There’s no question the mortgage industry has gone through monumental change over the last several years. Increased regulatory requirements, customer expectations and competition are prompting mortgage lenders to look more closely at new ways of doing business to improve efficiency and their bottom lines.
More and more, lenders are looking outside their company for help. Partnering with a business process management (BPM) vendor is becoming increasingly popular. However, selecting the right BPM partner calls for some careful research and consideration.
Think “partner” not “vendor”
While there are a slew of BPM firms to choose from in the mortgage space, lenders tend to focus on the larger, more established outsourcing firms. What lenders may not realize is this: unless they are driving huge volumes, lenders frequently receive very little management attention from the larger BPM firms. Changing to another BPM firm at such time involves enormous cost and effort.
That’s why it’s important to identify a true partner when selecting a BPM firm, not simply a vendor. The best outsource partners will be well-versed in all the latest regulatory changes, will have the right technology to keep track of all those changes, and will have built a readily accessible knowledge base. Look for a BPM partner that is willing to be flexible and customize its offerings to meet your company’s specific needs. The right partner will take all steps necessary to assist you with your current focus, and will also present multiple ideas and solutions for the future.
Strategies to ensure success in outsourcing partnerships
Once an outsource partner is selected, there are a number of steps lenders can take to help ensure that their business goals are met. The following are a few that will help you get the most out of your BPM partner relationship.
1) Start small. It is usually advised to begin the engagement with a process that isn’t highly critical, but one in which an impact will be easily noticed. Consider it a sort of “test drive.” Examples might be indexing, loan setup, loan boarding, or document verification. Once an acceptable stability and rhythm have been achieved in that process, the lender can start moving to more complex processes, and ultimately to those that are customer-facing. Moving gradually from the less critical to more complex and customer-facing processes provides an opportunity for the lender to evaluate the BPM partner, and the BPM partner to understand the lender’s business, expectations and organizational culture.
2) Communicate your business requirements. The BPM partner needs to fully grasp the areas within the lender’s business that need improvement, as well as the metrics the lender is looking for. That means the outsourcer’s team spends the time needed to completely understand the core business metrics their client wants tracked and improved. The team also should identify other operational factors that influence the clearly defined business metrics. These might include finer things like defining handoffs, laying out a clear feedback mechanism for output delivered during initial stages.
3) Look for a BPM partner that does what’s needed for a smooth transition. The BPM partner should capture detailed expectations from the lenders, upfront in the engagement. Based on this, they can they can create a detailed implementation plan and also plan tactical day to day operations. This includes deciding what process will go first, and hand-picking the people who will manage it. The BPM partner needs to ensure its team understands the lender’s business expectations and to train them to deliver the expected outcomes.
4) Confirm management will be available. Make clear from the start that the BPM’s executive leadership team needs to be accessible, and that channels of communication are open for immediate escalation of any issues that may come up. Otherwise lenders may find they are only working with lower level staff, with no access to the executive leadership team. Having access to the service provider’s leadership team helps ensure that things that may not have been addressed expressly in the contracts get resolved quickly.
5) Verify technology competency: Outsourcing is clearly not just about staffing seats at a different location. The BPM partner needs to be able to provide or recommend the appropriate technology for your business processes to help you achieve the goals you’ve defined.
6) Look for a partner who is passionate about your business. Every member of the BPM partner’s team must clearly understand the factors that define your success as a lender. Team members should be passionate about working for your achievements. That means going beyond merely meeting the requirements of the SLA. An enthusiastic team driven to make your company successful can make a huge difference in the outcome.
All of these factors play an important role in ensuring a successful BPM partnership, one that will make your company more nimble and drive a solid return on investment (ROI).
Challenging markets—like today’s– are a great opportunity for lenders and servicers to rethink and recreate their business strategies. If outsourcing is one of those strategies, take the extra time and the proper steps to manage those partnerships well. Doing so can mean the difference between a mediocre experience, and one that exceeds your expectations.
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