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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 40 October 2023 F E A T U R E S T O R Y TIME FOR ORIGINATORS TO TAKE A SECOND LOOK AT OUTSOURCING Peter Baci and Javed Shaikh of Mphasis Digital Risk explain how leveraging specialized skills and expertise through offshoring can improve the quality of service and overall customer experience. B y P E T E R B AC I a n d J AV E D S H A I K H T he year 2022 was one of the toughest years the mortgage industry has experienced in a long while, with the average cost to originate leaving lenders at a loss on each funded loan. This year has been just as challenging. As we begin preparing for 2024, mort- gage originators should once again look across the Pacific Ocean to countries that have long been used for offshore banking operations. Financial services companies have uti- lized offshore resources to great success for more than two decades. As we know, with the continued development of information technology (IT) and advanced communi- cation technology, our world has become a global village. As a consequence, cheaper, task-based work jump-started the offshor- ing/outsourcing evolution and has evolved into global partnerships revolutionizing entire industries. With that in mind, offshoring certain functions of mortgage operations to a third-party service provider located in another country still provides several benefits that should not be over- looked during a tumultuous time in the mortgage finance and real estate sector. Cost Savings O ne of the most significant benefits of offshoring mortgage operations is cost savings. Companies can leverage low- er labor costs in countries such as India or the Philippines to reduce operational expenses and increase profitability— and, most importantly, lower the cost of services and pass these benefits onto their customers. By reducing charges and the overall costs of processing a loan, lenders become far more competitive while increasing profitability and sustainability in a volatile market. Companies can also take advantage of tax holidays provided by different governments at specific loca- tions, such as special economic zones or software technology parks, thus further reducing operational costs. Increased Efficiency O ffshoring can also help increase efficiency by allowing companies to focus on their core competencies while outsourcing non-core functions. This capability helps reduce operational complexity, streamline processes, and assign experienced and expert workers to more productive tasks. Companies we work with that pursue this route routinely utilize and promote best-in-class process- es and procedures, having the benefit of working with multiple clients and plat- forms across the mortgage industry. Offshoring also provides efficiencies through their hours of operation. After all, time is money. Hours of operations can be set depending on each client's need either, be it working U.S. business hours or overnight U.S. hours—providing originators with practically 24 hour-a-day operation. This "follow the sun" approach reduces cycle time for loans, which leads to an enhanced customer experience. In some cases, offshoring providers are also able to provide consultancy work for their clients. The consultants review process flows, workflows, tools, and reports in an effort to create a more efficient and robust workflow. P E T E R B A C I is a VP at Mphasis Digital Risk, and has more than 20 years' mortgage experience across both originations and servicing. His record of success includes leading large-scale operations with a strong focus on improving the customer experience and increasing efficiency within departments. J A V E D S H A I K H is an Associate VP at Mphasis Digital Risk, and has more than 22 years of experience in the offshoring industry across multiple domains including customer service, banking, insurance, and the Australian and U.S. mortgage sectors. Javed is a NMLS Licensed Manager (MLO), leading delivery for multiple clients across multiple sites.