Outsource or not to Outsource, that is the question...

To paraphrase Shakespeare’s Hamlet; to outsource or not to outsource, that is the question. Based upon the number of proposal requests in the sourcing industry lately, the banking industry is showing the signs of a thaw from a strategic growth perspective. The good news is that lenders are listening to their past critics and are seeking ways to improve cost efficiency and loan quality and as a result are becoming more open to the idea of outsourcing as part of the strategy. There are a number of positives to outsourcing but also some misunderstood “myths” of which I will discuss the top two today.



Myth #1: Outsourcing will cause a loss of jobs: Let’s kabosh that myth right now. Outsourcing does not cause a loss of jobs; running operations with a P&L statement in the red does. If left unchecked, it can cause a loss of not just a few jobs but everyone’s job in the company. The fact is, if done properly, outsourcing can streamline costs and processes enabling a lender to grow while maintaining a seasoned staff and increase revenue more rapidly than the associated costs.



Myth #2: Our work can’t be done by an outsourcer: This is another myth that comes up. Loan fulfillment is a step-by-step process filled with multiple “if, then” scenarios. I have had the opportunity to see several lenders’ processes and they are basically the same with a few nuances and varying check points along the way. In my opinion, the real issue here is a perceived loss of control or quality with the loan pipeline. This is where a detailed Statement of Work (SOW) and Governance document come into play. A lender should never begin an outsourcing project without a clear step-by-step process and ownership/responsibility plan which is detailed in the SOW. The Governance plan outlines the “rules” of the engagement with respect to expectations, communication process on performance, issues and production reporting to minimize any surprises.



Hopefully this has helped in a small way to emphasize that with a solid plan, lenders can take advantage of outsourcing to increase efficiency and revenue while lowering cost and maintaining control over the fulfillment process. If you have a comment or question, please drop me a note at thesourcingpro@gmail.com.