In light of the recent economic ups and downs, businesses are having a more difficult time keeping up with all the work that needs to be completed while still keeping operational expenses relatively low. This can put them at a competitive disadvantage unless they employ solutions like a BPO company that allows them to scale back on internal operations and focus on streamlined processes.
More companies are taking the initiative to employ these solutions, and outsourcing is enhancing practices for a growing number of industries. The most recent operations to take advantage of the need for finance and accounting services are American financial institutions that have trouble processing work with fewer resources.
Banks outsource mortgage duties more frequently
The Wall Street Journal reported that new regulatory and industry demands are making it difficult for banks in the United States to maintain timely processes, and as a result, they're now outsourcing the work associated with servicing mortgages and processing foreclosures. The Wall Street Journal cited data from HfS Research that indicated revenues from this type of work have doubled in some countries over the past several years. Thanks to more industry regulations in the U.S.and a significant number of foreclosures in recent years, this has been a trend that could continue to be prevalent.
This has raised some concerns in the U.S., but the process has been touted by many industry executives who guarantee an outsourcing company won't be giving the final go-ahead when it comes to foreclosures. Rather, these companies put the necessary documents in order, review loan history and ensure lenders took the necessary steps to reduce monthly payment amounts so American banking professionals can sign off them in a more timely fashion. This frees up more time for bank employees and allows them to better allocate their time to more important or risky tasks.
A growing trend
The level of scrutiny new regulations require banks to comply with means there is an unprecedented amount of work for financial institutions, and much of it can't be effectively handled by current in-house teams. As a result, The Wall Street Journal reported it's estimated U.S. banks spend $150 million per year to outsource foreclosure reviews and loan modifications.
Even if foreclosures slow in the coming months, these companies will still see business from U.S. banks in the form of mortgage originations, especially as the housing market picks up. This will only further the need for financial institutions to streamline current practices and shift some responsibilities to outsourcing companies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.