Loan Origination Software: Best-in-Class or All-in-One? This may end the debate.

Mortgage lenders, credit unions, and banks looking for a loan origination system find themselves having to choose between a best-in-class and an end-to-end solution. You’ll always hear spirited debates about this at every mortgage banking conference..

For LOS vendors, the choice comes as no real surprise though. When it comes to best-in-class POS providers, we observed lenders routinely tackling deficiencies in their business models. This was especially true after the digital mortgage started gaining momentum and new providers were popping up left and right, making it even more difficult for lenders to discern what was ideal for them.  More providers meant more interfaces to establish and thus more complexities.

OpenClose took a close look at those crossroads, and after performing extensive market research, it was clear that we could offer more value and a better price while all but erasing the typical integration issues. We consolidated the LOS and POS experience into our already comprehensive end-to-end enterprise-class LOS platform.  The feedback we received from customers was phenomenal.  (We even won an Innovation Award for being the industry pioneer behind that idea.)

Ultimately, the result was few players involved in the same process, fewer contracts to deal with, fewer pricing models, and fewer instances of integration breakage.  What’s more, it was less expensive to implement as eliminating unnecessary waste (vendors) from the mortgage process wasn’t a bad thing, if the all-in-one provider handles that same function very effectively and at a lower cost.  Creating the same experience from a single-source vendor is exactly what OpenClose did to help solve the best-in-class POS provider vs. all-in-one provider debate:  automation of POS through LOS — from start to finish — via one provider.

Now, APIs have definitely made it easier to interface with disparate technologies, but lenders still face challenges when working with multiple providers as APIs aren’t t cure-all answer to integration problems. It’s a bit of a double-edge sword as you can have an API, but if it is older or not robust enough, lenders can still encounter frustrating interfacing issues. There are quite a few new LOS providers out there that market themselves as next-gen, highly contemporary platforms, but they are lacking in many areas — with a solid RESTful API suite being one of them: like the suite OpenClose offers.

Now, we are not saying that POS digital mortgage vendors don’t add value.  They do.  And we still seamlessly integrate with them even though we have our own, premier front-end solution for loan officers to aid borrowers as well as a consumer direct model for borrower self-service. However, we are discriminating with how flexible their APIs are, as one of our value propositions is that we provide second-to-none support to our customers.  If any provider appears to have a light API or does one-off custom integrations, we shy away from it.

It’s clear that the industry wants to do business with the end-to-end/all-in-one vendor, but best-in-class/best-of-breed vendors serve their purpose, too, as we rely upon our integration partners to do what they do best in providing value to the lender.  From digital mortgage POS automation onto communication and exchanging first-party data with the LOS, it’s just easier, more cost effective, and reliable using a single-source. The lender only deals with one vendor and thus one contract, SLA, contract, and pricing arrangement.

PROGRESS in Lending recently conducted a survey asking readers: ‘What type of vendors do lenders prefer: best-in-class or all-in-one?’  The results revealed a dominating preference. Some 66% preferred an all-in-one provider to 34% wanting a best-in-class provider. This new survey of loan origination professionals seems to put that debate to an end.