How to Streamline Your Loan Origination Process with Outsourcing

The loan origination process is a crucial part of lenders’ operations. However, it can get costly, time-intensive, and tedious given the repetitive nature of the various workflows that go into this process. 

In today’s competitive landscape, lenders are looking for ways to unlock efficiencies and do more with less to support sustainable growth. In many cases, these organizations look outward to relieve some of the pressure off their internal team. By partnering with a reputable outsourcing partner to execute the loan origination process, lenders will find countless benefits both in the back-office and for their borrowers as well. 

Throughout this post, we will dive deeper into the loan origination process, the advantages of outsourcing this process, and provide you with some helpful tips for successful integration that can lead you to more streamlined operations. 

Understanding the Loan Origination Process

The loan origination process refers to a series of steps that a lender takes to issue a loan, including: 

• Receiving applications
• Processing applications
• Underwriting the loan
• Disbursing the loan amount

The loan origination process is a critical operational component for lenders and must be done by qualified and experienced professionals who understand the lender’s criteria. Throughout this process, important decisions like credit approvals are made that could impact the lender’s bottom line. Thus, the accuracy and thoroughness of the loan origination process are vital to helping lenders avoid costly errors or gaining an outsized risk exposure. 

As we briefly mentioned above, each of these steps can get quite repetitive. As such, your internal team may tire of the tedious workflows that are involved at each stage of the process. But, precision and accuracy are not something that can be compromised during loan origination. 

In most cases, your team would prefer to work on more complex loan originations that require strategic thinking and high-level judgment–not the standard and repetitive cases. So if you want to free up your team to put more attention and detail into these complex scenarios, while still getting the same volume of originations done, you may consider outsourcing the majority of this process to an offshore partner. 

Advantages of Outsourcing Loan Origination

Lenders can enjoy a wealth of benefits when outsourcing their loan origination process, or even just certain components of it, to external partners. Continue reading to learn about some of the main advantages of doing so. 

Cost Savings

One of the primary benefits of outsourcing the loan origination process is the cost savings that lenders will experience. By some estimates, companies can save up to 50-70% by hiring an outsourced staff member in India versus hiring someone in-house for the same role. 

Amid times of economic uncertainty like we’re currently experiencing, companies are often looking for ways to tighten their budgets, making offshore outsourcing for a time-intensive task like loan origination so enticing. 

Better Efficiency & Quicker Turnarounds

Outsourcing your loan origination process will also result in better efficiency and quicker turnaround times. When you’re outsourcing to an offshore team in India, for instance, you can essentially run a 24/7 operation in tandem with your in-house personnel. This means your loan originations can be completed much more quickly, leading to better customer satisfaction. 

Plus, given the lower cost of labor, you can get more loan originations completed for less of an expense, helping you deploy resources more efficiently. By becoming more streamlined with the help of outsourcing, lenders’ internal teams can focus on their core competencies that promote growth and drive the business forward. 

Access to Specialized Teams

When you choose the right outsourcing partner, you can work with a team who specializes in just loan originations, not generalists. This can include talent that has deep expertise with loan originations, in addition to specialized technology or programs that are built to support this process that you may not have access to otherwise. 

Gaining access to specialized teams can leave you feeling confident that your loan originations are in good hands and being completed by the experts. Plus, it further enhances the efficiencies you’re able to gain by working with the outsourced team. It can even improve your risk management since the team members are more experienced, have managed a large volume of loan originations, and know what to look out for. 

Helpful Tips for Outsourcing Your Loan Origination Process

If you’re ready to take the next step and see how you can start outsourcing your loan origination process for more streamlined operations, continue reading through the following helpful tips. 

1. Assess Your Needs

Before you start looking for an outsourcing partner, you need to do a thorough assessment of your internal loan origination processes, identifying current pain points and inefficiencies. If you haven’t already, it can be valuable to consult with your loan processors at this time to get their firsthand feedback on what could be improved, where the majority of their time is spent, and what they enjoy working on most. 

Outsourcing your loan origination process is a big change, so it can be worthwhile to get your staff’s input to ensure they feel included at all stages of the implementation and that their voices are heard. These conversations may help you determine the scope of the outsourcing that you’re looking for, like full outsourcing or only partial, with your internal team still completing some of the stages themselves. 

At this time, you’ll also want to consider the scalability and capacity requirements that you’ll need from an outsourcing partner. Take into account your current loan processing volume, but also what you project for the future to ensure you find a good match that won’t limit your growth potential. 

2. Research Potential Outsourcing Partners

Once you have a good idea of what you’re looking for in an outsourcing partner, you can start researching different providers and creating a shortlist for yourself. 

You should assess their experience and expertise with loan origination, as you only want to work with qualified teams that will make your work easier and more streamlined, not more complicated. Make sure to consider relevant references and testimonials for further verification of their abilities.

This stage includes an evaluation of their security measures and technology stack to see if they’re up to par with your compliance needs and can support the loan origination processes they’re taking over for you. Given the sensitive data that is shared and stored throughout loan origination, this is something you need to evaluate in order to protect your clients and meet the relevant data security regulations. 

3. Create an Implementation Strategy

After you’ve gone through the research process and selected the right outsourcing partner for your loan origination needs, you can get to work on the actual implementation. This includes a transition plan and timeline for the integration.  

Collaborate with your partner at this stage to define clear goals and expectations from both parties and what is expected from their team. Are they only processing applications, are they completing everything but the underwriting? Ensure both sides understand their role in the loan origination process so nothing falls through the cracks.

Other important factors to take care of at this step include establishing effective communication channels, including key points of contact for each team. Plus, you’ll want to get on the same page about the data privacy and security measures they will need to adhere to to meet your standards and compliance expectations. 

4. Monitor & Evaluate Performance

With the integration complete, this doesn’t mean you should take a completely hands-off approach with your outsourced team. You’ll need to continually monitor their performance to ensure they’re operating to your expectations. 

This can include establishing performance standards and metrics and setting up a regular reporting schedule and review process. This allows you to meet with the team to gain their feedback and discuss any operational issues, challenges, or improvements that can be made for further efficiencies. 

Expert Loan Origination Outsourcing with Assivo

There are countless benefits to outsourcing your loan origination process, including better cost savings, improved efficiencies, and more. All in all, if you’re looking to streamline your operations and stay agile to deal with the fast-paced marketplace today, outsourcing could be the missing link to making this happen. 

When you choose the right outsourcing partner that has specialized expertise in loan origination, like Assivo, you can see quicker turnaround times, enhanced risk management, and more time for your internal team to focus on doing what they do best. We tailor the process to fit seamlessly with your operations and needs to help you scale operations without adding to your team’s workload. 

See why hundreds of companies have partnered with Assivo and request your free trial today!