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Top 4 Pitfalls of Loan Software Configuration

Posted by Chris Carlson | Wed, Feb 13,2019 @ 05:34 AM

Ever feel like your institution isn’t fully utilizing its loan software solution? 

Don’t worry, you’re certainly not alone. Regardless of the scope of your direct or indirect lending footprint, institutions routinely turn to teams of business consulting experts to maximize efficiency and uncover new growth opportunities. Loan software configuration is never as simple as a plug-and-play situation you see with setting up a new television or stereo. Your system’s configuration is as much an evolving process as the landscape of the lending industry or the economy in general.

To help you properly monitor your current solution or proceed with the configuration of a new platform, here are four very common mistakes to avoid when configuring your loan software solution for peak efficiency and optimal performance:

  • Fear of changing the system without being able to predict the effect: Institutions are made of many decision makers and making a decision can be challenging, especially when the decision implies added risk. With usual staff turnover that occurs over the years, we often hear that no one remembers why certain changes were made because they were executed years ago. Analyzing origination and performance data in order to increase the decisioning efficiency can help overcome this obstacle because decisions can be backed by objective evidence.

  • Altering the decisioning configuration based on a purely judgmental approach without the proper impact analysis: Changing the system configuration without being able to predict the effects in terms of efficiency, risk, and compliance can be very dangerous. Deep data analytics are fundamental to effectively improving the decisioning configuration.

  • Making changes to the system without keeping a parallel audit trail (and without a procedure): This is one of the most common mistakes. Institutions often make multiple system changes without keeping track of the reasons behind them and of the types of changes. This brings increased compliance risk and the inability to rebuild the history of system configuration, which generates operational risk.

  • Changing the decisioning configuration without first analyzing underwriting and policy guidelines: Institutions often change product policies and underwriting guidelines without updating the origination. If you have never performed an assessment to see if the system is aligned with your institution’s policies, it is likely that there is misalignment between the system and the policies or underwriting guidelines. This increases your institution’s exposure to compliance, operational and credit risk. It’s fundamental that, at least once each year, a checkup of the system is performed to ensure it is correctly representing the institution’s policies and underwriting guidelines.

Avoiding these common configuration pitfalls will definitely save you time and money in the long run. However, these are just a few of the things our MLX Consulting experts help institutions identify and resolve to get the most out of their solutions. If you’re interested in learning more about how our team can help streamline and optimize the configuration of your loan origination system, please click the button below to request a consultation.

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Photo Credit: Jukka Zitting

Topics: Loan Software, indirect lending, loan origination system, business consulting

Written by Chris Carlson