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» VISIT US ONLINE @ DSNEWS.COM 61 the firm is focused on creating processes to memorialize the requirements and to monitor compliance long term. Nackley, like other third-party vendors in default servicing, is gravely aware of one detail: everything costs money, including compliance, and the price tag for third-party vendors has reached a new ceiling. ere is even whispering in the industry about companies who may be "too small to succeed" mainly due to the fact that there are so many competing demands on companies, creating a situation where firms without a massive infrastructure remain challenged, according to Nackley. Hansen remembers clearly one provider who fell on hard times simply because it lacked the resources to make a needed software update. e same firm eventually lost volume. "ere is a lot of pressure on expected margins," Hansen said. "When you run a company, there is an expectation of a profit margin. I think margins have fallen. If you look at the life cycle of the business, you will see competitors continue to fall off. e firms that continue to compete and win, they have pushed the envelope in technology. ey are asking how do we automate more, how do we move this file forward more efficiently?" Sam Tucci, business development manager for US Best Repair Service, Inc., says the property preservation firm now has to pay more just to ensure background checks are run on virtually every party that works on a property. "We have always performed background checks on vendors," he says. "But they are starting to require a background check on every single person that services the property." Previously, firms like Tucci's limited their background checks to business owners providing services, but the list has grown to include checks on foremen, lawnmowers, plumbers, and electricians, Tucci explained. "We are now talking about 12 to 15 background checks," he says. "It is more cost management for us." But under today's regulatory landscape, it's not an option to say no. TECHNOLOGY TO THE RESCUE ird-party vendors succeeding today leverage technology in new ways to stay ahead of the curve and to ensure compliance with all regulatory standards. If you ask Tucci to name one of his firm's great successes stories, he will point to the firm's ability to create its own proprietary software to manage everything from vendor management to contacts and compliance. "We always stayed ahead of the game," Tucci said. By being proactive, US Best has never been caught off guard when there has been a need to implement new regulations. In fact, the firm created its own technology to handle regulatory compliance and business metrics. As a result, Tucci concludes that "we have a system here that keeps track of what we are doing – a quality management type of system." As for what the servicers want from US Repair? eir demands have grown, Tucci admits. "e biggest thing they want to know is who do we work with?" ey also are paying attention to training and procedures, he concluded. Adam Hansen also points to tech solutions as a saving grace in today's environment. "We have leveraged technology to help us demonstrate and establish our compliance," he said. "e technology we use right now is used in order for us to comply with audits." Despite coming a long way with technology, challenges remain, Hansen admits. His firm receives multiple client audit surveys weekly, each usually containing more than 300 questions to demonstrate its compliance with a client's particular work regime. Unfortunately, the end result is you have multiple clients with different regimes asking the same question in different ways. ere are multiple ways to answer these questions, and programming that into the system so the answers are deployed in an automated fashion is a tall order, Hansen admits. Along with technology, staying proactive is an essential tool for third-party vendors. Who is most likely to succeed is fairly easy to predict. Efficiency and innovation will be the defining characteristics of those who flourish in the industry, Tucci suggested. To illustrate his point, he cited an old Lewis Pierson quote, saying, "Business is like a man rowing a boat upstream. He has no choice; he must go ahead or he will go back." Taking a moment to ponder this quote, Tucci added, "We don't really have options. e margins are getting slimmer; they are getting slimmer for us – for everyone. Servicers have more they have to do, and it all rolls down here." Still, he says industry-wide, many vendors are staying successful as they adapt and embrace the fact that change in the post- financial crisis world is inevitable and even inspiring at times. "We don't really have options. The margins are getting slimmer; they are getting slimmer for us – for everyone. Servicers have more they have to do, and it all rolls down here." COVER STORY M ARKET PUL SE SUCCESS FORMUL AS INDUSTRY INSIGHT INDUSTRY INSIGHT

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