Auto lenders facing the uncertainties of the current economic climate are looking for every opportunity to reduce operating costs. For many lenders, the cost of resources that enable in-house auto loan servicing has become difficult to justify. In light of this, outsourcing auto loan servicing may be a more cost-effective alternative for auto lenders.
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Matching Resources To Changing Demands
Consider the costs associated with hardware and software that support your auto loan servicing today. While hardware costs have likely been depreciated, software licensing and support continue—and may grow. Modifying older systems requires programming skills, and these systems often systems don’t facilitate the rapid modifications required to meet changing industry requirements.
But technical resources aren’t the only issue. One of the most difficult aspects of providing auto loan servicing in-house is matching staffing resources to meet changing demand. In the years you’ve managed auto loan servicing, you’ve likely experienced boom and bust cycles and have had to staff accordingly. Hiring and training take away from your core focus on loan origination. Meanwhile, declining loan volumes can necessitate downsizing, resulting in unused software licenses and office space.
Are you paying for resources that go unused?
Cost Benefits of Auto Loan Servicing Outsourcing
Overhead costs associated with in-house auto loan servicing can be greatly reduced by outsourcing auto loan servicing. An auto loan servicing specialist makes continued investments in IT resources, integrated servicing systems, and experienced staff to bring greater cost and operational efficiency to every aspect of auto loan servicing.
These specialists incorporate technologies such as predictive modeling to gain a better understanding of payment patterns, find new opportunities to automate processes to improve customer service and reduce operational costs, and continually educate servicing agents on industry best practices. As a result, customer needs can be serviced with greater efficiency by:
- Enabling a smooth transition from funding to servicing by automatically importing all the relevant loan contract information generated during origination into the servicing system. Servicing agents have secure access to comprehensive loan information to immediately respond to customer inquiries.
- Supporting multichannel engagement. Borrowers can communicate with lenders via a variety of channels—by call center to resolve a problem, text for a quick follow-up to an inquiry, or post when paper documents are the only option.
- Self-service portal to manage payments, review loan details, or securely access relevant documents or statements. A self-service portal is one of the most cost-effective means of enhancing customer service and, in many instances, portals can reduce up to 50% of call center traffic.
Across all interaction channels, an experienced auto loan servicing provider captures and records customer communications, initiates and tracks workflows to resolve inquiries, and maintains a single source of relevant customer interaction history.
Automation Across All Areas of Loan Servicing
Automation is key to auto loan servicing efficiency. A modern provider’s system works as an integrated whole, incorporating automation wherever possible to eliminate manual processes that increase servicing costs. With an integrated system and automation:
- Up-to-date account information is immediately available to servicing agents and borrowers as a result of real-time transaction processing.
- Portfolio balances are automatically mapped to core general ledger account balances for prompt reconciliation.
- Workflows can be easily configured to meet changing servicing requirements, initiate, execute, and track all customer care activities.
- Workflow rules track and manage delinquent accounts, providing insights that are often missed by manual reviews of accounts.
- Repossessed vehicle inventory is rapidly liquidated to minimize vehicle storage costs.
Consider the number of manual processes, rekeying of data, and poorly coordinated tasks that impede servicing efficiency and increase operational costs in your current servicing system. Auto loan servicing specialists have already addressed these problems and continually look for additional areas to further improve efficiency and reduce costs.
Are you missing opportunities for automation to improve service and reduce costs?
Scalability Improves Efficiency and Reduces Costs
One of the most difficult aspects of providing auto loan servicing in-house is configuring resources to meet the needs of today. An outsourcing solution eliminates this problem by providing auto loan servicing resources that can easily be increased, decreased, or modified in accord with lending cycles. With this model, lenders no longer have to adjust IT, staffing, and office resources to changing loan volumes. As a result, overhead expenses are reduced and operational costs are more predictable.
Time To Further Explore the Advantages of Auto Loan Servicing Outsourcing?
If your current approach to auto loan servicing isn’t keeping up with changing industry requirements, delivering the level of expected customer service, or allowing you to operate in a cost-effective way, explore the benefits of outsourcing. Ultimately, increased efficiency, improved service, and lower operating costs benefit both lenders and borrowers, enhancing both the lending and borrowing experience.
defi SOLUTIONS provides loan management and servicing, and a wide range of technology-enabled BPO services. If you’re questioning the costs of your loan servicing system take the first step in realizing the benefits of outsourcing. Contact our team today or register for a demo.