Key RFP Shifts in Loan Origination Systems for Fintech & Banks (2024)

Kael TheoWritten by
Published onUpdated on

 

The loan origination system (LOS) landscape is undergoing rapid transformation as fintechs and banks prioritize digital-first lending. RFPs for LOS solutions increasingly reflect demands for automation, AI-driven underwriting, and seamless integration with open banking ecosystems. Procurement teams now evaluate vendors not just on functionality, but on adaptability to regulatory shifts like CFPB’s Section 1033 and ESG-linked lending criteria.

 

Why LOS RFPs Are Evolving

 

Banks now expect LOS vendors to address four critical gaps in legacy systems:

 

    1. End-to-end digitization (e.g., removing manual document review)

 

    1. Decisioning speed (AI models that reduce approval times by 40-60%, as seen in NuBank’s 2023 RFP)

 

    1. Compliance guardrails for fair lending and anti-fraud (e.g., FDIC’s 2024 tech checklist)

 

    1. Platform extensibility through APIs (Citizens Bank’s 2023 RFP mandated pre-built integrations with Equifax, Plaid, and ICE Mortgage Tech)

 

 

A recent Frost & Sullivan study found 78% of RFPs now explicitly require AI/ML capabilities for risk scoring—a 220% increase since 2021.

 

Emerging RFP Requirements: 3 Real-World Examples

 

    1. PNC Bank’s 2024 LOS RFP prioritized:

       

        • “Dynamic document capture with NLP for 4506-T tax form processing”

       

        • “Configurable waterfall models for alternative credit scoring”

       

       

 

    1. A credit union consortium RFP (Q2 2024) required:

       

        • “Real-time HMDA reporting dashboards”

       

        • “Pre-qualification APIs for automotive dealer partnerships”

       

       

 

    1. European Digital Bank’s ESG demand:

       

        • “Carbon impact scoring for SMB loan portfolios aligned with EU Taxonomy”

       

       

 

 

Public RFP repositories like SAM.gov show a 34% YoY increase in “low-code LOS customization” requirements.

 

Vendor Response Strategies

 

Winning proposals now employ:

 

Tiered compliance mapping:

 

    • Cross-reference each RFP requirement with SOC 2 Type II controls, Reg B, and state-specific lending laws (see LendingClub’s response template).

 

 

Proof-of-concept (POC) benchmarking:

 

    • Include third-party speed tests (e.g., “Our engine processes 87 loan apps/minute vs. RFP’s 50/minute threshold”).

 

 

Total cost of ownership (TCO) calculators:

 

    • Interactive tools showing 5-year savings from features like automated stipulation clearing (modeled on Blend’s 2023 RFP response).

 

 

Procurement Team Best Practices

 

    1. Weighted scoring modernization:

       

        • 30% for API ecosystem breadth (per J.D. Power’s 2024 LOS evaluation framework)

       

        • 25% for implementation timeline (vendors offering sandbox environments score higher)

       

       

 

    1. Red team testing:

       

        • Require vendors to process live application data during demonstrations to validate throughput claims.

       

       

 

    1. Future-proofing clauses:

       

        • “Vendor must provide annual AI model card updates per NIST AI RMF 1.0 standards.”

       

       

 

 

Conclusion: The 2025 Horizon

 

Expect RFPs to demand deeper Explainable AI (XAI) for underwriting models and “LOS-as-a-service” deployment options. Fintechs should preemptively develop:

 

    • Blockchain-based loan audit trails (already seen in ADGM’s 2024 sandbox RFP)

 

    • Embedded lending widgets for neobank marketplaces

 

 

For procurement teams, Gartner recommends adding “ethical AI bias mitigation” as a mandatory evaluation criterion by 2025. The winning vendors will be those bridging regulatory rigor with developer experience—treating RFPs as collaborative design sprints rather than compliance exercises.

 

(Additional resource: ECB’s fintech RFP database tracks LOS procurement trends across 20 jurisdictions.)

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