Financial service providers are under tremendous pressure to streamline their operations with fluctuating market demands, pressuring the back-office teams. Working with some of the well-known and successful financial and lending intuitions across the globe, we collected few common fixes that apply in general to any and every financial institution. These learnings were gathered from clients who range from originations to servicing to due diligence and some are also wealth management focused with white glove service. We consider this to be a great starting point when solving efficiency challenges for an organization.
A back-office team can be flooded with volume during one cycle and stress their systems to the limits, but that same team is more than 50% idle in the next quarter, and trying to keep everyone busy can be a challenge. Only a meticulously designed and well-maintained operations unit can handle such volatile trends.
Optimal use of back-office technology and software helps lenders address this challenge by efficiently originating or managing their loan portfolios. These products help automate everything from loan origination to underwriting to servicing. They can also help track and report the performance of loans. Loan originators and servicers should review their systems now to meet the changing market needs. Consider these areas that lenders often take for granted but could help save money and create much-needed efficiency:
- Email Ticketing Systems: This is an often ignored or taken-for-granted system that can act as the tip of the spear when it comes to optimizing efficiency. A basic email ticketing tool easily converts an email inbox into tickets or tasks and adds tracking and service level monitoring features, allowing companies to manage and monitor customer inquiries quickly, effectively, and efficiently. These systems also archive all correspondence for future reference, just as a client relationship management tool, providing accountability and a clear view of service level trends during a given period. While this methodology is not new, it optimizes operations and is one of the best ways to manage customer support inquiries. This strategy allows a business to respond quickly and effectively to customer problems with near-perfect service level scores.
- Loan Origination System (LOS): For lenders, the LOS is the most critical system in the company. Proper configuration and ongoing upkeep can transform a sound loan origination system into a potent tool that serves as the backbone for any origination shop. Because these systems are so complex, they need a thorough review and regular monitoring to ensure optimal operations. If the LOS configuration has issues or glitches, it can cause serious mistakes that could be detrimental to the entire company. Spending time configuring and using the LOS to its total capacity accurately is a big lift for a lender.
- Telephony System: In the old days, operators responsible for routing incoming calls by physically answering them and forwarding them to required extensions managed the 3. telephone system. Today’s world has cloud telephoning systems that have intelligent algorithms to interpret and route hundreds of calls simultaneously without the need for an operator to answer and direct them manually. The heart of these telephone systems, interactive voice response (IVR), can be customized to meet the needs of an organization. Lenders should look at their system’s features to confirm that the configuration meets the company’s needs and correctly uses the system’s features. In many cases, lenders do not bother to optimize their IVR settings and keep the initial default settings, preventing the company from realizing the full system benefits.
- Analytics and Reporting: Reporting is the oldest activity that we have known in anything we did in the name of trade. Initially, the owner or executor of a particular task was responsible for analytics by manually scrutinizing the reports. Today, the intelligence of analyzing a report has migrated to systems capable of handling different algorithms. A company must invest in a system that can extract, process and publish data in the desired format. There are many tools in the market, from databases to middleware to front-end dashboards for publishing different data sets. Companies can also choose to go open source. Essentially, a company needs to properly use an adequate number of reliable tools. Regular review of this automation will ensure compliance and reveal potential growth areas.
- Servicing platforms: This system helps manage loans and borrowers by tracking payments and delinquencies. It can also automate many of the tasks related to loan administration, such as sending emails and letters to borrowers and generating reports. These sophisticated systems can also help manage regulatory changes, market fluctuations, portfolio trading and other market changes. Companies should consider the possible use of a business process management (BPM) tool to integrate various ad hoc tasks that exist in a loan servicing business. A BPM tool brings method to the madness when handling large amounts of ad hoc tasks in a broad spectrum of the loan portfolio.
Financial institutions need a variety of back-office products to run their business effectively. Using the right products can streamline their processes and make their teams’ jobs easier. Additionally, lenders can improve their customer service by properly using back-office products and reducing the time it takes to process or manage loans. When all internal platforms work correctly, a lender can improve its bottom line and become more competitive in any market.