The loan origination system (LOS) has become more than a lending tool—it’s a strategic differentiator. As borrower expectations for speed, transparency, and personalization continue to grow, credit unions with legacy LOS platforms are finding it harder to keep up.
The opportunity to close this technology gap is significant. According to Astute Analytica, the global LOS market is expected to approach $10 billion in the next five years, with innovation fueled by automation, AI, and digital transformation. To compete in today’s fast-paced lending environment, a modern LOS must deliver more than basic functionality. It should act as the engine behind smarter decisions, faster funding, and stronger engagement.
Here are six must-have capabilities credit unions should prioritize when evaluating a new LOS.
- Unified loan and account origination
Pairing loan and account origination on a single platform unlocks speed, efficiency, and a better member experience. Integrated solutions streamline identity verification, credit checks, fraud detection, and data entry—eliminating duplicative work while enabling faster cross-sell opportunities. With the right platform, accounts and loans can be opened in minutes, not hours.
- Smarter decisioning, powered by AI
Loan decisioning should be fast, accurate, and adaptable to the credit union’s unique lending strategy. Traditional decision engines rely on limited attributes and often require manual reviews. Meanwhile, advanced decision engines powered by artificial intelligence (AI) and machine learning (ML) analyze a broader range of data, resulting in more accurate risk assessments and faster, automated approvals. These engines also make more nuanced decisions, assigning appropriate loan amounts based on more comprehensive data.
- Flexible workflow configurability
The right system comes with the administrative tools to empower credit unions to customize steps and decision points, tailoring the workflow by loan type, channel, and internal procedures, without requiring extensive coding or IT support. A user-friendly interface with low-code or no-code options enables lenders to build adaptable workflows, while API capabilities provide deeper customization when needed. This flexibility enables the LOS to evolve alongside the credit union’s changing needs.
- Automation that saves time and reduces errors
Automation plays a crucial role in improving efficiency, lowering operational costs, and reducing manual workloads. A modern LOS should support automation across various manual tasks, such as email notifications, queue management, and data exports, allowing staff to focus on higher-value tasks. For example, automation can use AI to classify, analyze, and extract data from documents like pay stubs, W2s, and credit reports. By leveraging automation tools, credit unions can minimize human errors and accelerate loan processing times.
- Built-in integration capabilities
A modern LOS shouldn’t operate in a silo. It should integrate seamlessly with core banking systems, CRMs, and document management tools, while also supporting API connections to third-party providers. This opens the door to enhanced fraud detection, member communication platforms, and advanced analytics that drive better business decisions.
- Multichannel communication tools
Members want updates on their terms—whether by email, text, or instant message. Credit unions that meet this expectation build stronger relationships and reduce application abandonment. In fact, research from Soprano Design shows that 90% of texts are read within three minutes, and open rates are five times higher than email. That’s a powerful case for adding SMS to your LOS toolkit.
Putting it all together
A next-generation LOS does more than originate loans—it transforms the member experience and powers long-term growth. With the right technology, credit unions can reduce friction, boost efficiency, and position themselves to compete and win in an increasingly digital lending environment.
Still wondering what makes a LOS worth the investment? Get the guidance you need to make your next platform decision with confidence. Download our eBook, A practical guide to selecting the right loan origination solution, for additional insights and evaluation criteria.
