Servicing Operational Expenses: Strategizing Your Top Focal Points
Written by: Heather Papows, Senior Consultant- Loan Servicing & Secondary Market
A recent MBA Servicing NewsLink[1] published the results of their annual survey on the major components of direct servicing costs by functional area. As evidenced in the chart, a servicer’s top three expenses are in the areas of customer service, servicing systems (technology and processes), and loss mitigation; the three combined making up nearly 50% of the entire operating costs.
Servicers can use this information as a guide to direct their efforts and ensure they are getting the best return on investment in those areas. In many ways, customer service and servicing systems are so closely intertwined that they can be assessed together, where your servicing systems inherently should support your operation and the experience that both your customer/member and employee have.
To assess customer service is to focus on who you serve (your customer/member) and who you employ to serve them. How is your staff trained, how is their performance monitored? How well do they represent your institution, and what is the experience like for your customer/member when they interact with your institution?
When you next look at servicing systems, you are adding a layer to include how you serve that customer/member. This is through your technologies and automations, whether direct or indirect. Your core system of record, billing statements, and online banking portals are all direct. But don’t ignore the indirect systems such as insurance servicing platforms or tax payment vendors as well.
Lastly, loss mitigation is a highly variable cost that fluctuates based on market conditions- and an important contributor to serving your customer/member when they are facing hardships and challenges. Many institutions have not seen a lot of action in this area lately, but forecasters predict an uptick in this as we enter 2024.
Once you determine which components of servicing operational expenses you plan to focus on, you need to game plan how you’ll assess those items and in what ways you hope to improve them. Generally, a workflow analysis will cover all aspects of the operation- but it’s also timely and can become costly. It may feel more manageable to break it out into phases, looking at already identified challenges or complaints and prioritizing singular processes or systems to attack one at a time.
Whatever your priority may be, trust the seasoned industry experts at SCA! We uniquely provide not only the guidance but also possess the skillset to implement the changes you need, putting you on a speedier path to success! Our experience and knowledge on many platforms and many service providers allows us to bring industry best standards right to your fingertips! Contact Bill Dolan, Director, at WDolan@scapartnering.com or by phone at (617) 694-2617 for more information.
[1] MBA Chart of the Week: MBA’s Servicing Operations Study and Forum - MBA Newslink
