Bringing front-line lending efficiency to back office operations
Process automation isn’t a new concept for the mortgage industry. Over time, lenders have realized that the processes – new loan and renewal – are very paper-intensive. Not to mention, there’s a lot of sending documents back and forth among lenders, support staff and underwriters.
So, naturally, they did something about it. In many cases, that something was software, a combination of document management, imaging, workflow and process management.
However, that’s where the efficiency stopped – the front-office. Lenders found the competitive advantage they were looking for, and that was enough.
Today, it’s not enough anymore.
With any advantage being a competitive one, there’s (finally) a rapidly increasing trend in taking that automation to the back-office– and with big results. In fact, at a recent presentation at the MBA’s Mortgage Operations conference, it was reported that lenders can save $2,000 per loan in those back-office, operational expenses by going paperless.
I’m usually pretty skeptical of stats, but that one stuck with me. It put the back-office benefit in the context of the front-office – exactly how it needs to be positioned to be heard.
So where is this $2,000 savings coming from?
Looking at the primary administrative functions, the ones that usually come to mind are accounting and human resources. Let’s take accounts payable. Through integrated document management and workflow, organizations have the ability to set up automated processing for purchase orders, invoices and exceptions. This significantly decreases turnaround time and allows institutions to take advantage of early payment discounts and eliminate late-payment penalties.
In human resources, it’s all about employee productivity. Much of this department’s time is spent manually performing administrative tasks such as performance evaluations, compensation plan changes and time-off requests, or more routine functions, like changing name and address data, entering vacation dates, and filing or retrieving employee records. By streamlining and automating these processes, HR employees are able to be more efficient and spend time on more critical tasks, like recruitment.
These benefits are all well and good. But lenders need to go beyond even these departmental views of the back-office. There are huge opportunities for savings in other areas, areas that almost all employees touch every day.
I have a few ideas in mind of what these areas are, but what do you think? What else is the mortgage lending business missing right now in automating the back-office?