Loan Origination Software Market - Industry Dynamics, Market Size, And Opportunity Forecast To 2030

Market Overview

Global loan origination software market is anticipated to exceed revenue generation of US$ 9,544.70 million by 2030 from US$ 3,913.35 million in 2021 at a CAGR of 10.73% over the forecast period of 2022–2030. 

The growth of the market is influenced by various optimistic factors such as managing lending tasks, authoritative rules governing the use of information, and greater operational efficiency. Apart from this, there are a number of factors driving demand for loan origination software market. Among these are the need to automate the process of loan approval, streamline communication between lenders and borrowers, and improve efficiency across the lending process. Loan approval is time-sensitive, and borrowers can often be hesitant to open a new loan if they're not sure it will be approved. 

Automating the approval process can help reduce delays and make the process more efficient for all involved. Another reason for increased demand for loan origination software is the growing trend of online lending. More borrowers are turning to online platforms to find loans, thanks in part to lower overhead costs and faster decision-making margins. Lenders also want to improve their efficiency when it comes to communicating with borrowers. Loan origination software can help reduce confusion and speed up the process of getting loans approved. Overall, there is a strong demand for loan origination software due to its many benefits, including improved efficiency and quicker decision-making.

Competitive Landscape

Global loan origination software market is highly competitive. Wherein, top four players are holding around 29.6% share of the market. Out of which, Fiserv Inc., holds the highest market share of 11.9%, which is closely followed by LeadSquared, Finastra and ICE Mortgage Technology Inc. 

Recent Developments:

• In June 2022, Digital checks have been added to payout choices offered to companies utilising the Carat operating system by Fiserv, Inc. This new option, made possible via cooperation with Checkbook, Inc., an all-in-one push-payments processor, enables companies that conduct mass payouts to increase choice, hasten the distribution of monies to clients, and lower operating costs related to paper checks in global loan origination software market.
• In August 2022, Truv, a one-stop employment and income solution, announced an integration built on the Encompass Partner Connect API Platform and which has been made available through Encompass by ICE Mortgage Technology, a global provider of technology, data, and market infrastructure. This integration will automate consumer income and employment verification for the American workforce.

Market Dynamics of the Loan Origination Software Market

Driver:

Rising Implementation of Machine Learning, AI, & Block-Chain Based Technologies 

Large enterprises and SMEs all across the world are beginning to recognise the advantages of blockchain, machine learning, and AI based technologies. Some of the most current technologies that are expected to improve digital lending platforms and open up new growth potential include machine learning, AI, and blockchain. Furthermore, an efficient, and transparent loan-funding procedure is made possible by the power of these technologies. Additionally, by utilising AI and machine learning algorithms, loan applications may be handled very quickly, fully scaling the approval process. Furthermore, the decentralisation of the loan process is being helped by blockchain technology. As a result, it is expected that the rapid uptake of machine learning, AI, and blockchain-based technologies will fuel the growth of the loan origination software market.

Restraint:

Strict Regulatory Frameworks 

One of the main factors hindering the global loan origination software market growth is stringent regulatory norms that negatively affects the lending businesses. Due to the sensitivity of financial data, most firms abide by international compliance requirements, despite the difficulties in maintaining compliance and complying with rules in the market for digital lending platforms. Additionally, the threat environment is continually shifting, and a rise in cyberattacks have cost financial institutions dearly. In addition to this, the governments across the world are consequently passing new laws to protect economic data more frequently. 

Trend:

Growing Demand from BFSI  

Global loan origination software market is witnessing a significant surge in the adoption by the BFSI sector in order to boost productivity and improve the client experience. In the upcoming years, the market is anticipated to be driven by a high demand for loan origination software in the banking industry for consumer or retail lending, commercial lending, small and medium business lending, mortgage lending, and other lending to add flexibility and adaptability for future needs. The loan origination software solution from Habile Technologies was adopted by Credifranco, a Non-Banking Financial Company (NBFC) with headquarters in the United States in 2018 to meet rising consumer demand and enable users to extend loans and cancel them. 

Market Segmentation

Components Analysis

Based on component, the solution segment in the global loan origination software market captured the highest share of 79.26% in 2021 and is expected to generate a revenue of US$ 4,350.38 million at the end of the forecasted period. Wherein, the loan proposal sub-segment is likely to continue dominating market as the loan origination software is highly used for automating and managing the end-to-end steps in the loan process from the application, through underwriting, sanction, assessing, documentation, funding, and administration.

Deployment Analysis

In the global loan origination software market, cloud-based deployment is highly popular thanks to minimal upfront investment cost, no licensing fee, and only requirement of the devices needs to access the internet. As a result, the segment held over 62.40% share of the market in 2021 and is anticipated to continue dominating the market with the potential to generate a revenue of US$ 3,502.26 million by the end of the forecasted period.

Enterprise Size Analysis

Based on the enterprise, large enterprises segment generated a revenue of US$2,652.68 million in 2021 and is expected to continue dominate the global loan origination software market with the high demand of loan for meeting the working capital requirements and expanding the business. However, SMEs play a vital part in the developing nations and represents most businesses across the regions. Apart from this, they are the significant supporters of employment generation and economic development at the global level.

End-User Analysis

Brokers, lenders, and institutions are altering how they currently handle loan applications with the use of loan origination system (LOS) software. User can deepen cost-efficiency, lower operating costs, enhance communications, and eliminate errors with the aid of these software platforms.

Based on the end user, banks holding the largest share of the global loan origination software market. The segment was responsible for generating around 45.24% market revenue in 2021 in using the globally. The need of LOS is escalating to meet the increased demand for loans by large number of people worldwide owing to the reasons like meeting the personal aspirations, commencing own business, meeting unforeseen expenditures or to consolidate the existing debt.

Regional Analysis

North America held the 34.58% share of the global loan origination software market in 2021. Wherein, the US is found to be the largest contributor to the regional dominance. In the first quarter of 2022, over 20 million Americans took personal loan in the US. This indicates that companies in North America are using these tools to streamline their loan origination process. One reason why companies in North America are so reliant on loan origination software is because they have a tendency to churn their loans more frequently than companies in other regions. This means that the companies need to be able to speed up their loan approvals process. 

Additionally, these companies face stricter lending criteria than companies in other regions, which necessitates the use of more specialized software. Overall, it seems that North American businesses are finding value in using loan origination software. By automating key processes, these companies can speed up their overall lending process and increase efficiency overall.

However, Asia pacific is tend to grow at the highest CAGR of 11.63% along with an approximate net increase of 2.12% by the end of 2030. The main drivers of this growth of the loan origination software market include tighter regulations and higher credit demand in key markets such as China and India. In China, for instance, the government has introduced a series of reforms aimed at broadening access to credit for small and medium-sized enterprises (SMEs). In India, meanwhile, rapid industrialisation is leading to increased demand for loans from both households and businesses. The loan origination software market is also benefitting from consolidation among players. 

List of Key Companies Profiled

• LeadSquared
• Finastra
• Fiserv Inc.
• ICE Mortgage Technology Inc.
• Calyx Technology Inc.
• Comarch SA
• Pegasystems Inc.
• Black Knight Inc.
• Wipro Limited
• Other Prominent Players

Segmental Overview

By Components

• Solution
  • Cash Flow Analysis
  • Loan Sanction
  • Loan Proposal
  • Multi - Stage Loan Appraisal & Approval
  • EKYC/KYC
  • Compliance And Reporting 
• Services
  • Managed Services
  • Professional Services
    • Consulting
    • Support & Maintenance

By Deployment 

• On-Premise
• Cloud

By Enterprise Size

• Large Enterprises
• Small & Medium Enterprises

By End-User

• Banks
• Insurance Companies
• Credit Unions
• Savings & Loan Associations
• Peer-to-Peer Lending
• Others

By Region 

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Poland
  • Russia
• Asia Pacific
  • China
  • Taiwan
  • India
  • Japan
  • Australia & New Zealand
  • ASEAN
  • Rest of Asia Pacific
• Middle East & Africa (MEA)
  • UAE
  • Saudi Arabia
  • South Africa
  • Rest of MEA
• South America
  • Brazil
  • Argentina
  • Rest of South America