Arjun Raman of Wipro Opus Risk Solutions: Strapped for Time–Empower Overworked Staff with Outsourcing

Arjun Raman is AVP with Wipro Opus Risk Solutions, Mumbai, India.

The economic effects of the pandemic have placed strains on the day-to-day operations of servicers. An established relationship with a strategic outsourcing partner can streamline efficiency and productivity, resulting in improved scalability, increased cost savings and expertise at the ready.

Many servicers admit to facing challenges in scaling up operations to meet the urgency in their call centers and back office operations. Outsourcing can help a company retain its service goals and prevent employee burnout.

In spring of 2021, the Consumer Financial Protection Bureau surveyed 16 large mortgage servicers to identify areas of risk in the servicers’ COVID-19 pandemic response as part of its supervisory oversight. The CFPB summarized that many servicers managed the anticipated high call volume without significant increases in metrics such as average time to answer, handle times, or call abandonment rates. However, this did not come without a price in terms of the strain put on their employees.

Servicers were forced to make tactical changes to help meet the surge in volumes. They repurposed existing talent within the organization which meant that they needed to change their operating and training models to enable shifting staff from one servicing function to another. The “new normal” of working from home came with its own challenges as well in terms of equipping employees with the necessary technology, connectivity, onboarding and remote training. Managers were challenged with managing their remote teams.

To this day, servicers are trying to perfect their operating models to cater to this new normal. Something has to give in this whole process and what servicers have come to realize is they have sacrificed the employee experience in the process of adjusting to the increase demand during a globally stressful time. Employees had to work overtime to meet the surge in volumes. They had very little training to adjust to new concepts and had to function in new scenarios with very little handholding. And most likely, employees faced a lot of hurdles when it came to malfunctioning IT equipment, slow internet connectivity and ineffective remote coaching. All these factors lead to lower productivity and staff morale.

As per a report published by the Boston Consulting Group, changes in the competitive landscape of the market shifted to non-bank origination increasing from 50% in 2016 to 65% in 2021 and comparatively, non-bank servicing went up from 40% in 2016 to 50% in 2021. The increase in volume as a result of the shift compounded by the pandemic resulted in a lot of stress on operations resources. 

Servicers had to look externally for solutions to help manage capacity efficiently with better workflows, automation and hybrid operations that provide speed, scalability and flexibility.

Servicers that had relationships with top tier outsourced service providers benefitted during these times because these providers were more resilient, able to manage customer expectations and most importantly, able to manage their own employee’s experience. Leading outsourcing providers typically have delivery centers in multiple strategic locations so they are able to take advantage of higher productive hours, access to strong talent and lower cost of operations. For example, servicers can increase productivity by 10 to 11 percent per agent by selective outsourcing to near- or offshore strategic locations. If you spread that over 60% of servicing functions that can be potentially outsourced, servicers can unlock significant productivity and cost improvements.

The BCG findings also pointed out that “some of the other levers to optimize costs are through organization redesign, outsourcing and real estate optimization. While end-to-end workflow transformation is one lever to reduce costs, others are critical as well. With a large increase in headcount in the industry, there now is an opportunity to take a step back and re-think organizational structures and cross-functional collaboration mechanisms to right size non-customer facing roles.

In addition, BCG discussions with banks, independent mortgage banks and third-party providers of key services such as Business Process Outsourcing, indicate high expectations that mortgage players will increase outsourcing, facilitated by increased digital capabilities. Finally, increased remote work driven by COVID-19 will create opportunities for mortgage participants to re-examine and optimize their real estate footprint across branches, offices and facilities.”

In retrospect, the pandemic made servicers more inclined to make changes that will likely stick around for the long term. The pressure to be profitable grows with compressed volumes, the need to go digital, competition from neo banks and emerging digital players. Servicers that experience shifting capital market requirements, increased forbearance and hardship requirements coupled with the additional need for human talent benefit from strategic outsourcing relationships.

Most leading outsourcers have strong intellectual property, highly-optimized production disciplines, rigorous quality control, advanced analytics and strong operational leadership. The results of having these features are more efficient customer handling, faster turn times, better production quality and a reduced cost in operations thus the economics make the effort worthwhile. In today’s digital world, it is recommended that servicers look at partnerships that can help them transform faster to compete in this millennia.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)