loan origination process is a qualification and verification process carried out to apply for a loan, namely the entire process from identification to approval of loan funding. Loan origination is the first stage of applying for a loan from a financial service provider. Meanwhile, the method for carrying out this process is called the Loan Origination System (LOS). Loan Origination System (LOS) is responsible for managing all loan origination processes from pre-qualification to loan approval.

Loan Origination System (LOS) is a system specifically designed to assist in processing credit applications required by banks and other financial service providers. The LOS process starts from the identification process of prospective customers or prospects, the initial scoring process both from the internal and external sides such as checking the financial information service system (SLIK), survey or taxation process that ensures the completeness of customer data, credit approval processes, credit verification, and credit agreement. In essence, LOS functions to speed up and simplify the credit process starting from the application process to disbursement which is integrated with Core Banking.

Loan Origination Digitization

Previously, the loan origination system was done manually or using a simple application by relying on several variables. However, if there is uncertainty, it will be submitted to the consultant for further consideration.

However, now with the presence of technologies such as AI, Blockchain, cloud computing and so on, it can shorten the entire loan origination flow into three stages known as “310”.

3 minutes to fill out a loan application form online

1 second process between loan approval and fund transfer

0 no human intervention in between

With this technology, financial service providers and banks can attract consumers with a fully digital customer experience service instead of going to the nearest bank branch, filling out paperwork, and then having to wait for days. With just a few clicks, borrowers will get a decision within 24 to 48 hours. And as we know, a better customer experience can influence consumer decisions in an instant.

Today, both banks and financial service providers are pressured by the need to reduce risk, increase profit margins, and provide remote services. Utilizing a fully digital analytics-based loan origination system can help overcome these problems.

The advantages of digitizing the loan origination process are as follows:

  • Decreases risks. By automating repetitive steps, we can minimize the risk of decision-making errors. In addition, the latest generation of loan origination systems can be integrated with various data sources to quickly verify customer data. What’s more, if the method uses an AI-based system, then analysis can be done instantly and decision making becomes more accurate.
  • Saves operational costs. One of the goals of digitizing loan origination is to streamline or eliminate unnecessary steps if they can be done automatically, so that costs such as printing documents, stationery and the like can be reduced. In addition, the loan origination system can also act as a digital filter, so that it can help process data or loan applications in larger amounts without any additional costs.

In fact, with intelligent machines, intelligent machines can be configured to automatically predict the optimal loan terms and structure for customers, so that companies can determine maximum profit margins without harming borrowers.

  • Increases obedience. With loan origination that is able to produce a high level of predictability and repeatability, companies can be helped to avoid biased decision making and still comply with the rules regarding credit policies.
  • Access to new customer demographics. In the next few years, consumers from the millennial generation and Gen Z will have a high level of consumption. Moreover, the millennial generation is one of the generations most burdened with debt. Therefore, millennials are the demographic that fintech companies are most interested in, by utilizing alternative credit data in the loan origination, so that they can offer services that suit the needs and preferences of this demographic.
  • Increasing customer experience. The leaner and more efficient the loan origination is, the better it is for customers and companies because they can accept decisions quickly, create competitive interest rates, and conduct quick fundraising. These are the keys to effective retention and stable profit growth.

The financial industry is currently shifting its focus to customer engagement and satisfaction by designing services and providing the best service. One way to do this is to apply the latest technology known as the loan origination process. Therefore, AdIns innovates with CONFINS LOS, which is an irreplaceable loan origination system because of its ability to assess loan applications that can benefit all parties, both customers and financial service providers.




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