Loan Origination Software Market projected to reach $12.2 billion by 2032, experiencing 10.2% growth
Allied Market Research published a report, titled, "Loan Origination Software Market by Component (Solution and Service), Deployment Mode (On-premises and Cloud), and End User (Banks, Credit Unions, Mortgage Lender, and Brokers, NBFCs, and Others): Global Opportunity Analysis and Industry Forecast, 2023–2032". According to the report, the global loan origination software industry was valued at $4.8 billion in 2022 and is projected to reach $12.2 billion by 2032, growing at a CAGR of 10.2% from 2023 to 2032.
LOS stands for loan origination software. It's a specialized software that automates and streamlines the process of applying for and approving loans for lending institutions. Banks, credit unions, and mortgage lenders are all using loan origination software to manage loan applications and approval. LOS acts as a central hub for managing everything from the initial application to the final loan approval.
Prime Determinants of Growth:
The global loan origination software market is experiencing growth due to several factors, including an increase in the adoption of AI, machine learning, and blockchain technologies, improved customer experience, and technological advancement in loan origination and management. On the other hand, the concerns regarding data security and compliance and the rise in stringent government rules & regulations hinder market growth. Moreover, the collaboration with FinTechs enhances ample opportunities for market growth in the future.
COVID-19 Scenario:
The COVID-19 pandemic significantly influenced the loan origination software market, causing both short-term disruptions and long-term shifts in the industry. As businesses faced economic uncertainty and financial constraints, the demand for loans surged, particularly for government-backed programs aimed at providing relief.
Moreover, providers have chosen partnership and collaborative approaches to increase their market share or expand their product offerings. For instance, in September 2020, the Swedish Export Credit Corporation teamed with FIS to Digitalize Its Commercial Lending Platform. The FIS platform is expected to provide a single, end-to-end credit life cycle solution to enable a streamlined process for deal structuring, risk assessment, and execution.
The solution segment to maintain its leadership status throughout the forecast period-
Based on component, the solution segment held the highest market share in 2022, accounting for more than three-fifths of the global loan origination software industry revenue, and is estimated to maintain its leadership status throughout the forecast period. This is due to several important reasons and opportunities. As technology advances and the lending business evolves, loan origination software provides a variety of benefits and opportunities for both lenders and borrowers. However, the service segment is projected to manifest the highest CAGR of 12.0% from 2023 to 2032. Because online lenders and fintech firms are at the cutting edge of digital lending, their loan origination service is designed to provide a smooth online experience and speedy approvals. In addition, credit unions can use loan origination software to provide personalized lending options and services to their members, which are expected to positively impact market growth.
The on-premises segment to maintain its lead position throughout the forecast period-
Based on deployment mode, the on-premises segment held the highest market share in 2022, contributing to more than three-fifths of the global loan origination software market revenue, and is expected to maintain its lead position throughout the forecast period. Financial institutions frequently have legacy systems and databases that must work in combination with loan origination software. On-premise solutions can be more directly connected with current infrastructure, making data and feature sharing between systems easier. Therefore, integration with legacy system, customization, data control, and security of the on-premise segment drive the growth of the loan origination software market. However, the cloud segment is projected to manifest the highest CAGR of 11.7% from 2022 to 2032. This is due to the ease of implementation, scalability, and reduced need for in-house IT infrastructure. Furthermore, cloud-based loan origination software could interface more easily with other cloud-based technologies including customer relationship management (CRM), credit scoring, and document management systems. This integration improved the loan origination process's efficiency and efficacy.
The banks segment to maintain its leadership status throughout the forecast period-
Based on end-users, the bank's segment held the highest market share in 2022, accounting for around one-third of the global loan origination software market revenue, and is expected to maintain its leadership status throughout the forecast period. This is due to different types of banks focusing on various kinds of loans including personal loans, business loans, or mortgages that require specialized software to handle these specific processes. This demand drives the growth of the loan origination software market, providing tailored solutions for each banking segment. However, the mortgage lenders and brokers segment is projected to manifest the highest CAGR of 13.7% from 2022 to 2032. Owing to the ease of implementation, scalability, and reduced need for in-house IT infrastructure. Furthermore, the growth in the housing market and the increasing number of people looking for loans have created a higher demand for efficient processes. Loan origination software helps lenders and brokers handle this demand smoothly.
North America to maintain its dominance by 2032-
Based on region, North America held the highest market share in 2022, contributing to around two-fifths of the global loan origination software market revenue, and is expected to maintain its dominance during the forecast period. This is due to the increasing use of mobile devices, loan origination software that offers mobile-friendly interfaces and supports mobile applications can attract a wider customer base. These trends are creating a dynamic landscape for loan origination software in North America. However, the Asia-Pacific region is expected to witness the fastest CAGR of 13.4% from 2023 to 2032. Owing to the rise of alternative lending models, such as peer-to-peer lending and digital platforms, created opportunities for specialized loan origination software. These platforms require versatile software that can accommodate unique underwriting criteria, integrate with various data sources for accurate risk assessment, and ensure compliance with diverse regulatory frameworks across the region.
Leading Market Players: -
• Bryt Software LCC
• Finastra
• Floify LLC
• ICE Mortgage Technology, Inc.
• LendingPad Corp.
• LoanPro, LLC
• Nelito Systems Pvt. Ltd.
• Software Advice, Inc.
• nCino, TurnKey Lender, Inc.
The report provides a detailed analysis of these key players in the global loan origination software market. These players have adopted different strategies such as expansion, merger, and product launches to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, product portfolio, and strategic moves of market players to showcase the competitive scenario
Key Findings of the Study
• By component, the solution segment led the loan origination software market growth in terms of revenue in 2022.
• By deployment mode, the on-premise segment accounted for the highest Loan origination software market share in 2022.
• By end user, the bank's segment accounted for the highest Loan origination software market share in 2022
• By region, North America generated the highest revenue in 2022.