October 13, 2022 — Find anything intriguing below? We are talking about lender trends as they pursue vendor relationships. Let’s meet up in Nashville at the 2022 MBA Annual Convention and Expo to talk about these, or whatever is on your mind.
With the refi feeding frenzy now ended, the market has flipped and times are tough. Like every prior down cycle, lenders begin to re-trench and stick to their core competency of underwriting loans. They look for value-added partners for many other duties.
OBSERVATION: We must be in for one heck of a rough patch, based upon the the number and makeup of leaders reaching out. I have not seen this much activity in 10-years.
There has been a steady increase in the number of RFPs being issued. We have helped write and/or respond to many within the past several months. In some cases, RFPs are not mandated by company policy, so lenders simply seek guidance on, “which vendors should I consider?” We help reduce the risk of choosing poorly—often for FREE! For over a decade now, we have helped lenders and vendors find each other.
Below is an update on where we see most activity from lenders. It’s all about cost cutting and shoring up the balance sheet—as well as an urgency to set themselves up for when volumes are robust again. Will a readily available workforce be there?
While few people actively talk about it, often for political reasons, global outsourcing remains very much in demand. Interest generally rests with India, the Philippines, Central and South America. Each have their respective Pros and Cons.
Lenders savor the flexibility to ramp up and down much faster than possible on their own. Cost saves, of course, remain the primary reason to outsource, followed by an ability to have around-the-clock production. Offshore resources work on files while we sleep, ready for next steps when we begin our U.S. workday.
The global workforce is incredibly capable and talented, with vast abilities in virtually every role in the lending process. We have even seen substantial ability in the underwriting function. Now, keep in mind, loan decisions CANNOT be made offshore. However, global talent has the capability to do so. Some lenders ask their offshore teams to ‘make approve/decline recommendations’ for their domestic underwriters to consider.
Artificial Intelligence (AI), Machine Learning (ML) and Robotic Process Automation (RPA) continue gaining meaningful traction. Leaders I have spoken to view automation investment as an imperative, generally with three major objectives:
- Productivity gains and cost reduction
- Service level improvements
- Competitive leverage and differentiation
- Paying vendors for outcomes vs. headcount ('lift and shift')
- Vendor pruning—reducing the total number of vendors
- Lender acquisitions and less formal partnerships—having to make vendor choices (who remains?)
- and more
Outsourcing and automation technology give you bandwidth and productivity enhancements. It helps during this downturn, but will be essential when lending volume returns. Given what we see today via hiring troubles in every industry coast-to-coast, it is a good idea to set yourself up to hedge against these conditions when it comes time to hire.
What else is on your mind? Let's chat.
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Thanks for reading.
Scott Roller, President