Business Process Outsourcing: The Pros and Cons for Auto Lenders

Exceptional service is what separates industry leaders from everyone else.

They are the companies that are not afraid to change their business model and are always looking for new ways to provide the best services for their customers.

With the rise in digitization, customer expectations are higher than ever. It can be tricky trying to remain competitive and deliver a personalized experience. One of the easiest ways to ensure your company keeps up with changing customer needs and expectations is to use business process outsourcing (BPO).

Let’s take a look at the business process outsourcing pros and cons and what they could mean for your business.

What is Business Process Outsourcing?

Business Process Outsourcing is another form of outsourcing. It refers to the practice of contracting out various business processes, such as data processing, customer service, accounting, human resources management, and call centers to an external company. 

Here are a few stats about BPO:

57% of businesses outsource processes because it helps them focus on core processes

31% of organizations witnessed a rise in service quality with outsourcing

44% of company’s experienced significantly lower operating costs as a result of their current BPO

Source: Statista

Customer service is a vital part of the BPO industry. The right BPO provides customer service that will help you maintain your brand reputation, retain customers and cut your operating costs.

Gaining an Edge in a Competitive Market

Auto lending companies make up one of the most competitive business markets. Because of this, auto lenders are turning to BPO as a way to deliver consistent service to their borrowers. 

The increased accessibility in online lending has made it easier than ever for people to be picky about who they want to work with when buying a vehicle. With so many lenders competing for consumer attention, BPOs can offer customized solutions for auto lenders looking to personalize their services. 

Let’s discuss business process outsourcing pros and cons for auto lenders and some things that you need to consider before reaching out to a potential outsourcing company:

Business Process Outsourcing Pros for Auto Lenders

There are numerous quantifiable benefits of outsourcing loan processes to a third-party provider. Of course, there can be disadvantages as well, but with a white-label industry expert like defi SOLUTIONS, you can avoid the pitfalls. Let’s begin by examining the pros:

Configurable Services Tailored to Your Brand Identity

Experienced outsourcing providers will work with your lending company to help you transition from in-house to using a BPO. The transition doesn’t have to be all or nothing, it should be tailored to your clients and operations.

The decision to outsource should still reflect the unique way you engage with your borrowers. You can choose the type or level of services, plan how you want the transition to go, and configure the BPO to your brand identity. 

Outsourcing doesn’t mean losing touch with your customers either. Your BPO servicer will interface with your customers and report important information back to you. In addition, they have the ability to provide expert, round-the-clock services to keep your business up-to-date with today’s customer service standards. 
The best BPO providers offer a range of services, including:

Title Management  Title management for sign-off processing, validating vehicles, lienholder, and registered owner. Checking up on delayed titles, etc.	24/7 Call Center Support Optional 24/7 call center servicing hours or customized hours that can include weekends and holidays.	Foreign Language Support Call center agents fluent in foreign languages to support diversity with borrowers.
Return Mail Processing  Return mail processing to update billing information, validate returned mail addresses, locate hard-to-find recipients.	Cash Management Cash management, including research for rejected items, payment processing, and account payoffs, reconciliation, and cash disbursements.	Proactive Campaigns Proactive campaigns to lower defaults by coaching borrowers on staying current and reaching out to delinquent borrowers to secure promises to pay.

With the right level of BPO services backing up your lending company, you can focus your attention on growing your business.

Provide Consistent Service While Reducing Overhead Costs 

Imagine being able to scale your lending business without having to worry about hiring and training, buying more IT equipment, or expanding your office. 

The benefit of using BPOs is that they are able to easily scale to the size and scope of your increased workload without the resulting cost of in-house operations. 

With a full-service center at your disposal, you’ll never have to worry about the compounding costs of growing your business. The most professional business process outsourcing company adopts best practices and uses the latest technology. This means that while outsourcing can reduce or even eliminate some of your overhead costs, your lending company will still perform at the highest level. 

Business Process Outsourcing Cons: The Potential Problems of Working With the Wrong BPO

We have discussed the numerous benefits of working with a professional BPO provider. Now let’s discuss the risks of choosing the wrong BPO provider. Here are some of the pitfalls you may run into: 

Communication Difficulties Can Disrupt Workflow

Communication is critical in every aspect of a business—especially in the loan cycle process. Before anything, a strong, trustworthy relationship needs to begin developing. It takes time to grow, and both parties should be putting in the effort.

When lenders and service providers are not communicating sufficiently, aligned, or operationally prepared to work, results are that services aren’t performed, implementation activities get stalled, everyone is frustrated, and the expectations of an improved loan program fall short.

Shared Data Can Pose Security Risks

Allowing a third party to monitor your customer data or business financial and performance data can be uncomfortable. Therefore, your provider must have systems in place that are proven to protect your sensitive information. If the provider cannot guarantee safe data, you will be taking easily avoidable risks. If they are unwilling to be transparent with their business as much as you are with yours, then you do not have the right provider. 

Loss of Quality Control

Asking another company to take over specific loan cycle processes may mean that you are stepping outside of your comfort zone for the sake of your business. But there are common questions that can come to mind about your BPO provider.

What if their quality of service is less than acceptable?
Are their staff as trained as they claim?
Are they truly capable of improving my loan program?

It’s normal. All you must do is look toward a third-party provider that guarantees to deliver on their promises, with a lengthy track record to prove it. Otherwise, you will experience a disconnect with the wrong provider and likely find they have little to no concern for your values as an auto lender, resulting in poor service quality that drives your business downward.

Final Thoughts: Business Process Outsourcing Pros and Cons

After carefully considering the business process outsourcing pros and cons, it is critical for your business to choose an experienced BPO provider that focuses exclusively on the lending industry. At defi SOLUTIONS, our end-to-end lending technology suite and white-label services remove the complexities within the loan cycle and set auto lenders on the path to success. We take a universal approach to our lending suite, so you enjoy efficacies beyond comparison at all stages of the process.