Compared to the lease or loan origination process, the servicing process is far more complex. It can last years, and may require more frequent interaction with a borrower across multiple channels. If payments are missed, significantly more time and effort are expended on a borrower. If the account goes to default, you have to coordinate legal action, repossession, and recovery of assets.
While large, nationwide lending institutions have the financial resources to invest in the office space, IT infrastructure, systems, and staff needed to handle customer support, payment processing, cash management, and collections, smaller lending institutions are coming to realize the challenges of maintaining efficiency throughout the servicing stage of the auto lending process flow.
Improving the Auto Lending Process With Business Process Outsourcing
TransUnion reports that in February, 10.9% of subprime borrowers with outstanding auto leases or loans were more than 60 days past due. That’s an increase from 10.7% in January and 8.7% from the prior year. And for six consecutive months, that percentage has been increasing.
Those statistics translate into an increasing load for any lease or loan servicing department. On top of the quotidian support for borrowers with current accounts, servicing agents are now required to devote additional time to manage a growing number of delinquent accounts.
Lenders who have difficulty hiring experienced staff or can’t easily scale IT systems and software licenses to handle the increased servicing demand are looking at business process outsourcing (BPO) to help their auto lending processes flow more smoothly.
A well-established BPO provider can handle all the activities associated with lease and loan servicing, from the initial borrower welcome call all the way to the final payoff or vehicle remarketing. In particular, the BPO approach facilitates smooth auto lending process flows in the following ways.
1. Seamless Transition From Origination to Servicing
A BPO provider will integrate their systems with your loan origination system to allow for a smooth transition from the lease or loan origination process to the servicing phase. Automation ensures that all relevant borrower information is quickly and securely transferred to the BPO provider’s servicing system.
With that information in place, a servicing agent then initiates a welcome call to verify contact information, educate the borrower regarding payments, and answer any questions. A smooth transition of data and a timely welcome call can set the foundation for a positive lender-borrower relationship that helps the servicing phase flow smoothly.
2. Skills to Meet Demand
Established BPO providers have the physical, technical, and staffing resources to easily accommodate changing lease and loan volumes. When delinquencies are increasing, a provider can quickly hire experienced staff. The best providers employ multilingual agents to make effective communication with borrowers easier.
3. Resources to Boost Efficiency
IT systems are designed to easily handle increasing workloads—they can scale up without delay. And compared to most smaller lending institutions, BPO providers have the technology and processes in place to facilitate a much higher level of efficiency. Workflows and decision rules eliminate manual tasks; fraud detection capabilities alert to potential problems with the goal of rapid resolution; and payments made by lockbox, ACH, or in-house are quickly posted so that borrowers and serving agents have accurate account balances.
For many lenders, the varying federal and state lending regulations are obstacles to a smooth auto lending process flow. Leading BPO providers understand the complexity of navigating these regulations. They have the systems and processes in place and trained servicing agents to ensure that all interactions and communication with borrowers meet regulatory requirements, including the maintenance of collection licenses for all 50 states.
And as delinquencies grow, the best BPO providers can initiate proactive outbound campaigns to help reduce defaults by securing promises to pay. And for the inevitable defaults, optimized bankruptcy and repossession management processes efficiently handle the matter.
Focus on a Smooth Auto Lending Process Flow
The best BPO providers for auto lending have developed and refined their systems and processes to facilitate a smooth auto lending process flow. Features include:
- The tight integration of data as it moves from lease and loan origination to the servicing phase.
- Seasoned service agents with years of lending experience utilizing systems and tools that enable them to handle the full spectrum of borrower requests and quickly resolve them.
Continuous investments in upgrading systems and skills to better respond to economic changes allow these providers to far more efficiently manage the complexity of lease and loan servicing than most lenders can provide in-house. If you’re struggling to achieve a higher level of efficiency and smoother auto lending process flow, it may be an opportune time to consider working with an experienced, established lease and loan BPO provider.
defi SOLUTIONS provides software solutions and services across all phases of the auto lending process: origination, servicing, and business process outsourcing. These offerings are tailored to the needs of captive lenders, regional banks, finance companies, credit unions, and lending start-ups. If you’re looking for a better solution to make your auto lending process flow more smoothly, contact our team today or register for a demo.