Outsourced loan fulfillment offers numerous benefits for small and midsize lending companies. In today’s competitive market, local lenders are increasingly bringing on outsourced partners to help stabilize costs in a variable market and bring specific expertise to the fulfillment process.
Still, adding a fulfillment provider to your processes requires some forethought. Before partnering with a loan fulfillment provider, there are a few things you should evaluate internally.
1. Structural changes
For most lenders, bringing on a loan fulfillment partner represents a change in the way things are done. In-house loan officer duties will need to be reexamined. Tech and HR departments may need to adjust. And above all, upper-level leadership will need to help guide everyone into a new modus operandi.
Handing over certain elements of workflow to a loan fulfillment solution can sometimes feel like a loss of control. Here, a perspective shift can help: Rather than viewing a fulfillment partner as taking over control, position them as a catalyst for growth. Yes, a loan fulfillment provider will alter a lending company’s current structure. But a good partnership will facilitate change in a way that supports and uplifts the in-house team. Creating a partnership mentality allows for a feeling of expansion rather than contraction.
Overall, adding on a loan fulfillment solution means processes will need to flex, so decision-makers should consider whether or not their company is in a place to handle change.
Evaluate: Is our company ready to centralize services in order to create a streamlined process and improve margins?
2. Systems training
Creating a true partnership with an outsourced fulfillment service means both companies will need to learn about each other’s intricacies. The service that you choose should have clear documentation and communication regarding their systems, goals, experience, and technology. Your lending company will need to collaborate in turn.
Successful integration of a new fulfillment service requires an overview of current systems. Your outsourced partners will need to be brought up to speed on the particular nuances of your company, including all loan manufacturing processes. Onboarding an outsourced service partner can be simplified by having a solid training plan in place. Don’t have anything documented? Don’t panic—a good partner will work with you to document your processes during your onboarding phase.
To make the process as efficient as possible, take this time to consider how ready your team is to train new, outsourced individuals. A concise loan process workflow helps outsourced professionals assimilate quickly. And fusion of the two teams––your in-house team and your outsourced team––goes more smoothly with clear direction and documentation on both ends.
Evaluate: How primed is our company for growth? How quickly can we add outsourced team members to the existing team?
3. Expense analysis
We’ve established that loan fulfillment solutions should make sense from a people perspective by giving lift to your current team’s systems and productivity. But to truly enhance the corporate model, you know a decision like this also needs to make sense for your bottom line.
To properly consider whether or not outsourcing makes financial sense for your lending company, it’s important to get a full picture of current costs surrounding loan processing. Going beyond salary to consider all expenses is key.
Take HR for example: SHRM (Society for Human Resource Management) research indicates that it takes more than $4,000 and over 40 days just to onboard a new employee. A loan fulfillment partner may help significantly reduce those costs in your lending company.
Analyze the full financial picture surrounding loan fulfillment. Look at elements such as equipment costs, benefits costs, liability costs, and any additional overhead costs, then compare them against the expenses incurred by outsourcing. Most small and midsize lenders find that adding a loan fulfillment solution saves money when considered over time. Remember: Bringing on an outsourcing partner should yield time and money gains for your company, or it’s not worth it.
Evaluate: What is the true cost of our company’s underwriters and processors beyond just salary?
4. Goal alignment
Adding on a loan fulfillment partner should be more than just a way to check off a to-do list of loan processing tasks. Your in-house team can get the job done. But you don’t just want the job done––you want the company grown. How is a loan fulfillment solution going to move your company to the next level within the lending market?
As you consider loan fulfillment solutions, it can be helpful to clarify your particular growth goals. These might include increasing the capacity of loans serviced, increasing the breadth of loan products offered, increasing the profitability per loan, increasing the ability to respond to market volume demands, and much more. Pinpointing corporate growth goals informs the decision of whether to outsource loan fulfillment processes or not.
Evaluate: What unique benefits can a loan fulfillment team bring to our company’s own internal group?
5. Current reality
With goals firmly in mind, the final consideration before moving forward with any loan fulfillment solution should include assessing the current reality of your internal loan processes. After all, how can you move forward without a firm grasp of where you are?
As we’ve established, it’s important for your fulfillment partner to understand how your systems work. In like manner, it’s just as important for them to understand the output that those systems yield. Tracking performance metrics––such as the average time to close and the number of underwriter touches––creates a baseline for your outsourcing partner. Equipped with that current reality, your partner should then be able to come alongside your team and facilitate measurable growth in efficiencies.
Evaluate: What technology is our company using currently? Do we have adequate reporting related to loan manufacturing processes?
Integrating a loan fulfillment partner is not to be taken lightly. These five considerations can help leaders at small and mid-sized lending companies weigh the pros and cons of outsourcing.
Want to see how loan fulfillment solutions can grow your lending business?
Our Definitive Guide to Outsourced Loan Fulfillment Success offers expert insight to help you understand:
—How outsourced fulfillment can help your lending business
—Business considerations to take into account before jumping in
—6 areas to vet potential partners
—Insider advice from industry experts with 20+ years of experience and customer testimonials