Lenders are well-acquainted with loan origination systems, for better or for worse. This fintech solution is widely used to support traditional loan origination processes, providing a reliable structure for managing workflows and data, and enforcing rules that govern loan approvals. But this structure can also be a weakness of LOS technology—especially for nontraditional lenders seeking better flexibility in how they use this solution to support business activities.

At first glance, a business process management tool may seem like more of the same, providing similar structure and rules in support of loan origination activities. However, there are crucial differences between LOS and BPM software. Before you commit to one type of solution, take a few minutes to learn about the subtle differences between these two business solutions and how they might be used together to deliver greater value to your organization.

How LOS and BPM Software Differ

One of the biggest distinctions between LOS and BPM software is the intended use of each solution, which determines its functionality and customization options. Traditional LOS software is built for the specific purpose of supporting loan origination, but in most cases, this software offers rigid functionality that doesn’t accommodate use cases more commonly seen with emerging lending markets and/or nontraditional lenders looking to disrupt more traditional markets.

Comparing LOS and BPM Software

LOS

• Built specifically for loan origination
• Fixed features and functionality
• Can’t accommodate innovative or unorthodox loan origination needs
• Popular among traditional lenders

BPM

• Can be customized to support any business process
• Fully customizable features and functionality
• Can support emerging lending processes, such as loans to build solar infrastructure
• Preferred by nontraditional lenders

Fast-evolving industries such as solar, direct-to-consumer, and other verticals have different lending needs that an LOS solution might not be able to accommodate. With solar lending, for example, there are unique workflow tasks that need to be integrated into the loan original process, including document reporting for local PACE program requirements and local agency permit processes. Traditional LOS solutions often don’t have the customization options to account for these tasks, making an LOS an inefficient solution for managing these lending workflows.

Business process management, by contrast, is much more open-ended. Although a BPM solution isn’t designed to support loan origination out of the box, it can be customized to perform every function offered by a traditional LOS, while also easily accommodating new business processes that an LOS can’t handle.

Challenges of Using BPM vs. LOS

There’s a reason nontraditional lenders still opt for a limited LOS solution instead of seeking out something that suits their specific needs: The cost of a fully customized solution has traditionally been much higher than the cost of licensing an existing LOS and making do with its inherent limitations.

In a world of limited and imperfect choices, lenders have often been forced to go with the more affordable option. And the cost of developing a business process management solution from scratch would be too cumbersome for many small companies to attempt, especially if they want to ensure that all of their custom integrations and features are included.

But those options are evolving thanks to no-code BPM solutions that alleviate the financial cost and resource burdens of custom BPM development.

How Decisions Can Help

Because Decisions offers a BPM solution that can be customized to a lender’s needs, it can provide all of the services you might seek from an LOS, and more. This is possible as soon as the BPM workflows have been created according to the lender’s unique needs.

Lenders also have the choice to use Decisions exclusively to manage their business processes, or to integrate Decisions on the back end of an existing LOS solution to enhance the functionality of the LOS while retaining its user interface and existing features. This can be an easy way to enhance the capabilities of your LOS without having to train your staff on how to use a new business solution.

And, as your organization’s needs evolve, BPM software makes it easy to analyze performance and implement changes to your business process workflows, delivering long-term value to support your organization’s success.

Limitless Lending Practices

Thanks to BPM software, emerging lenders can enter new lending verticals without being restricted by software solutions that can’t keep up with their evolving needs. Whether through combining BPM with LOS software or replacing an LOS solution entirely, no-code BPM provides the flexibility and agility required to support any and all loan origination needs a lender might face.

Learn more about the benefits of BPM to lenders by downloading our white paper, Beyond Loan Origination Systems.