Why ‘letting go’ is the new control

As the marketplace hots up, outsourcing is experiencing near double-digit growth, with lenders looking to future-proof their firms and retain their competitive edge, says Geraint Chamberlain, head of consultancy at Target Group

In a marketplace, where regulatory change is evolving at a rate of knots, it is increasingly important for organisations to select a partner with rigid processes that are highly visible to the lender.

For example, the use of electronic document management and business processing management (BPM) technologies will help lenders and outsourcers alike enforce compliance and ensure a clear audit trail giving lenders increased confidence that their portfolio is being managed in a fully compliant manner with all of the associated benefits including meeting regulatory obligations, adhering to Treating Customers Fairly principles and brand protection.

The perfect partnership
As your chosen third party will be a partner in your business, a lender must be confident that the chosen provider will protect the brand’s values and maintain service levels that customers expect.

Reviewing a potential outsourcer’s servicer ranking before appointment will also help ensure that a lender has selected the right third party for the job. Reputable outsourcers will have an assigned independent servicer ranking with a ratings agency such as Standard & Poor’s, Fitch or Moody’s. A reputable outsourcer will provide flexible and predictable pricing with a proven track record and the agility to quickly adapt to market change.

Outsourcing many of the routine business processes to a servicer with a lower cost base is good business sense as it offers the potential to substantially reduce costs a lender might prefer to retain risk control in-house but outsource customer account management.

Processes such as arrears management or complaints management, are another area that are often outsourced to a qualified third party.
Business process outsourcing also offers lenders the flexibility to mix and match their outsourcing to their business requirements whether it’s the full end -to-end lending operation or just part of the processes such as arrears management.

Tailored and efficient lending software is also critical for ensuring a successful outsourcing partnership, (see cube left). Though vitally important in helping to deliver an efficient service, IT should be regarded as an enabler. It equips experienced people to perform to their utmost potential. By combining an outsourcer’s proven technology with its highly qualified personnel, lenders get the best possible opportunity to deliver results.