LOS admin is probably costing lenders more than they realize. Most mid-sized lenders have one – or a few – LOS administrators on staff to handle daily needs and upkeep. The larger the lender and the older the platform, the higher the cost, with some lenders paying in the millions just to maintain and extend their systems.
This admin essentially creates a “platform tax” – a hidden cost lenders have to pay in addition to what their tech costs. With origination costs already high, lenders are looking for opportunities to save.
While some LOS admin is absolutely necessary, some of it may be due to inefficiencies and it’s critical to know the difference. Identifying and eliminating unnecessary overhead can help cut the “platform tax” that’s draining lenders’ time and resources.
What’s Necessary?
LOS administrators play a vital role in keeping lending operations compliant and functional. The industry is constantly evolving, and staying aligned with regulatory updates, new loan products and form changes is not optional. Each of these shifts affects workflows, system logic and documentation. Someone must ensure the LOS reflects those changes, especially when the platform itself does not automatically adapt.
Someone also has to ensure that, throughout all these changes, data stays consistent everywhere. From application to AUS to investor file, numbers like borrower income have to stay the same. This is essential in protecting from fallout or rework. Access control and audit will always be necessary admin, too. This work ensures data stays safe and there’s a clear trail of who handled what and when.
A good admin will shorten cycle times, reduce defects and help the front line close more loans without extra work. A great admin will also help reduce risk.
What’s Not?
The value of a good admin is clear, but all too often they are held back by work that has little to no business impact. Fixing integrations, remapping fields and retesting the same workflows again and again after each release requires a significant amount of time that could be spent elsewhere.
Many simple updates and configurations should be straightforward, but the platforms make them complicated. Tasks that should be point and click take custom coding. Every gap in the system eats away at the admin’s ability to protect the business and make larger improvements.
The unfortunate reality is, much of the time spent on admin is not spent making improvements, but fixing what’s wrong with the technology that was supposed to make them more efficient.
Adding fields can take hours if they have to be manually wired to multiple screens and reports.
New releases can break custom rules if event timing or field IDs changed. Integrations can require daily babysitting to keep from failing and reporting can demand copied data sets if the model is closed or inconsistent.
The list goes on, but the end result is the same: most of the work LOS admins are doing is more like triage and less like the preventative medicine they’re supposed to be.
What’s the Cost?
The cost is more than just the admin’s salary and how much time they spend on unnecessary work. Lenders should also consider the time sales and ops teams spend waiting for changes or re-keying the same data. They can be slow to market when it takes weeks to push a workflow fix. Then, there is the ongoing technical debt from quick fixes that are never turned into permanent solutions.
Everything adds up quickly. Each custom, one-off project make upgrades painful down the road. Major releases can require months of retesting. Every seemingly small element adds up to big costs. Not just licenses, but the people and time that get sucked into keeping the LOS running.
What Should Lenders Look For?
So, how can lenders make sure admins are doing value-added work instead of chasing down problems? There’s a simple test that can help them identify their platform-induced work and hunt down the “platform tax.”
To start, take three recent changes – maybe a new fee, workflow tweak or report. Look at how long each took from request to production. See how many people had to touch it. Ask how much testing was needed and find out if anything else broke along the way. If the answers to these show long delays, lots of handoff, heavy testing or breakage, those are all platform problems. The goal is always quick turns, clear ownership and little testing. The right platform will naturally support that goal rather than impede it.
LOS admin is necessary, but not all of its costs. Lenders aiming for efficiency have to know the difference between the work that adds value and the work that’s costing it. Admin’s job should be more about optimizing their tech than repairing it. If admin costs are high, it’s time to take a critical look at the role the platform plays in driving them up.
Mario DiBenedetto is president of Brimma Tech, a subsidiary of Wilqo LLC.