Think outsourcing and people automatically think offshoring and then panic about how their clients will react to calls being routed via the Far East and India.
But we have to recognise that brokers are finite, so we need to find ways of working smarter and developing a more efficient business model that can cope with a larger client bank.
First I’d like to demolish three key myths that exist around outsourcing:
MYTH: ‘Your mess for less’
No one can do what you do – better, faster and cheaper – if they start from this premise. If you are thinking about farming out various processes from your business, beware of the consultancies, agencies and third party providers who offer this ‘service’.
First, it is insulting that they consider your business a mess. Second, they need to offer a great alternative that drives efficiencies and delivers savings for both you and them. Third, with this approach they are not thinking about your customers.
MYTH: It’s not possible to outsource any mortgage broking activity because of regulatory issues and possible brand damage
While client relationships will undoubtedly be an area in which brokers excel and therefore shouldn’t consider outsourcing, there are a number of other activities associated with your business that should be considered for outsourcing:
IT:
Cost reduction and risk management are two challenges on the priority list of most mortgage intermediaries. Many factors contribute to inefficiency and control issues although on a day-to-day basis technology is a key driver.
Lenders in particular, but also some networks, have been battling obsolete technologies and aging legacy systems that are inappropriate for today’s fast-paced business needs. Lenders and advisers – via their networks – need integrated operations for increased agility and responsiveness. Leading edge IT is critical to this.
Closer to home, brokers need to decide whether it is appropriate to invest in their own IT skills – to maintain databases, update websites, and deal with glitches that require the insight to know if it is a case of ‘turn it off and on again’ or a ‘blue screen of death’.
Marketing and PR:
While no one knows our business better than we do, presenting our knowledge and skills to a mass audience takes a different skill set.
So many brokers are reluctant to invest in this area because they feel they can make bottom line savings by doing the job themselves.
The key question to ask is ‘if you weren’t doing this, could you be adding to the bottom line?’. If time spent on marketing activity – calling journalists; negotiating and booking advertising space; writing articles; designing advertisements and posters –takes you away from client servicing, then it is not the best use of your time and you should consider employing the professionals to do this work on your behalf.
Overseas or other specialist advice:
Saying ‘no we don’t/can’t do that’ to a client does not sit well with most brokers. But there are some specialist fields that mortgage brokers don’t yet feel confident to advise on such as overseas, lifetime mortgages, and debt issues to name just a few.
The right networks make it easier for brokers by not only offering links to strategic partners, but also by offering brokers the chance to shadow the work as it is being carried out so they benefit from some on-the-job training and also satisfy themselves that their client is in safe hands throughout the process.
Administration and call centre activity:
There comes a time when every mortgage broker has to make the decision to grow the business through recruitment of admin support.
To mitigate the risk of recruiting the wrong people – whether secretarial support, customer service or call centre staff – brokers can test the water by outsourcing the activity to reputable third party providers.
MYTH: It is still commonly assumed that outsourcing means relocating call centres to lower cost specialists in Asia and India.
You can outsource without offshoring and lessons learned in the early days of outsourcing ensure that organisations consider carefully which services to put offshore.
Stories about Indian graduates being trained to sound Mancunian; make small talk with UK-based customers about Coronation Street and the rain had their comical side. But for those consumers who genuinely struggled to communicate with their insurers, a serious issue emerged.
A media backlash saw banks and life offices turn tail and relocate operations to the UK. In what would have been described as systemic racism had the backlash been about Liverpool, Glasgow or Cardiff accents and cultures, to name just three of the call centre capitals of the UK, organisations bowed to public pressure to repatriate their services. Although there is more to it than that.
Outsourcing low value call centre work to India works in principle but actually the risk to brand is too high. And while UK call centre staff once cost up to three times those in India, a combination of India’s high inflation, and the UK’s strong and adaptable labour force boosted by Eastern European workers means the gap is inevitably closing between the costs of the labour force. Technology also means that call centre platforms are delivering more automation and can deal with a greater volume of calls. Three years ago, it might have taken 150 people to run a typical call centre but today the same service can be delivered by just 80.
However, moving the back office processes overseas enables companies to concentrate on the strategic direction of their business without the risk of getting bogged down in day-to-day operations. It also means that outsourcing specialists can exploit synergies and achieve economies of scale making the proposition far more economically attractive to clients.
Alternatives to outsourcing
For some brokers, the idea of outsourcing is a step too far. The trust and rapport between adviser and client is at the root of your proposition and we have all learned lessons from the chase-the-dollar strategy of banks who have tried and failed to maintain a relationship with their customers by doing everything they can – including outsourcing, centralisation and process re-engineering – to keep the customer at arms length.
Mortgage intermediaries fall into two categories:
- driven, professional, aspirational people doing the job of two or more people, managing every detail of their daily business.
- dedicated professionals who focus on servicing their clients well, relying on the support and assistance of technology, additional staff or outsourcing.
The second category has already structured their business to take advantage of the tools that are available and should be reaping the rewards of their long-term vision.
A supportive network will help both categories of brokers to successfully grow their businesses. After all, a network working with you to plan and implement the strategy to take the business to the next level, is just as important as them negotiating the best procuration fees and offering best of breed technology.
The right network goes even further, with a package of business development support to enable brokers to offer new product lines and services; assist in recruitment; and provide a range of training, mentoring and development opportunities. Networks who care about their members not only work with brokers to free up time to actively service more of their client base, but also support those advisers who are looking for some time out for additional R&R. After all, to the broker, four hours spent on the golf course is four hours of networking.
Home of Choice employs five business development directors to advise on 25 revenue generating schemes. We work with firms to tailor business models to their needs from supporting recruitment strategy to peer group workshops. Interestingly, one of our most powerful business development tools - which was originally conceived as good client servicing - is the weekly email to advise on a Monday the remuneration they will receive later that week. This weekly reassurance helps member networks focus on their day job with confidence rather than worrying when/how much will be paid – it even serves as a challenge to improve figures for the following week.
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