How Offshore Delivery Centers are Helping Mortgage Lenders Improve Operations


BLOG VIEW: In 2019, the global outsourcing market amounted to $92.5 billion, having experienced a drastic jump in the last decade. One of the major reasons for this is that businesses across industries have realized that investing in offshore delivery centers (ODCs) is a viable option. The mortgage industry is no exception.

In 2020, ODCs in mortgage have gradually made way for specialized mortgage-sensitized ODCs. They are being increasingly viewed as a requirement to improve the quality of operations with scalable and flexible services.

Earlier in the decade, it was common among mortgage lenders to outsource processing to multiple third-party vendors. Over a period, though, they felt the need to have greater control over their extended teams and this is how the concept of ODCs came in.  

Today, when cost-effective solutions are much in demand, mortgage-sensitized ODCs are a preferred option due to their lower operational costs and several other benefits. A well-executed ODC allows the lender to focus on core competencies. There are several other reasons why ODC setups are increasingly becoming a popular choice among mortgage lenders. 

An ODC setup offers lenders a capable and domain-sensitive resource base that is specially trained on mortgage processes. They have ready access to infrastructure that meets all their security and other protocols. Plus, ODCs work well in today’s industry, where talent is dear, and lenders need to pay high premiums to hire permanent teams. ODCs help eschew the many significant components involved in building in-house teams – overhead costs such as office space and equipment, employee-centric extras like health insurance etc.

In fact, an ODC offers the exact same benefits as highly qualified in-house teams, but with a lot less commitment and investment. Pertinent research has shown that mortgage companies using ODC set ups have managed to reduce their annual spends 30% to 40%. 

In 2020, lenders are also demanding more control over their own business operations and those of the third parties they associate with. ODCs fit perfectly for this new mandate because they essentially act as an extended, integrated, and dedicated offshore facility that exclusively manages the lender’s operations. This is where they score over outsourcing, where the facility is not necessarily dedicated solely to the lender’s operations. With ODCs, lenders can manage the setup team as if it is their own organic extension, regulate expenses, and acquire more exposure. 

In today’s highly competitive age, where time is of key essence, ODCs offer a major advantage, as they ensure that lenders can get what they want done within their requisite timelines, especially when they have tighter deadlines. Availability of highly qualified resources and their familiarity with the lender’s processes helps while handling high volumes. This kind of inherent flexibility is a difficult option when working with a mortgage process outsourcing company, considering the nature of the working relationship. Research points out that shared services setups may cause a delay 70% of the time, especially in case of unexpected volumes.

Moreover, ODCs are fast emerging as a preferred option because they can seamlessly manage the regular operations of lenders while the latter can focus on customer relationships and business growth. The prime task of an ODC is delivering dynamic solutions customized to best meet the business objectives of the lender – an element that could be missing in pureplay outsourcing. Communication is also a lot easier in ODC setups considering that a dedicated team of professionals works exclusively for specific mortgage lenders with a deep understanding of their requirements, standards, and expectations. 

ODCs have a one-up over outsourcing in team management too. The parent company can have a say in the choice of candidates for leadership and managerial positions to suit its own objectives. In outsourcing, the mortgage lender has no control over the composition of the team or the people in senior positions in the company. 

This is also the time when the mortgage industry is increasingly looking towards innovative solutions to bolster business and gain an edge over competition. Modern ODC teams work well to this end by developing cutting-edge products and services for lenders by taking on new challenges. They are very closely aligned with the parent company which helps them understand business objectives and priorities and deliver stellar innovation.

Meanwhile, outsourcing partners may simply deliver as per required deadlines or replicate a defined process. According to research, many companies with successful ODCs have reported a 10% to 15% improvement annually because of process innovation efforts. 

Transparency in operations, another seminal element in 2020, is an important offering from ODCs. The parent company can have custom dashboards to ensure that they have a clear view of productivity, processes and deadlines. This is difficult in mortgage process outsourcing because lenders do not have complete control over operations and the way work is performed and monitored. 

For these reasons, mortgage sensitized ODCs have become one of the most cost-effective, practical, and sustainable solutions for the mortgage industry, especially in these crucial times. They offer lenders much more agility, deliver greater long-term value to the business, and help build longevity in the relationship.

Alok Bansal is managing director of Visionet Systems Inc.

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