The market for outsourced servicing options for first and third-party servicing has matured greatly over the past 20 years. Outsourcing initiatives in the early 1990’s morphed into globalization initiatives in the late 90’s, ultimately resulting in meaningful investments in longer-term strategy. Certainly, the market has evolved to the point where Credit Unions need to have an outsourcing strategy… specifically one that addresses call center operations. As Credit Unions of all sizes search to enhance value to it’s membership, choosing the right servicing partner that will create operational efficiencies while mitigating risk , while allowing you to focus on your core business, is a very big step in realizing that added value.
Over this time period, off-shoring of call centers grew as well. For a variety of retail customer service businesses, the downside was minimal, but for Credit Unions, the stakes were much higher due to direct customer interactions requiring regulatory compliance as well as brand protection
Therefore, it is more important than ever before for businesses to partner with a servicing organization that not only understands Consumer Finance Protection Bureau (CFPB) regulations, but one that places compliance at the very forefront of their business model, and treats your brand as their own.
All of these factors have generated significant opportunity for outsourced call centers and competition in the space is picking up accordingly. Given so many considerations related to domestic, near-shore, and off-shore outfits, selecting the right call center is an extremely important consideration that comes down to two main criteria: how well can they perform and how good are they at managing risk?
Managing Risk
The up-front process for evaluating an outsourced call center partner is meant to be stringent. Most companies start by evaluating capabilities to ensure the potential partnership is a match for the portfolio, but it is equally important to dive into compliance and risk management. Some key categories to consider are:
- How long has the company been in business, what is their financial health?
- What is the company’s compliance management system? Do they have a Chief Compliance Officer that reports to the board? What happens in the event of a consumer complaint?
- Did a review of all compliance training demonstrate that agents are trained on the right regulations with adequate frequency?
- Does the company have a demonstrated history with all product lines offered by your Credit Union
- Does the company have specific expertise in managing the target asset? For example, if the asset is sub-prime auto, the company should have skip, recovery, and asset disposition teams.
- What is your approach to managing vendor risk? Do you require a back-up servicer?
- What is the actual risk you are outsourcing? For basic inbound calls and early care, the risk will likely be lower than outsourcing past-due collections.
- What is the call center’s disaster recovery / business continuity plan?
- Is the call center multi-site? Are these additional sites domestic or international?
Delivering High Performance
Ensuring high performance from your outsourced call center partner should be considered up-front. Service level targets should be clearly stated in a Service Level Agreement (SLA). Measurements are tangible and should be communicated and “coded in” at the very beginning of the partnership.
It’s important not to overlook the intangible either:
- What are your expected returns from outsourcing? Economic? Customer satisfaction?
- Is there absolute alignment between the client and vendor on delivering those returns? What is the level of expertise required to be successful?
- Who is running the company? Do they have experience in managing your specific asset?
- Have you built a vendor performance scorecard? Do you know what KPIs you want to measure and hold your vendor accountable to?
- How transparent are the operations? What type of portfolio management reports will be provided?
- What is the level of control that the outsourcing client can exert over the call center? Will the call center allow frequent off-site audits? On-site audits? Is the call center management team open to feedback, and if so, will they respond in a meaningful way?
How the market is pulling it all together
A number of financial institutions and their partners are getting it right by considering best practices such as:
- Scrutinize, evaluate, and drive the performance of outsourced vendors. Having an internal vendor manager that will serve as a liaison and single point of contact between companies will support an open line of communication and help drive vendor performance.
- Success in outsourcing requires a real commitment to the model, and to maximize returns, ensure that your outsourcing partner is completely transparent, meeting your SLA expectations and protecting your brand.
- A sophisticated outsourcing strategy that employs multiple outsourced partners across a variety of locations (domestic, offshore) can often be found in a single shop; many domestic call centers have off-site locations or are tightly integrated through strategic relationships, and this can ease the load of managing multiple vendors. By partnering with a company with multiple strategic locations, smaller companies can reap the benefits that larger companies are able to do across multiple vendors.
About Servicing Solutions:
World-class loan servicing professionals who are impassioned to protect the value of your brand, portfolio and investment. Our pledge is to leverage our vast amount of experience and knowledge along with applying emerging technology and analytical expertise resulting in, maximized profits and a best in class Servicing Solution.
About the Author: Cesar Guzman is currently the Vice President of Operations at Servicing Solutions. Cesar brings over 20 years of experience within the loan servicing industry to this role. As Vice President of Operations, it falls upon Cesar to oversee the day to day servicing operations across multiple locations. Cesar’s calm and steady leadership, combined with his commitment to creating and fostering a learning culture and an exceptional work environment, are the driving forces behind our ability to ensure we exceed all of our clients’ performance standards while providing first- class customer service
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