Inflation is through the roof in the US and the economy might be headed towards a recessional phase. After rising to 9.1% previously (the highest in decades), inflation reached 8.5% in July 2022. The rising interest rates and the falling value of the US dollar have significantly affected the mortgage industry and posed a threat to their survival. Many mortgage providers are struggling to stay afloat during these challenging times, some even shutting down their operations.
The consequences of inflation are alarming for mortgage businesses as frequent layoffs have become the most common measure for cutting down on costs. However, outsourcing can be the silver bullet for mortgage businesses to stay agile, navigate inflation successfully, and mitigate the adverse effects of the troubled economy.
How Mortgage Process Outsourcing Can Help
Mortgage process outsourcing can strengthen businesses in many ways because off-loading less important tasks can help maintain margins while focusing on essential aspects of the business for survival.
1. Reduces Overhead Costs
According to the 2020 Global Outsourcing Survey by Deloitte, cost reduction is one of the primary benefits of outsourcing for most industries, and the mortgage industry is no exception. During a tough time like inflation, it’s important to cut costs to stay afloat.
Traditional mortgage processing with in-house resources is expensive as you need a dedicated team (which you need to train), infrastructure, and time. Salaried employees that are an asset to your company when the business is profitable can become a burden to maintain when things go south. Outsourcing mortgage processing to a third-party, especially offshore, not only cuts down on overhead costs but also increases efficiency. Moreover, you can customize the services you are getting from a third-party based on your requirements while saving costs on employing and maintaining in-house resources.
2. Offers Workforce Scalability
When the demand for mortgages is high in the market, lenders generally rely on hiring new employees to meet the workload. However, when the market becomes volatile, they end up with a staff that doesn’t have much to do, leading to layoffs. The issue of scalability can be resolved with outsourcing as mortgage providers can easily scale the workforce based on the volumes of loans and the hours of work needed.
3. Enables Access to the Latest Technologies
Investing in the right technologies can help mortgage businesses in beating inflation. However, not every business can afford to make hefty investments, especially when the market is not favorable. Also, technology implementation can be overly complicated when done in-house. Moreover, mortgage businesses should keep the costs low amid inflation. Partnering with a mortgage outsourcing partner can allow access to the latest technologies like Artificial Intelligence (AI), Robotic Process Automation (RPA), and Blockchain. Many mortgage outsourcing companies offer mortgage process automation solutions as well that help transform traditional processing methods, thus accelerating the loan cycle and reducing loan processing time from months to days by leveraging the power of technology. So, in that case, you get an ideal combination of industry expertise with technical know-how.
4. Better Customer Experience
Neglecting customer experience during a challenging time like inflation is a major risk. According to a recent study conducted by Ipsos on how inflation affects customer experience expectations, there can be an inflated demand for better customer experience as inflation rises. If the customers have positive sentiments about your company, they will continue to engage with you even when prices are rising. Moreover, they might have higher expectations of enhancing customer experience from you. By outsourcing your mortgage process to a third party, you can focus on improving the relationship with your customers while your offshore outsourcing partner works on minimizing errors, streamlining processes, and offering undisrupted services 24/7, thus enhancing the customer experience of your mortgage services.
The Key Takeaway
When inflation is on the rise, going for a vetted outsourcing partner is a good idea. Besides saving money, a mortgage process outsourcing company can potentially help your business in getting valuable insights that can improve your bottom line. This is the time to turn your setbacks into success with a secret weapon – outsourcing.