Exploring the rewards and risks involved in offshore mortgage servicing

June 24, 2021

The mortgage industry is seeing a lot of ups and downs because of the Covid-19 impact. The situation has further complicated the inherently complex industry. 

As the mortgage industry is faced with complexities, lenders often need to delegate several aspects of loan processing due to its labour-intensive nature. 

It is where Offshore service providers come in and create value for the lenders. The Offshore service provider model isn’t only limited to design, development and testing by IT companies, it can work for mortgage lenders as well.

The Rewards

The key advantages of mortgage service offshoring include:

  • Access to the latest mortgage technology

Whether you are a small business or a large enterprise, the set-up and infrastructure costs will eat into your profits. One of the most significant advantages of offshoring mortgage services is access to the latest technology you receive. 

As digitisation is essential in today’s world by outsourcing tasks to a capable service provider, you not only have access to the latest digital tools but also can track the exact status of a process. 

And as you don’t have to invest in the infrastructure directly, you never need to worry about the maintenance and upgrading costs. 

  • Helps small & large businesses alike

Offshoring with the right service provider can appear an uphill task. At the same, one of the biggest misconceptions surrounding offshoring is its suitability for only large enterprises. 

The mortgage offshoring model needs careful deliberation from the top management, but once a process has been established, even a small lending company can go ahead and work with an offshore service provider. 

  • Dedicated team of Qualified Professionals

An offshore delivery centre has a team dedicated to catering for your company-specific requirements. With qualified professionals who understand your work process, communication is easier and delivery issues can easily be resolved. 

Since these professionals already have a background, they can hit the ground up and running with minimal training and effort.

  • Access to Big data Analytics & Modelling 

Big Data is used by Financial service providers to deliver targeted offers to customers resulting in high sales of services and products. As an SMB, a startup or a small company may not be able to access Big data modelling, offshoring can help you get access to the same. 

If your offshore service partner can help you tap big data modelling, you will see a marked increase in sales, profits and customer satisfaction while ensuring that all decisions are based on solid data. 

  • Focus on core competency 

Mortgage processing involves an array of complex tasks which require niche skills. The services include payment processing, escrow services, investor reporting. These tasks require the thorough attention of the senior management which could otherwise be used to ensure compliance. 

One of the benefits of offshore mortgage processing is that processing and reporting services can be completed by skilled professionals, allowing you to focus on core company objectives. 

Such tasks can therefore profitably be completed by an offshore service provider, allowing the company to focus on growth, compliance, and profitability. 

  • Minimize Overheads

The math of the mortgage offshoring process is simple. If you assume an overall expenditure of a business process, you can receive similar or better-quality results at a fraction of the same expenditure. 

Most service providers charge a reasonable fee, with the services being customisable to help you effectively deal with an economic downturn. 

  • Global Growth & Talent

Growth is key to survival and sustainability. Mortgage firms who look to explore uncharted territories must partner with specialized companies which are reliable and complement their business operations. 

  • Reduce the Turnaround time for Operations

Considering the competitive nature of the mortgage industry, financial institutions and businesses can streamline operations and revamp portfolios based on the market requirements. 

Another benefit of mortgage service offshoring is the work passed onto a competent service provider who has the required manpower to ensure timely project completion. 

Offshoring can help you keep up with the changing demands and allow you to timely meet deadlines. However, the whole shifting process involves an inherent risk. 

The Risks

  • Service disruptions

With companies moving their operations offshore in a bid to save on costs and improve productivity, the practice can result in temporary service disruptions. 

The result is a momentary pause on company operations which can be mitigated with a robust workflow mechanism. 

  • Higher staff turnover

Staff turnover can be higher as compared to the in-house staff due to a mismatch in technical, cultural and work standards. This again creates challenges to service the clients which requires tactful pre-joining training.

  • Lack of a natural flowing discussion

Offshore customer service agents often rely on ‘script’ to manage customer calls. It can be frustrating for a borrower who has a complex issue at hand as a natural flowing discussion with an experienced native service person is missing. 

Offshore employees may not have received the necessary training to deviate from the fixed script and manage complex issues leaving companies to shift back the complaint to the in-house representative. 

A scenario based exercise for employees is required rather than sticking to a particular script.

Next steps

The challenges and setbacks faced by companies aren’t entirely related to offshoring as the genesis of these issues has been rapid growth and integration of multiple systems. 

Increased regulatory requirements may require the companies to invest in training, establish a stable employee base and adhere to protocol. 

But businesses aren’t the only ones to benefit from offshoring. It is the customer’s needs whose on-demand interactions and round the clock availability from financial firms are met by offshoring. 

With a dedicated offshore team, the rewards for companies continue to make the risk worth it.  

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