Introduction

Origination is the process during which a borrower applies for funding, and a lender processes the application. This process includes all the steps from taking an application up to disbursing funds or declining the application. Depending on the type of funding applied for, for example, a loan or lease, and the lending institution that processes the application, for example, a bank or a financial institution, different steps may need to be performed as part of the application processing. Q2 Origination provides you with a framework for processing these different types of application scenarios. 

An applicant or potential borrower can create an application by:

• Filling and submitting an online form 

• Placing a call to a lending institution and providing necessary details

• Visiting a lending institution and requesting a loan or a lease

You can integrate the Q2 Origination system with your customer interfacing system to capture the application details and collaborate with the stakeholders, or directly enter these details in Q2 Origination and process applications. Similarly, you can integrate Q2 Origination with other products in the Cloud Lending Solutions (CLS) suite, like CL Loan and CL Lease. You can seamlessly transfer the applications that you convert into contracts to these systems for servicing. You can also define the disbursement and payment schedules at this time, which are implemented at the time of the contract servicing. 

The origination framework of Q2 Origination enables you to maintain details of your customers, evaluate and process their applications for funding, and approve the leases or loans for disbursal. You can set up your product offerings, financing options, rates, interest calculations, risk and credit profiling data, documentation requirements, and other rules and scorecards based on which customer applications are evaluated and processed. Q2 Origination offers you flexibility in defining your credit policies and handling exceptions to these on a case-to-case basis and provides documentation capability and application workflows to support these. You can also set up loan origination teams to work on specific application types.  

Q2 Origination supports multiple currencies for origination. You can enable currencies in Salesforce and select the desired currency for each application. The contract generated from an approved application is in the same currency. For financial reporting, a currency conversion may be done in the general ledger. For applications created via APIs, Q2 Origination provides the additional flexibility to generate the payment schedule later. 

Using Q2 Origination, you can define the different stages of the loan origination process. The process of loan origination consists of several manuals as well as system tasks, carried out in a sequential manner. Many users can be involved in the completion of a task.

The loan origination process flow is composed of the following stages:

• Application Entry

• Application Verification

• Underwriting

• Approvals

• Document Verification

The following table lists out the different stages, the actions that are handled in each stage, and the exit points (when an application moves to another  stage) for each stage:

The features and the different stages in the process flow are explained in detail in the following chapters.

Key Features 

Some of the key features of Q2 Origination are:

Agreement Templates

You can maintain a master agreement with your customers, which may be applied across multiple schedules or contracts. They can associate the agreement template set up in CL Common to a customer account or specific applications based on the lender’s business practices. 

Auto-Decisioning for Online Lending

You can set up an automated scoring and decisioning process to get real-time results for the loan applications. You can define custom workflows that utilize the scorecards and rate cards established to set terms for each loan. The credit grade of a  borrower is automatically determined from the scorecard results. The configurable rate card is used to assign loan terms based on this grade. Pricing is then selected as per the rate card. Therefore, all of these automated processes allow for an application to be submitted, scored, and priced automatically. A response can be returned to a borrower in a much faster manner using Auto Decisioning.

Financial Statement Analysis

Q2 Origination enables administrators to define template bundles that govern the configuration of balance sheets, income statements, and cash flow statements.  Within each template bundle, administrators can configure the layout of each financial statement by defining group headers (for example, current assets), the line items included within each group, and their position relative to one another, as well as the position of the group on the financial statement output. 

Q2 Origination enables users to configure the following types of calculations:

• Input – a field in which the value is determined by user input.

• Rollup – a field in which the value is determined by the sum of its subordinates in the field group.

• Compute – a field in which the value is determined by a configured formula or expression.

• Difference – a field in which the value is determined by comparing the current statement period value to the previous statement period value.

The template bundles also govern the configuration of financial ratios. Administrators can configure financial ratios by creating a line item within the template bundle consisting of a value of type Ratio and an input type of Compute.

Criteria Based Scorecards and Tasks

Scorecard functionality in Q2 Origination has been enhanced to enable lenders to define execution criteria that determine when a specific scorecard is used to evaluate an application. For each scorecard, lenders can configure matching criteria that define when the scorecard should be executed. Similarly, the task management functionality has been enhanced to enable lenders to define criteria that determine when a specific task should be applied to an application, the loan product to which the task is associated, and the stage to which it applies.

Credit Exposure Calculation

Q2 Origination enables lenders to configure calculations that drive direct exposure, direct proposed exposure, indirect exposure, and indirect proposed exposure.  The exposure calculation configurations consist of the database queries and expressions that automate the collation and aggregation of applicable data.  Q2 Origination also automates the calculation of credit exposure for each borrowing entity (Account) in the Q2 Origination database via a daily batch job and enables users to calculate exposure on-demand for specific Account records.

Workflow and Task Management

Q2 Origination offers workflow and task management for complex lending processes like commercial real estate loans through the Deal Room and the Loan Dashboard options. 

Document Management

You can oversee document management requirements like collection, appraisal, and management through the Deal Room or the Document Management Wizard, bringing transparency and accountability in lending and also bringing speed to application processing. Documents may be attached to a loan or lease opportunity or directly to the collateral or borrowing entity, making document management very efficient in case the same borrower or collateral is associated with multiple loan opportunities.

Single Record of Data

Q2 Origination is built on the native Salesforce.com platform, which provides a scalable and reliable secure cloud-based solution that delivers a single system of record. A single system of record assures the integrity and validity of data, mitigates risks, and simplifies maintenance. 

Extended Sales Reach

You can define rate card based pricing for your dealers to generate Quick Quotes using your mobile phones for customers. These quick quotes can be automatically converted into applications for credit review and valuation of assets financed or collateralized. 

Management by Exception

You can streamline your operations by automating tasks. For example, you do not have to manually oversee the approval of an application. With Q2 Origination, you would simply submit the application for approval, and it would move to the approver's queue. Similarly, you can automate more complex tasks like credit pull, credit decisioning, and collateral valuation. You can set up these approval workflows to manage by exception, freeing up valuable executive time.

Minimal Organization Change 

You can implement new business processes and policies by updating pricing, credit decisioning, and workflow processes to automatically apply from a given date.

Quick Implementation  

Using the features like the guided borrower management wizard, the collateral management wizard, and document management wizard, credit memos, covenants, and exception policy definitions, you can speed up the implementation time by going live within a few weeks.

Capabilities

Some of the key capabilities of Q2 Origination are:

• Generating Quick Quotes and Contract Documents

• Converting Quick Quotes into Applications

• Defining Rate Cards, Credit Policies, Collateral Valuation Tables

• Integrating with Credit Bureaus and Collateral Valuation Agencies

• Automating Credit Decisioning and Collateral valuation

• Managing Approval Exceptions

• Accepting eSignatures

• Integrating Web and Voice Collaboration and

• Reporting along with Robust Analytics