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API Connectivity FAQs

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API Connectivity FAQs

Open Banking

Banks, their customers, and a legion of third-party providers (TPPs) all can point to positive results from this fintech spin on banking.

Open banking involves the sharing of customer account data with TPPs, who are granted access through portals called application programming interfaces.  Customers are not required to share their data, but they can authorize such sharing if it seems to be to their advantage to do so. Among the many services provided by TPPs are account information applications that perform budgeting and price comparisons. Ecommerce retailers like Amazon function as TPPs in providing payment initiation services.

Benefits to financial institutions

Banks benefit from open banking by expanding the services they can offer to customers. The new services that TPPs can provide through open banking help financial institutions offer a one-stop-shop and retain their existing customers in a highly competitive marketplace.

Open banking has spawned a new industry of TPPs, many of them fintech startups with highly specialized products geared to banking customers with particular profiles. Before the onset of open banking, these companies would have had no access to the financial data needed to design and market their products.

Benefits to customers

The primary benefit of open banking for customers is an increase in the number of service options available to them. The services offered by banks traditionally had been limited to those included in a customer’s account. The entry of TPPs into banking means that customers can access more personalized services than those offered by traditional banks.

The competitive landscape in banking has led many banks to offer their customers what are known as open banking services.

Open banking allows customers to access services offered by financial institutions other than their home banks. Through the use of application programming interfaces (APIs), banks can invite third-party providers (TPPs) to access customer accounts and tailor services to their clientele based on the data they have mined. The specific benefits of open banking to you include more options and more highly customized services.

Open banking allows you to conduct e-commerce and other transactions directly through TPPs without the need for your home bank to do it for you. While banks traditionally have provided many of these services, the scale of their offerings has been limited compared with the array of services available through open banking. Similarly, open banking eliminates the need for you to rely solely on your bank for financial advice. Open banking offers many more choices of service providers, meaning that you are no longer tied to a particular service just because it’s included with your account. This approach allows banks to continue as the depository for your money while offering you more services than would otherwise be possible from a single provider.

Open banking gives you a greater role in tailoring bank services to your specific needs. With the access that open banking grants to them, third-party providers can introduce customers to a new level of customization and personalization. As just one example of the types of services available, some open banking platforms allow you to synchronize your bank account to payment information services like Olivia AI, which can help you track income and expenses more effectively than you ever could through your online banking services.

Open banking requires greater security measures, such as digital IDs that are validated through a biometric means like fingerprints. This approach is highly effective in defeating attempts at identity theft and fraudulent payments.

The cost of information technology services can be high. Paying ITS professionals can be expensive — especially after you factor in the price of things like hiring, training, and paying benefits.

For example, according to Robert Half Technology, a Seattle-based company can expect to pay a network/cloud administrator between $100,000 and $170,000 in salary. Those figures do not include benefits, bonuses, and other costs.

And salaries are not the only ITS costs a business faces. For example, the hardware and software used to perform information technology services also can add up to a substantial cost.

Another hidden cost appears when you have the wrong information technology services. For example, if an ITS department cannot do its job well, you may experience a lot of downtime — and lose revenue as a result. This hidden cost is easy to overlook, but doing so is a big mistake.

Some businesses try to cut costs by having an outside company manage information technology services. In such situations, the business outsources the work to a third party and is not required to pay full-time employees and offer them benefits.

According to one 2020 estimate, you can expect to pay about $100 to $150 for each of your employees per month for managed IT services. However, if you require more advanced security solutions and consulting, rates can jump to $250.

So, a company with 30 employees can expect to pay roughly $3,000 to $7,500 per month to an outside company to manage your information technology services.

Other managed IT services have different pricing models, such as charging on a per-device — rather than a per-employee — basis.

Just keep in mind that while managed services can be an excellent option for many companies, it does not work well for every organization. If your IT needs are sophisticated and the technologies you use are complex, trying to save money by hiring outside services may prove costly.

Open banking has demonstrated its potential to improve services, reduce fees and provide consumers with more options.

Open banking is one of the most significant developments occurring in the financial world. It originated in Europe, but countries in other parts of the world are now embracing it as well. Open banking uses emerging technologies to create more efficient and cost-effective financial services by sharing customer information with third-party providers (TPPs). The services that TPPs provide generally fall into the categories of account access and payment initiation services. For account holders, open banking can change the way they pay bills and make purchases.

TPPs are able to acquire account information from many financial institutions in an open banking environment through the use of application programming interfaces (APIs). For example, an application can use an API to access your checking account, track your spending habits, perform price comparisons and make suggestions as to what you can afford to purchase. Open banking isn‚Äôt legally mandated in the U.S. yet, but American banks are increasingly willing to share information with TPPs in order to improve their customers’ experience and provide them with more services.

Open banking is dramatically changing the practices of financial-sector stakeholders such as banks, regulators and TPPs. Customers can also expect more options for managing their money, especially for borrowing money, because they will be able to directly access the services that TPPs offer rather than just those of their banks. Banks have an incentive to add these services in order to remain competitive in a rapidly changing financial marketplace.

Open banking has demonstrated its potential to improve services, reduce fees and provide consumers with more options. This trend is expected to continue as countries formalize open banking through legislation.

APIs allow two applications to talk to each other. Read on to find out how they make open banking possible.

Some have said that application programming interfaces (APIs) are the foundation of open banking. It certainly is hard to imagine modern open banking without them. APIs are a kind of software that allows two applications to talk to each other. In open banking, they make possible the sharing of information between a bank and the third parties that provide financial products and services to the bank’s customers.

APIs provide a secure method of communication between an online banking system and another party. They provide access to personal bank data that allows developers in the financial technology (fintech) industry to build applications tailored to the financial institution and its customers. Many of these applications expand banking services well beyond what a financial institution would be capable of providing its customers on its own. Thus, it is easy to see how APIs can help banks develop new business markets and generate new revenue streams through third-party partnerships.

Open banking APIs may be classified into private APIs, partner APIs and open APIs. The customer’s financial institution implements and maintains private APIs on its own networks. Business partners of the financial institution can build partner APIs. Open APIs provide information to third parties that aren’t partners of the financial institution and don’t work directly with them. Using that information, those third parties can build applications that put them in a position to become partners with the bank.

APIs have become particularly important to open banking in the UK, where banks are legally required to share account information with authorized third parties such as account aggregators and payment initiators. No such legal requirements exist in America, but U.S. banks already are taking the initial steps toward developing open-banking platforms.

The U.S. financial services industry is moving toward an open banking environment. APIs have allowed PFM applications to directly access financial data from the bank, and the future of these applications is very promising.

Compared with Europe, where open banking has been established through legislation, the U.S. financial services industry has moved more slowly toward an open banking environment in which customer data is shared with third-party providers (TPP). Some banks in the U.S. already share their data voluntarily, even when it isn’t required. This trend is likely to accelerate as banks, their customers and TPPs realize the benefits from open banking.

The regulatory climate in the U.S. has kept a lid on the growth of open banking. The U.S. has extensive regulations controlling the privacy and security of financial information shared among organizations. For example, U.S. regulators require customers to approve of the conditions under which banks can share their information. Progress in the technologies securing the privacy of shared information, identity, and consent is gradually overcoming the fear of privacy loss in the U.S., moving its financial sector ever closer to a true open banking platform.

Open banking platforms are built on application programming interfaces (APIs) that connect banks with TPPs and permit a free flow of information between them. APIs have been in widespread use on the Internet for two decades or more, but until recently were not employed in the U.S. banking industry. Nevertheless, the technical underpinnings of open banking are readily available to U.S. banks at such time as they choose to apply them.

One U.S.-based TPP that has penetrated the banking market is the personal financial management (PFM) tool Mint. It uses customers’ bank account information to track their spending and help them reach their financial goals. The earliest PFM tools needed customers’ usernames and passwords to log on to accounts and obtain information. However, the use of APIs has allowed PFM applications to directly access financial data from the bank. The future of these applications is very promising.

PSD2 is a successor to the Payment Services Directive (PSD) that was passed by the Council of the European Union (CEU) in 2007.

The purpose of PSD, which the banking industry strongly supported, was to increase the participation of non-banks in Europe’s payments industry. PSD2, a 2015 revision of PSD, further regulated payment services in the European Union. The objective of PSD2 was to integrate the payments market in the EU by increasing the security of financial transactions. This directive has created a greater opportunity for banks to collaborate with providers in the financial technology, or fintech, industry.

The implementation of strong customer authentication (SCA) measures for electronic payments is a critical element of PSD2. This feature is particularly important in ensuring the security of payments made from mobile devices, especially payments originating from outside the EU. PSD2 also specifies common and secure communication requirements, such as requiring the use of certificates qualified by electronic Identification, Authentication and trust Services (eIDAS) as specified in ETSI TS 119 495. PSD2 requires websites to use this standard to authenticate communications between financial service providers.

The CEU passed PSD2 on November 16, 2015, but allowed EU members two years to incorporate the directive into their national laws. It supplemented PSD2 with the passage of EU directive 2018/389 on November 27, 2017, creating standards for SCA measures. The first provisions of PSD2 went into effect on January 13, 2018, and the entire directive became effective on September 14, 2019.

Businesses were originally required to comply with the Regulatory Technical Standard for PSD2 by this date, but they encountered a variety of challenges that delayed the process. The European Banking Authority, therefore, granted an extension to December 31, 2020, for the purpose of fully implementing SCA measures.

Learn the common way to divide digital transformation into these four key areas.

There is no hard and fast rule about the four main areas of digital transformation. Some experts and companies define it one way, others another. But the following is a common way to divide up this subject into four key areas:

  • Business process. This is where a company brings in technology that allows it to transform its processes, services, and models. A good team plays a critical role in making this happen.
  • Business model. This is where the company uses new technology to both improve customer experience and drive the revenues of the business higher.
  • Domain. In this aspect of digital transformation, the business moves from one area of expertise into something new, like a product or service it has not sold before. Exploiting the technology associated with digital transformation opens new opportunities.
  • Cultural/ organizational. This crucial component of digital transformation involves making sure everyone in the company is on the same page and working together. This is especially important in companies where departments and teams often fight for scarce resources, and thus may not be used to cooperating as much as is necessary to make digital transformation succeed.

Other companies may divide digital transformation into different categories. But in most cases, these categories are focused on common themes, such as:

  • Using technology to create new efficiencies
  • Empowering employees throughout the company to give their best to the project
  • Opening new opportunities that would not exist without digital transformation
  • Serving customers by giving them a better experience

Concepts such as cloud computing, artificial intelligence (AI), and the internet of things (IoT) are among the latest developments surrounding digital transformation.

Digital transformation refers to using digital technology to better operate a business and meet customer needs. It really began in earnest when the internet took root three decades ago. Today, most businesses operate in ways that were unthinkable prior to digital transformation.

One hallmark of digital transformation is the determination to incorporate technology into all aspects of a business’ operations. In its infancy, this might have meant something as simple as moving from pen-and-paper accounting to using computer spreadsheets.

With time, the changes have become more sophisticated, including using data analytics to automate operations. Some people make a distinction between “digitization” — the simple process of converting information to digital form — and “digitalization,” which involves using digital technologies and information to literally transform how a business operates.

Innovation is another major aspect of digital transformation. Those committed to the concept of digital transformation are always looking at new ways to tackle old problems, or imagining how to use technology to create brand-new opportunities.

Concepts such as cloud computing, artificial intelligence (AI), and the internet of things (IoT) are among the latest developments surrounding digital transformation.

Digital transformation matters because it allows businesses to tap into cutting-edge technologies that help them to keep pace — and thrive — in an increasingly competitive marketplace. Digital transformation also helps businesses to speed up their processes and to increase the efficiencies of their operations. With the right technology, businesses become more agile and flexible, making them better able to quickly adjust to the changing needs of their customers.

While digital transformation might seem to be all about technology, the process goes nowhere without the people who make it happen, and the businesses that fund the technological changes.

A digital transformation project is an effort to replace a business’ older nondigital or manual processes with systems based on digital technology.

In doing so, companies hope to enhance customer experience with their brand, encourage operational flexibility and innovation within the company, and create efficiencies that drive down costs.

An important part of any digital transformation program is to implement technologies that serve your needs today, but that also can be used as the foundation for the changes that will inevitably — and ceaselessly — arrive in the years to come.

In addition to carefully researching your digital options, it is important to have all members of your team onboard and expressing their input about wants and needs the digital transformation should meet. Open communication across departments is key to any successful project.

This can be difficult in organizations where departments are used to competing with one another, but cooperation is a prerequisite for digital transformation success.

Once you have a better idea of what your goals are and how you plan to achieve them, create a roadmap to get you to those goals. Then, measure your progress to make sure you are on target, and that your plan does not need additional tweaks.

Virtually all companies that implement digital transformation will want to know what their return on investment is. In some cases, the ROI might not be immediately apparent.

But over time, companies that take this step will offer better service to their customers, and that should pay off in the form of loyal customers and new shoppers alike. Digital transformation can also create efficiencies that can help companies save money, as well as freeing up the best workers to make more productive contributions.

To keep up with fintechs, financial services companies must embrace cutting-edge digital transformation efforts.

Digital transformation is crucial in financial services. The rise of FinTech companies has brought with it a breathtaking pace of innovation and a more competitive landscape. To keep up, financial services companies–big and small–must embrace cutting-edge digital transformation efforts.

Perhaps nowhere is this more evident than in the rise of open banking, which allows businesses to share financial information with one another electronically. Third-party providers now can develop apps and services that benefit consumers of the original business.

Although digital transformation offers limitless opportunities, more established financial services companies may struggle to leave aging legacy systems behind and to embrace the future. Digital transformation is the kind of shakeup that can be unsettling in the short run, but it offers limitless potential over the long haul.

The big companies that long dominated the financial services industry understand that countless small and mid-sized competitors–and potential partners–now have joined the fray. Embracing digital transformation is no longer an option, it is a necessity.

Today’s customers expect to get real-time notifications on activity, or to be able to access a robo adviser 24/7. In the future, they are likely to expect even more, such as being able to access all their accounts in one place, regardless of how many financial providers they have. Digital transformation is the key to meeting these customers where they are so a business can serve their needs.

Measuring the progress of your digital transformation project is crucial to keeping it on track.

Having a good digital transformation plan is paramount, as is employing the right folks to do the job. But you can’t stop there.

Measuring the progress of your digital transformation project is crucial to keeping it on track. Successful businesses constantly ask the hard questions about their digital transformation schemes. That way, they can figure out where they truly stand.

For example:

  • How do your customers like the new technologies you have introduced?
  • Have the changes you made inside the company boosted productivity?
  • Are the new digital services boosting revenue?

Check to see if you are gaining new customers and holding on to loyal ones. Monitor the customer experience on your site. Are people easily navigating through the site, or are they struggling to understand where they should go next? The answer to that question tells you if you can briefly stand pat, or if you need to make changes soon.

Also, look inside the company to see if employees are using the new technologies you have implemented to dream up innovations, including new product ideas and ways to cut costs. What are you hearing about your new digital transformation product? Is it boosting team spirit, or sapping it?

Measuring your progress can tell you what you have done right, and where you have come up short. That way, you can continue to push ahead down productive avenues, and tweak or overhaul processes to fix the things that are not going well.

Deciding exactly how to measure your progress is rarely easy, but it’s crucial to have some type of yardstick that tells you which adjustments you must make.

These are just three of many examples of how investing in digital transformation can bring a big ROI.

When a company is considering making a commitment to digital transformation, you can bet that trying to figure out the return on investment (ROI) of such a venture is at the forefront of the leaders’ minds.

Digital transformation can indeed offer a large ROI. Every business has goals that are unique, and what is considered to be a valuable ROI will vary from company to company. But here are some examples of ROI from digital transformation.

  • A large company decides to automate requests from its workers for business supplies. This removes the need for the employee to send an email or stop by the HR department to make the request, then to follow up to make sure the request has been approved. Instead, an automated form substantially slashes the amount of employee time devoted to the process, saving the company many hours that can be freed up for other activities.
  • A company creates a social media page that draws in customers to interact with the company brand. Not only does this help forge a deeper relationship with the customer, but it offers a platform for customers to talk about what they love about the company’s brand and to share stories of positive experiences with the company.
  • A retailer launches mobile video ads that try to build a stronger relationship between the customer and the company brand. Such ads are sent directly to the customer’s phone, which advertisers have characterized as a more intimate delivery device than a TV or even a computer.

Those are just three of many examples of how investing in digital transformation can bring a big ROI.

For starters, drivers of digital transformation are companies that understand that it offers many ways to enhance a business in the marketplace.

Digital transformation is the process of integrating digital technology to all areas of a business. It is front and center for many businesses today. But who is driving digital transformation?

For starters, it is companies that understand digital transformation offers many ways to enhance the place of a business in the marketplace. Some of the perks of digital transformation are:

  • It helps companies stay on the cutting edge. A business that taps into digital transformation can use tools such as cloud computing, artificial intelligence (AI) and the internet of things (IoT).
  • It promotes innovation. Digital technology helps companies solve old problems and create brand-new opportunities.
  • It drives greater efficiencies. Digital transformation makes company processes faster and creates other efficiencies in their operations. Businesses become more agile and flexible in meeting customer demand.
  • It can save money. Companies that use digital transformation increase their efficiencies and free up resources for other things.

Customers also are driving digital transformation. Today’s customers have many options when looking for goods and services. Increasingly, these customers want products that meet their needs in ways that are most interesting and convenient to the customer.

Businesses are responding to these demands by using digital transformation to become more agile and flexible, making them better able to quickly adjust to the changing needs of their customers.

These companies understand that they must remain on the cutting edge, developing appealing products that are as good as — or better than — the offerings of competitors.

Agile digital transformation is a philosophy that adheres to the notion that continuous innovation must drive digital transformation.

Businesses that successfully implement digital transformation projects understand the need to continuously change to meet the shifting demands of consumers and the market. Agile digital transformation is a philosophy that adheres to the notion that continuous innovation must drive digital transformation.

Continuous innovation allows smaller changes to add up to bigger changes over time. Companies that embrace agile digital transformation feel the freedom to launch new products, and to take what they have learned from those launches to improve their offerings going forward.

Agile digital transformation puts a premium on the flexibility to change initiatives — even in midstream — if it will improve them. There is a commitment to continuous improvement — both within the team and in the products they are producing.

At the same time, those committed to agile digital transformation keep an eye on the bottom line, making sure their projects stay within budget. They also try to reduce the risk of failure by regularly testing and discussing new products.

Communication is at the heart of agile digital transformation. Both the business and IT units must work closely together on projects, in a spirit of transparency and collaboration. All of this increases the odds of turning out successful high-quality products and services.

Finally, agile digital transformations are only as successful as the people who create and implement them. Companies need to hold on to talented employees by allowing these workers to manage themselves, and giving them the space to reflect and be creative while also offering them new opportunities to learn.

Learn the common way to divide digital transformation into these four key areas.

There is no hard and fast rule about the four main areas of digital transformation. Some experts and companies define it one way, others another. But the following is a common way to divide up this subject into four key areas:

  • Business process. This is where a company brings in technology that allows it to transform its processes, services, and models. A good team plays a critical role in making this happen.
  • Business model. This is where the company uses new technology to both improve customer experience and drive the revenues of the business higher.
  • Domain. In this aspect of digital transformation, the business moves from one area of expertise into something new, like a product or service it has not sold before. Exploiting the technology associated with digital transformation opens new opportunities.
  • Cultural/ organizational. This crucial component of digital transformation involves making sure everyone in the company is on the same page and working together. This is especially important in companies where departments and teams often fight for scarce resources, and thus may not be used to cooperating as much as is necessary to make digital transformation succeed.

Other companies may divide digital transformation into different categories. But in most cases, these categories are focused on common themes, such as:

  • Using technology to create new efficiencies
  • Empowering employees throughout the company to give their best to the project
  • Opening new opportunities that would not exist without digital transformation
  • Serving customers by giving them a better experience

Concepts such as cloud computing, artificial intelligence (AI), and the internet of things (IoT) are among the latest developments surrounding digital transformation.

Digital transformation refers to using digital technology to better operate a business and meet customer needs. It really began in earnest when the internet took root three decades ago. Today, most businesses operate in ways that were unthinkable prior to digital transformation.

One hallmark of digital transformation is the determination to incorporate technology into all aspects of a business’ operations. In its infancy, this might have meant something as simple as moving from pen-and-paper accounting to using computer spreadsheets.

With time, the changes have become more sophisticated, including using data analytics to automate operations. Some people make a distinction between “digitization” — the simple process of converting information to digital form — and “digitalization,” which involves using digital technologies and information to literally transform how a business operates.

Innovation is another major aspect of digital transformation. Those committed to the concept of digital transformation are always looking at new ways to tackle old problems, or imagining how to use technology to create brand-new opportunities.

Concepts such as cloud computing, artificial intelligence (AI), and the internet of things (IoT) are among the latest developments surrounding digital transformation.

Digital transformation matters because it allows businesses to tap into cutting-edge technologies that help them to keep pace — and thrive — in an increasingly competitive marketplace. Digital transformation also helps businesses to speed up their processes and to increase the efficiencies of their operations. With the right technology, businesses become more agile and flexible, making them better able to quickly adjust to the changing needs of their customers.

While digital transformation might seem to be all about technology, the process goes nowhere without the people who make it happen, and the businesses that fund the technological changes.

A digital transformation project is an effort to replace a business’ older nondigital or manual processes with systems based on digital technology.

In doing so, companies hope to enhance customer experience with their brand, encourage operational flexibility and innovation within the company, and create efficiencies that drive down costs.

An important part of any digital transformation program is to implement technologies that serve your needs today, but that also can be used as the foundation for the changes that will inevitably — and ceaselessly — arrive in the years to come.

In addition to carefully researching your digital options, it is important to have all members of your team onboard and expressing their input about wants and needs the digital transformation should meet. Open communication across departments is key to any successful project.

This can be difficult in organizations where departments are used to competing with one another, but cooperation is a prerequisite for digital transformation success.

Once you have a better idea of what your goals are and how you plan to achieve them, create a roadmap to get you to those goals. Then, measure your progress to make sure you are on target, and that your plan does not need additional tweaks.

Virtually all companies that implement digital transformation will want to know what their return on investment is. In some cases, the ROI might not be immediately apparent.

But over time, companies that take this step will offer better service to their customers, and that should pay off in the form of loyal customers and new shoppers alike. Digital transformation can also create efficiencies that can help companies save money, as well as freeing up the best workers to make more productive contributions.

To keep up with fintechs, financial services companies must embrace cutting-edge digital transformation efforts.

Digital transformation is crucial in financial services. The rise of FinTech companies has brought with it a breathtaking pace of innovation and a more competitive landscape. To keep up, financial services companies–big and small–must embrace cutting-edge digital transformation efforts.

Perhaps nowhere is this more evident than in the rise of open banking, which allows businesses to share financial information with one another electronically. Third-party providers now can develop apps and services that benefit consumers of the original business.

Although digital transformation offers limitless opportunities, more established financial services companies may struggle to leave aging legacy systems behind and to embrace the future. Digital transformation is the kind of shakeup that can be unsettling in the short run, but it offers limitless potential over the long haul.

The big companies that long dominated the financial services industry understand that countless small and mid-sized competitors–and potential partners–now have joined the fray. Embracing digital transformation is no longer an option, it is a necessity.

Today’s customers expect to get real-time notifications on activity, or to be able to access a robo adviser 24/7. In the future, they are likely to expect even more, such as being able to access all their accounts in one place, regardless of how many financial providers they have. Digital transformation is the key to meeting these customers where they are so a business can serve their needs.

Measuring the progress of your digital transformation project is crucial to keeping it on track.

Having a good digital transformation plan is paramount, as is employing the right folks to do the job. But you can’t stop there.

Measuring the progress of your digital transformation project is crucial to keeping it on track. Successful businesses constantly ask the hard questions about their digital transformation schemes. That way, they can figure out where they truly stand.

For example:

  • How do your customers like the new technologies you have introduced?
  • Have the changes you made inside the company boosted productivity?
  • Are the new digital services boosting revenue?

Check to see if you are gaining new customers and holding on to loyal ones. Monitor the customer experience on your site. Are people easily navigating through the site, or are they struggling to understand where they should go next? The answer to that question tells you if you can briefly stand pat, or if you need to make changes soon.

Also, look inside the company to see if employees are using the new technologies you have implemented to dream up innovations, including new product ideas and ways to cut costs. What are you hearing about your new digital transformation product? Is it boosting team spirit, or sapping it?

Measuring your progress can tell you what you have done right, and where you have come up short. That way, you can continue to push ahead down productive avenues, and tweak or overhaul processes to fix the things that are not going well.

Deciding exactly how to measure your progress is rarely easy, but it’s crucial to have some type of yardstick that tells you which adjustments you must make.

These are just three of many examples of how investing in digital transformation can bring a big ROI.

When a company is considering making a commitment to digital transformation, you can bet that trying to figure out the return on investment (ROI) of such a venture is at the forefront of the leaders’ minds.

Digital transformation can indeed offer a large ROI. Every business has goals that are unique, and what is considered to be a valuable ROI will vary from company to company. But here are some examples of ROI from digital transformation.

  • A large company decides to automate requests from its workers for business supplies. This removes the need for the employee to send an email or stop by the HR department to make the request, then to follow up to make sure the request has been approved. Instead, an automated form substantially slashes the amount of employee time devoted to the process, saving the company many hours that can be freed up for other activities.
  • A company creates a social media page that draws in customers to interact with the company brand. Not only does this help forge a deeper relationship with the customer, but it offers a platform for customers to talk about what they love about the company’s brand and to share stories of positive experiences with the company.
  • A retailer launches mobile video ads that try to build a stronger relationship between the customer and the company brand. Such ads are sent directly to the customer’s phone, which advertisers have characterized as a more intimate delivery device than a TV or even a computer.

Those are just three of many examples of how investing in digital transformation can bring a big ROI.

For starters, drivers of digital transformation are companies that understand that it offers many ways to enhance a business in the marketplace.

Digital transformation is the process of integrating digital technology to all areas of a business. It is front and center for many businesses today. But who is driving digital transformation?

For starters, it is companies that understand digital transformation offers many ways to enhance the place of a business in the marketplace. Some of the perks of digital transformation are:

  • It helps companies stay on the cutting edge. A business that taps into digital transformation can use tools such as cloud computing, artificial intelligence (AI) and the internet of things (IoT).
  • It promotes innovation. Digital technology helps companies solve old problems and create brand-new opportunities.
  • It drives greater efficiencies. Digital transformation makes company processes faster and creates other efficiencies in their operations. Businesses become more agile and flexible in meeting customer demand.
  • It can save money. Companies that use digital transformation increase their efficiencies and free up resources for other things.

Customers also are driving digital transformation. Today’s customers have many options when looking for goods and services. Increasingly, these customers want products that meet their needs in ways that are most interesting and convenient to the customer.

Businesses are responding to these demands by using digital transformation to become more agile and flexible, making them better able to quickly adjust to the changing needs of their customers.

These companies understand that they must remain on the cutting edge, developing appealing products that are as good as — or better than — the offerings of competitors.

Agile digital transformation is a philosophy that adheres to the notion that continuous innovation must drive digital transformation.

Businesses that successfully implement digital transformation projects understand the need to continuously change to meet the shifting demands of consumers and the market. Agile digital transformation is a philosophy that adheres to the notion that continuous innovation must drive digital transformation.

Continuous innovation allows smaller changes to add up to bigger changes over time. Companies that embrace agile digital transformation feel the freedom to launch new products, and to take what they have learned from those launches to improve their offerings going forward.

Agile digital transformation puts a premium on the flexibility to change initiatives — even in midstream — if it will improve them. There is a commitment to continuous improvement — both within the team and in the products they are producing.

At the same time, those committed to agile digital transformation keep an eye on the bottom line, making sure their projects stay within budget. They also try to reduce the risk of failure by regularly testing and discussing new products.

Communication is at the heart of agile digital transformation. Both the business and IT units must work closely together on projects, in a spirit of transparency and collaboration. All of this increases the odds of turning out successful high-quality products and services.

Finally, agile digital transformations are only as successful as the people who create and implement them. Companies need to hold on to talented employees by allowing these workers to manage themselves, and giving them the space to reflect and be creative while also offering them new opportunities to learn.

Digital Transformation

Learn the common way to divide digital transformation into these four key areas.

There is no hard and fast rule about the four main areas of digital transformation. Some experts and companies define it one way, others another. But the following is a common way to divide up this subject into four key areas:

  • Business process. This is where a company brings in technology that allows it to transform its processes, services, and models. A good team plays a critical role in making this happen.
  • Business model. This is where the company uses new technology to both improve customer experience and drive the revenues of the business higher.
  • Domain. In this aspect of digital transformation, the business moves from one area of expertise into something new, like a product or service it has not sold before. Exploiting the technology associated with digital transformation opens new opportunities.
  • Cultural/ organizational. This crucial component of digital transformation involves making sure everyone in the company is on the same page and working together. This is especially important in companies where departments and teams often fight for scarce resources, and thus may not be used to cooperating as much as is necessary to make digital transformation succeed.

Other companies may divide digital transformation into different categories. But in most cases, these categories are focused on common themes, such as:

  • Using technology to create new efficiencies
  • Empowering employees throughout the company to give their best to the project
  • Opening new opportunities that would not exist without digital transformation
  • Serving customers by giving them a better experience

Concepts such as cloud computing, artificial intelligence (AI), and the internet of things (IoT) are among the latest developments surrounding digital transformation.

Digital transformation refers to using digital technology to better operate a business and meet customer needs. It really began in earnest when the internet took root three decades ago. Today, most businesses operate in ways that were unthinkable prior to digital transformation.

One hallmark of digital transformation is the determination to incorporate technology into all aspects of a business’ operations. In its infancy, this might have meant something as simple as moving from pen-and-paper accounting to using computer spreadsheets.

With time, the changes have become more sophisticated, including using data analytics to automate operations. Some people make a distinction between “digitization” — the simple process of converting information to digital form — and “digitalization,” which involves using digital technologies and information to literally transform how a business operates.

Innovation is another major aspect of digital transformation. Those committed to the concept of digital transformation are always looking at new ways to tackle old problems, or imagining how to use technology to create brand-new opportunities.

Concepts such as cloud computing, artificial intelligence (AI), and the internet of things (IoT) are among the latest developments surrounding digital transformation.

Digital transformation matters because it allows businesses to tap into cutting-edge technologies that help them to keep pace — and thrive — in an increasingly competitive marketplace. Digital transformation also helps businesses to speed up their processes and to increase the efficiencies of their operations. With the right technology, businesses become more agile and flexible, making them better able to quickly adjust to the changing needs of their customers.

While digital transformation might seem to be all about technology, the process goes nowhere without the people who make it happen, and the businesses that fund the technological changes.

A digital transformation project is an effort to replace a business’ older nondigital or manual processes with systems based on digital technology.

In doing so, companies hope to enhance customer experience with their brand, encourage operational flexibility and innovation within the company, and create efficiencies that drive down costs.

An important part of any digital transformation program is to implement technologies that serve your needs today, but that also can be used as the foundation for the changes that will inevitably — and ceaselessly — arrive in the years to come.

In addition to carefully researching your digital options, it is important to have all members of your team onboard and expressing their input about wants and needs the digital transformation should meet. Open communication across departments is key to any successful project.

This can be difficult in organizations where departments are used to competing with one another, but cooperation is a prerequisite for digital transformation success.

Once you have a better idea of what your goals are and how you plan to achieve them, create a roadmap to get you to those goals. Then, measure your progress to make sure you are on target, and that your plan does not need additional tweaks.

Virtually all companies that implement digital transformation will want to know what their return on investment is. In some cases, the ROI might not be immediately apparent.

But over time, companies that take this step will offer better service to their customers, and that should pay off in the form of loyal customers and new shoppers alike. Digital transformation can also create efficiencies that can help companies save money, as well as freeing up the best workers to make more productive contributions.

To keep up with fintechs, financial services companies must embrace cutting-edge digital transformation efforts.

Digital transformation is crucial in financial services. The rise of FinTech companies has brought with it a breathtaking pace of innovation and a more competitive landscape. To keep up, financial services companies–big and small–must embrace cutting-edge digital transformation efforts.

Perhaps nowhere is this more evident than in the rise of open banking, which allows businesses to share financial information with one another electronically. Third-party providers now can develop apps and services that benefit consumers of the original business.

Although digital transformation offers limitless opportunities, more established financial services companies may struggle to leave aging legacy systems behind and to embrace the future. Digital transformation is the kind of shakeup that can be unsettling in the short run, but it offers limitless potential over the long haul.

The big companies that long dominated the financial services industry understand that countless small and mid-sized competitors–and potential partners–now have joined the fray. Embracing digital transformation is no longer an option, it is a necessity.

Today’s customers expect to get real-time notifications on activity, or to be able to access a robo adviser 24/7. In the future, they are likely to expect even more, such as being able to access all their accounts in one place, regardless of how many financial providers they have. Digital transformation is the key to meeting these customers where they are so a business can serve their needs.

Measuring the progress of your digital transformation project is crucial to keeping it on track.

Having a good digital transformation plan is paramount, as is employing the right folks to do the job. But you can’t stop there.

Measuring the progress of your digital transformation project is crucial to keeping it on track. Successful businesses constantly ask the hard questions about their digital transformation schemes. That way, they can figure out where they truly stand.

For example:

  • How do your customers like the new technologies you have introduced?
  • Have the changes you made inside the company boosted productivity?
  • Are the new digital services boosting revenue?

Check to see if you are gaining new customers and holding on to loyal ones. Monitor the customer experience on your site. Are people easily navigating through the site, or are they struggling to understand where they should go next? The answer to that question tells you if you can briefly stand pat, or if you need to make changes soon.

Also, look inside the company to see if employees are using the new technologies you have implemented to dream up innovations, including new product ideas and ways to cut costs. What are you hearing about your new digital transformation product? Is it boosting team spirit, or sapping it?

Measuring your progress can tell you what you have done right, and where you have come up short. That way, you can continue to push ahead down productive avenues, and tweak or overhaul processes to fix the things that are not going well.

Deciding exactly how to measure your progress is rarely easy, but it’s crucial to have some type of yardstick that tells you which adjustments you must make.

Often known as IT service management (ITSM) strategy, it is being forced to stay on its toes in a fast-changing and more competitive marketplace.

Service management is the basket of capabilities and methodologies — from applications to connectivity — that IT organizations employ when planning and delivering services, both to a business’ customers and to the company’s employees.

Often known as IT service management (ITSM) strategy, it — like every other aspect of business today — is being forced to stay on its toes in a fast-changing and more competitive marketplace. That means remaining flexible and quickly responding to the ever-evolving expectations of customers.

The best way to do this is to move your processes into the world of digital transformation. In doing so, ITSM becomes digital service management (DSM). With a DSM system, you upgrade service management through the use of technologies such as artificial intelligence (AI), cognitive computing, the internet of things and more.

DSM allows for your business to be more proactive and to use new technologies to exploit opportunities. Technology also can be used in other ways — such as via virtual agents — that reduce the burden on staff members to free them to make other contributions.

When automating your DSM, investigate which tools make the most sense. Picking the wrong option here can cause big problems down the road.

Finally, remember that the only constant these days is change. Technology and competition are moving so fast that you need to stay nimble. Having longer-range plans is great, and so is sticking to them when you can. But you also must be ready to react and change course as the marketplace changes.

A digital transformation specialist is someone who advises businesses looking to make a bigger commitment to technological change within their organization. The person in this role helps businesses achieve their goals.

Sometimes known as a digital transformation consultant, the person in this role helps businesses zero in on the right plan, leads the business through discussions about how best to achieve their goals, and recommends options for achieving the goal.

The role has been formalized to the point that Cisco and Arcitura offer digital transformation specialist certifications.

A digital transformation specialist is likely to start a job by becoming familiar with a company’s current systems and looking for places to improve performance. The specialist may work with many people in an organization in hopes of understanding what different departments need. The specialist then strategizes about how to get everyone on the same page.

Once the digital transformation specialist understands a company’s wants or needs, he or she can help the company draw up a plan for achieving its goals. The specialist also will take an active role in helping lead the project to fruition.

The role of a digital transformation specialist is growing in importance. Companies often struggle to stay on the cutting edge of ever-evolving technology. A digital transformation specialist has the skills to help craft and implement changes quickly, keeping companies competitive by helping them marry existing and emerging technologies.

Digital transformation specialists can work as full-time employees, independent contractors, or for consulting companies.

These are just three of many examples of how investing in digital transformation can bring a big ROI.

When a company is considering making a commitment to digital transformation, you can bet that trying to figure out the return on investment (ROI) of such a venture is at the forefront of the leaders’ minds.

Digital transformation can indeed offer a large ROI. Every business has goals that are unique, and what is considered to be a valuable ROI will vary from company to company. But here are some examples of ROI from digital transformation.

  • A large company decides to automate requests from its workers for business supplies. This removes the need for the employee to send an email or stop by the HR department to make the request, then to follow up to make sure the request has been approved. Instead, an automated form substantially slashes the amount of employee time devoted to the process, saving the company many hours that can be freed up for other activities.
  • A company creates a social media page that draws in customers to interact with the company brand. Not only does this help forge a deeper relationship with the customer, but it offers a platform for customers to talk about what they love about the company’s brand and to share stories of positive experiences with the company.
  • A retailer launches mobile video ads that try to build a stronger relationship between the customer and the company brand. Such ads are sent directly to the customer’s phone, which advertisers have characterized as a more intimate delivery device than a TV or even a computer.

Those are just three of many examples of how investing in digital transformation can bring a big ROI.

For starters, drivers of digital transformation are companies that understand that it offers many ways to enhance a business in the marketplace.

Digital transformation is the process of integrating digital technology to all areas of a business. It is front and center for many businesses today. But who is driving digital transformation?

For starters, it is companies that understand digital transformation offers many ways to enhance the place of a business in the marketplace. Some of the perks of digital transformation are:

  • It helps companies stay on the cutting edge. A business that taps into digital transformation can use tools such as cloud computing, artificial intelligence (AI) and the internet of things (IoT).
  • It promotes innovation. Digital technology helps companies solve old problems and create brand-new opportunities.
  • It drives greater efficiencies. Digital transformation makes company processes faster and creates other efficiencies in their operations. Businesses become more agile and flexible in meeting customer demand.
  • It can save money. Companies that use digital transformation increase their efficiencies and free up resources for other things.

Customers also are driving digital transformation. Today’s customers have many options when looking for goods and services. Increasingly, these customers want products that meet their needs in ways that are most interesting and convenient to the customer.

Businesses are responding to these demands by using digital transformation to become more agile and flexible, making them better able to quickly adjust to the changing needs of their customers.

These companies understand that they must remain on the cutting edge, developing appealing products that are as good as — or better than — the offerings of competitors.

Agile digital transformation is a philosophy that adheres to the notion that continuous innovation must drive digital transformation.

Businesses that successfully implement digital transformation projects understand the need to continuously change to meet the shifting demands of consumers and the market. Agile digital transformation is a philosophy that adheres to the notion that continuous innovation must drive digital transformation.

Continuous innovation allows smaller changes to add up to bigger changes over time. Companies that embrace agile digital transformation feel the freedom to launch new products, and to take what they have learned from those launches to improve their offerings going forward.

Agile digital transformation puts a premium on the flexibility to change initiatives — even in midstream — if it will improve them. There is a commitment to continuous improvement — both within the team and in the products they are producing.

At the same time, those committed to agile digital transformation keep an eye on the bottom line, making sure their projects stay within budget. They also try to reduce the risk of failure by regularly testing and discussing new products.

Communication is at the heart of agile digital transformation. Both the business and IT units must work closely together on projects, in a spirit of transparency and collaboration. All of this increases the odds of turning out successful high-quality products and services.

Finally, agile digital transformations are only as successful as the people who create and implement them. Companies need to hold on to talented employees by allowing these workers to manage themselves, and giving them the space to reflect and be creative while also offering them new opportunities to learn.

Digital transformation is the process of integrating digital technology to all areas of a business. Unfortunately, many companies face barriers in bringing this goal to fruition.

Digital technology is constantly changing, and businesses must do all they can to keep up with these trends. Digital transformation is the process of integrating digital technology to all areas of a business. Unfortunately, many companies face barriers in bringing this goal to fruition.

Some of this simply comes down to basic human fear. Many in leadership positions are comfortable with their familiar systems and do not want to deal with the challenge of selecting, implementing and learning something new. They may be reluctant to leave their legacy system behind.

Getting all the departments in a business to work together on the project can be another obstacle. This is particularly true if the teams on the business are “siloed” and compete with one another for resources.

Not having the right people in place to make the transition successful or being locked into a workplace culture that dislikes risk also can cripple digital transformation efforts.

Some businesses may lack the budget to fund a rapid digital transformation. And of course, increasing your digital presence always raises the risk of cybersecurity threats.

All of these obstacles can be overcome if a business makes digital transformation a priority. Sometimes, businesses can be hesitant to pursue such a strategy because they don’t see a clear return on investment.

So, technology experts urge businesses to create clear goals that digital transformation can help them achieve. Then, as these technologies are implemented, it is important to track and measure how digital transformation is helping the company reach its goal.

Keeping all members of the business team focused on the long-term goals of digital transformation — instead of focusing on the short-term difficulties — can help solidify and grow your team’s commitment to the company’s efforts to upgrade its technology.

The cloud has revolutionized how all of us — including businesses — use technology. Today, many companies are harnessing the power of the cloud to cut costs and open up new opportunities.

When a business uses the cloud, data is maintained, stored, and managed on a network of internet-based servers. The cloud offers a reliable and secure platform for a business to build out digital services that can better meet customer needs and boost the company‚ bottom line.

In addition, moving to the cloud offers businesses the option of paying only for what they use, which can save them money.

There are various types of cloud services, including:

Software-as-a-Service (SaaS), where a third-party cloud provider hosts software applications that customers can access. Examples include email and calendaring.

Infrastructure-as-a-Service (IaaS), which is an instant computing infrastructure managed over the internet. With this service, businesses pay only for what they use.

Platform-as-a-Service (PaaS), which gives a business access to computing resources such as storage, security, network components, and servers. It differs from IaaS in that it includes middleware, business intelligence services, and more. PaaS supports the entire web application lifecycle, from building and deploying to updating.

Cloud computing helps companies cut the cost of maintaining in-house IT resources. With a cloud-based infrastructure, multiple workers on various teams can collaborate on projects remotely and without hierarchies.

While experts generally laud the role of cloud computing in digital transformation — saying it gives companies more flexibility, helping them innovate and scale more efficiently — some worry that some business leaders instinctively gravitate toward models that have been successful in the past, but that soon might be inadequate to meet a business’ needs amid changing market conditions.

To avoid such a fate, company leaders must make sure all their departments offer input before deciding on the right cloud system for the company.

Loan Platforms

Today’s lenders routinely use loan origination software (LOS) to streamline the lending lifecycle and make it more efficient for both lenders and borrowers.

LOS is a reaction to the traditional loan application process, which has tended to be both involved and time-consuming, requiring lenders to make many emails and phone calls and to complete extensive paperwork. Responding to lenders’ many requests for documentation made the process tedious for borrowers as well.

Using LOS, lenders can easily determine accounts that belong to each customer and the balance on those accounts, allowing them to identify the greatest lending risks. LOS should capture loan applications for review and ensure that customers apply for the right loans based on their needs and qualifications. Given the volume of documents processed during a loan application, document tracking becomes a necessary feature of LOS. The software organizes documents in a central repository that includes applications, income reports, and identity verification documents.

When underwriting is required, LOS can automate much of the process, allowing lenders to easily define their own underwriting rules and quickly assess a customer’s ability to repay a loan. LOS also contains disbursement-management features that can track the payments that lenders make to customers after approving their loans. The software is capable of monitoring payments that occur through an online system, by wire transfer or physical check.

LOS optimizes customer management by harvesting client information from multiple sources and storing it in a central location for convenient access. Lenders also can manage sales leads more easily with a LOS that can keep the information in one place. Post-sales, LOS can automatically generate invoices and send them to customers via email or SMS.

A loan origination system automates the process of a loan from application to disbursement–or rejection–of the loan.

At one time, this process was done manually. But now, the loan origination system can automate and manage the steps, saving both the lender and the customer time by improving the accuracy and efficiency of the loan origination.

The process differs depending on the nature of the loan. A mortgage loan will move through the process in one way, a personal loan in another. In addition, one lender may handle loan origination differently from another.

Although the process differs from lender to lender, some things you can expect include:

Pre-qualification. This is where the lender determines if the borrower is eligible for the loan and checks the borrower’s background. The borrower must submit a lot of documentation at this point, and a loan origination system can help move things along quickly and smoothly.

Application and application processing. During the application phase, the borrower actually applies for the loan. Digital portals and self-serve portals can speed up this part of the process. Application processing once took a long time, as the loan application had to pass through multiple departments. But a good LOS can cover a borrower’s information quickly, raising red flags if they appear.

Underwriting and credit decision. This is where a lender looks at your financial picture and decides how much to lend. Many different scoring mechanisms come into play, and the right LOS can zip through them. The credit decision follows, determining whether or not a loan is issued to the borrower.

Quality check and funding. In the quality check, the lender makes sure the process is compliant with laws. If all is in good shape at this time, the funds are released.

Loans traditionally have taken a month or more to move through the process. But a good loan origination system can speed up how long it takes to be approved.

LOS should integrate with a lender’s point-of-sale & mortgage servicing software, allowing information to flow seamlessly between the lender & borrower.

Mortgage lenders routinely use software to originate their loans, which can improve efficiency and save money. However, the large number of loan origination solutions currently on the market make the selection process challenging. While most loan origination software (LOS) share many of the same features, some of them serve to distinguish the best solutions from the others. These features include comprehensive vendor solutions, borrower communication hubs, and flexible pipeline management.

LOS should ideally integrate with a lender’s existing point-of-sale (POS) and mortgage servicing software, allowing information to flow seamlessly between the lender and borrower. This capability allows the parties to share loan documents like credit information and loan plans. An LOS that’s an end-to-end solution is thus able to handle the entire mortgage process from the initial application to the final payoff.

Regular communication with borrowers is essential for ensuring a fast, easy and transparent mortgage process. An LOS with an effective communication hub allows borrowers to continually monitor the loan application process from the same portal, instead of using separate portals with their own logins. Borrowers can also use this feature to apply for a mortgage, view the lender‚ disclosures and submit their reporting documentation.

A loan application is often complicated by the number of participants it requires. An LOS that automates the pipeline management process facilitates an application’s movement between these parties, from originator to closer. Solutions with this capability typically use status codes to ensure an application doesn’t move to the next stage until it’s ready. The best LOSs should also automatically send notifications of status changes to users, ensuring they remain up-to-date on the application’s status. LOSs should also allow users to customize the criteria for sending the application to its next destination, further improving the pipeline’s efficiency.

Each business will have its own priorities for the features it needs in upgraded loan origination software. Once you have a clear picture of your needs, begin reaching out to loan origination software vendors so you can comparison shop.

Deciding when to upgrade your loan origination software is not easy. On the one hand, modernizing your software can open new opportunities for your business. But upgrading can cost you money in the short term, and will likely create a few headaches for staff during the transition to the new system.

However, at some point, you will need to take the plunge. Outdated legacy systems can lead to inefficiencies, and prevent you from exploiting new opportunities to generate revenue. Once you decide to upgrade your loan origination software, your first major decision will be to select the software that is right for your business.

Good loan origination software helps you with many of the key aspects of lending, from origination through underwriting and closing. The right loan origination software should create greater efficiency, boosting accuracy and speeding your ability to make credit assessments. It also should offer the flexibility to customize the software to best meet your needs.

Perhaps most importantly, the software should improve your ability to do business in a way that boosts the bottom line. It should help you explore new opportunities to generate revenue while helping you cut costs.

Each business will have its own priorities for the features it needs in upgraded loan origination software. Once you have a clear picture of your needs, begin reaching out to loan origination software vendors so you can comparison shop.

In some cases, you might decide that the best way to upgrade your loan origination software is to build your own proprietary system. Although upfront costs can be high, you should save money over the long haul because you won’t have to pay the expenses associated with third-party software. In addition, you will have loan origination software that is specifically tailored to your precise needs.

Important LOS features include comprehensive vendor solutions, borrower communication hubs, and flexible pipeline management. Read on for other key differentiators between mortgage LOS solutions.

The large number of loan origination software (LOS) solutions on the market can make the selection process challenging for mortgage lenders. While there is little difference in the features offered by these programs, some LOS solutions do a superior job of making their features user-friendly and compatible, and fully integrable with other lending office software. Important LOS features include comprehensive vendor solutions, borrower communication hubs, and flexible pipeline management.

Ideally, LOS should integrate with a lender’s existing point-of-sale and mortgage-servicing software. A fully integrated software platform will allow information to flow seamlessly between the lender and borrower, enabling the parties to share loan documents such as credit information and loan plans. An LOS should offer an end-to-end solution that is capable of handling the mortgage-fulfillment process from the initial application to the final payoff.

Regular communication with borrowers is essential to ensure a fast, easy and transparent mortgage process. An LOS with an effective communication hub allows a borrower to monitor the loan application process from the same portal used by the lender, instead of having to create a separate portal and log in. Borrowers also can use this feature to apply for a mortgage, view the lender’s disclosures, and submit the requested documentation.

An LOS that automates the pipeline management process facilitates an application’s movement among the many parties who review an application, from the originator to the closer. Solutions with this capability typically use status codes to ensure that applications do not move from one stage to another until they are ready. The best LOS solutions should automatically send notifications of status changes to users, ensuring that they remain up-to-date on their applications’ status. LOS also should permit some customization of the user criteria for moving an application to its next destination, further improving the pipeline’s efficiency.

A loan origination system (LOS) helps bolster the processing and application of a loan product.

The right LOS system has software that can quickly perform actions that once were done manually. It also brings a level of efficiency to the process that can save time — and money — for everyone involved.

The right LOS can improve your business in several ways. It can:

  • Increase the speed and accuracy of your credit assessments
  • Give you more flexibility and allow for greater customization
  • Promote greater collaboration
  • Simplify the compliance process
  • Boost your bottom line

Microservices, APIs, machine learning, artificial intelligence and other technologies in a good LOS help trim processing time and increase efficiency. They also can cut the cost of processing a loan.

Automation of processes is one of the key advantages of implementing a good LOS. Without an LOS, the loan origination process can bog down due to the extensive amount of documentation that is required. That means the origination process can stretch out to a month or more.

Because an LOS automates much of this work, loan origination times can speed up significantly. Loan origination systems automate data collection from the borrower and verify a borrower’s documents digitally. The underwriting process also can be automated.

A good loan origination system might make the process of documentation easier for customers by pre-filling some of the data needed. The system also might use APIs that integrate with other apps and services, streamlining the process.

Every business has its own individual needs, so the LOS that is right for one business might not be best for another. However, there are some qualities that many of the best systems share. For example, the best loan origination systems are likely to have cloud-based infrastructure and customizable dashboards.

The best loan origination software differs depending on your company’s goals. Choosing the right software can open new opportunities for your business, so this is a decision that requires a lot of thought and care.

To select the right software, look for a product that offers the flexibility to customize the software to best meet your needs, and to grow with you as your company grows.

The loan origination software you choose also should work well with your other existing software. The cost of the new software should fit within your budget, and the software itself should not be difficult to implement.

The overriding goal of purchasing mortgage loan origination software should be to help you do business in a way that boosts the bottom line, allowing you to explore new opportunities to generate revenue while also helping you cut costs.

Once you have a clear picture of your needs, reach out to loan origination software vendors so you can comparison shop. Other things to keep in mind in finding the right loan origination software include:

  • How well does it automate basic steps of the loan origination process, from pre-qualification and loan application to underwriting and loan filing?
  • How secure is the software? Does it offer adequate protection of company and customer information?
  • Does it offer regular updates?
  • Does it come with an option to “test drive” the software before committing to it?

After you shop, you might decide that building your own proprietary system is the way to go. Upfront costs can be high, but you should save money over time because you won’t have to pay the expenses associated with third-party software. In addition, this type of loan origination software will be specifically tailored to your needs.