Transforming BPO Operations for the Mortgage Industry

June 20, 2018
by Clark Brett, VP, Business Development, AI Foundry

Mortgage processing outsourcing may be the key to helping banks address the challenges they face: driving cost efficiency, improving customer service and responding to regulatory demands.

Image Credit: Shutterstock

In recent years, mortgage lenders have progressively leveraged the capabilities of global BPOs to manage a wide spectrum of document-related processes. A dozen-odd major BPOs dominate the mortgage and consumer loan space, with varying resources and capabilities. Typically, these BPOs use a combination of U.S. and offshore resources to evaluate and reconcile loan document submissions, input key data into various systems, and identify discrepancies that must be addressed by the client lender.

The scale of BPOs’ role in the mortgage sector is extraordinary: one of the largest BPOs processes loan originations totaling $80B each year, supporting both banking and non-bank lenders in the U.S. and worldwide. Its staff handles millions of documents involved in the mortgage loan origination, servicing, and default management areas; in addition to similar functions for other consumer and commercial loan products.

Historically, BPOs have charged clients on the basis of labor usage, i.e. “full time equivalent” (FTE) headcount utilization.  This approach had the effect of suppressing technological innovation in BPO environments, since FTE costs were economical enough to be accepted by mortgage lender clients. During the past decade BPOs in the mortgage space enjoyed reliable growth in client contracts, relying upon the traditional FTE-based fee model.

However, several factors are increasingly driving BPOs to embrace “digital transformation” technology to streamline their services for clients. First, FTE pricing is being challenged by lending industry clients, who want it replaced by transaction-based pricing –  often with additional stipulations around transaction accuracy. Even in cases where clients accept FTE pricing, the BPO industry is being pressed to drive down FTE costs per transaction (such as a completed loan application). As BPOs are challenged to deliver more compelling fee value, technological innovation is becoming critical in their U.S. and offshore service delivery centers. BPOs are well-aware of this, moving swiftly to implement technologies such as Robotic Process Automation (RPA).  In the Philippines, for example, the industry’s leading association (IBPAP) sponsors frequent forums to drive action among member firms to embrace RPA, in order to preserve the competitiveness of Philippines-based BPO providers.

In the case of BPOs that serve the mortgage industry, additional technological initiatives are crucial. Since their operations are overwhelmingly focused on document-based processes, mortgage industry BPOs must embrace best-in-class technology that minimizes employee interaction with documents. BPOs can derive huge efficiencies from software solutions  that automate traditional agent tasks, freeing up staff to focus on exception handling, QA initiatives, and higher-value services for clients. For example, the labor involved in understanding “what is this document?”  “What data do I need from this document?” or “How does this data compare with data in another document?” can be largely eliminated.  Similarly, the costly work associated with inputting data into various loan management systems can be automated to a great extent, if optimal technology is implemented.

AI Foundry has built solutions that can transform the efficiency of BPOs in the lending industry, enabling staff to be freed from tedious, costly, and error-prone interactions with document interactions to a very high degree. AI Foundry’s solutions can quickly reposition a BPO’s competitiveness, enabling it to offer higher value services to clients, with reduced cost per transaction and superior quality and consistency of performance. 
 

For more information on how to unlock the valuable insights contained in your data, and how to develop your own digital strategies, visit the AI Foundry website where we share our processes and solve problems for our customers.

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Contact the Author:

Clark A. Brett | Vice President, Business Development

[email protected] | Mobile: +1 919 740 7182