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Smaller and mid-sized brokers are increasingly choosing to outsource loan processing due to the challenges of workload and costs, according to loan processing provider Brokers’ Back Office.
Anshu Lukka (pictured above), the director of Brokers’ Back Office, said loan process outsourcing is becoming more prevalent as brokers seek to optimise operations and provider a better customer experience.
He said the experience of his business is that smaller and mid-sized brokers are now choosing to outsource loan processing rather than the traditional large brokerage players.
“Even brokers who are new to the industry or only have just a few years’ experience are now considering the option of outsourcing their back office to other countries. They find it challenging to handle the workload and cost of managing loan processing in-house,” Lukka said.
Outsourcing used to be limited to larger brokerages, Lukka said, who would in the past contact Business Process Outsourcing (BPO) providers to hire a team to handle their loan processing.
“That’s different now. Technology is helping that, and there’s obviously a massive cost saving opportunity for brokers in having loan processing done offshore,” he said. “It’s also become possible now to find people like accountants, finance consultants and others with experience in an Australian mortgage market context. It’s becoming a global market.”
Brokers’ Back Office has experienced a “significant increase in demand” for its loan processing services in recent times, with its team growing from 40 to 75 in the last 12 months.
The business’ loan processing personnel are located in India. Its staff are directly employed on the ground by its local arm, which is set up as a subsidiary company of its Australian business.
Lukka said brokers looking at loan processing outsourcing in 2023 were mainly looking for ways to streamline their operations and provide a more efficient service to their customers.
“By outsourcing, brokers find they can focus on building relationship with their clients and providing personalised service,” he said.
Lukka said other reasons included cutting payroll costs, which some brokers say are becoming increasingly difficult to manage in a high inflation, skills shortage environment.
“By outsourcing loan processing brokers can save up to 70% in their payroll costs.”
He said being able to use staff with genuine experience in lending, not having to train new staff, and not having to worry about issues with staff turnover were other points of attraction for brokers.
Lukka said he expected the market to continue to grow as more brokers realise the benefits.
“I believe brokers will become more specialised in their core competencies, and outsourcing will become a standard practice for non-core business functions,” he said. “The outsourcing trend is not limited to new brokers; established brokers are also turning to outsourcing to concentrate on their core competencies and drive growth.”
Brokers choosing to use Brokers’ Back Office are offered either a deal-by-deal service or a dedicated team member or members supported by an experienced supervisor when required.
Approved by the majority of aggregators, the company last year achieved an ISO 27001 certification for information security, which it said provides comfort to brokers that sensitive data is protected.
