Outsourcing of Title Processing: Use of Technology and Online Databases
Date: Tuesday , July 26, 2011
I think the question of whether or not to outsource backroom operations has been around almost as long as title insurance. The eternal question for companies is whether it is nobler to bite the bullet and make the investment in technology and people or to let someone else take that risk. I can tell you that there are pros and cons on each side of the issue. I can also tell you that for many lenders, outsourcing, on balance, makes the most sense in the long run. Here is why.
* Making the most of your people — The best use of those limited staff resources is doing what they do best – generating business and dealing with customers. It makes more sense for them to spend their time getting more loans, marketing the company’s services for the future and dealing with current customers than chasing to get court documents and finding out the taxes owed. Inside staff should do what they do best and let outside vendors finish the product on the back-end.
* Mobilizing best practices — Being an outside resource gives a vendor more freedom to adapt the best of the best practices. In-house staff is often constrained by what has been done before, the politics of the institution and corporate history. I find that in these shops, people have been there a long time and have not been given the freedom to adopt new practices that go beyond the way they have traditionally done things. The “Not Invented Here” syndrome keeps them from being able to try new things. As outsourcers, we have worked with a variety of institutions and learned to take the best of what we have seen. We have the freedom to change practices to make them better. We can bring in the lessons we have learned by tackling problems that most Insurance companies only see once or twice in a lifetime. Then, we can customize those best practices to the way that fits with what they want. We have the experience and freedom to do that precisely because we are outsiders.
* Bundling services to cut costs and delivery time — Bundled services mean less of everything – costs, time and data input. With bundled services, data is input once and used for everything from title to appraisal to mortgage insurance to closing. That means less staff time, fewer mistakes from multiple input of data and an ability to seriously lower costs.
* Putting technology to work — Better technology means processing quicker and cheaper. Yet, you would be amazed at the number of companies who are still handling many backroom operations manually. That is because it is expensive to bring in the latest title processing systems. Clients get regular updates on the system itself about orders. Invoicing and accounting is much simplified that is one of the things outsourcing brings to the party – advanced technology that was acquired on someone else’s nickel (ours).
* Improving geographic reach — Outsourcing enables small lenders to expand their market areas. We can provide the bundled services over the entire country that allow smaller companies to expand beyond their traditional market reach. Remember, too, that outsourcers like us are familiar with the variety of compliance issues throughout the country. Title Policies are written differently in New York than in Florida which may have different judgment and liens to be included in the Title Policy and without the understanding of those differences, they do not get closed. Operating nationwide also gives us access to data on market trends nationwide. We can spot ways in which the market is changing and help companies adapt before those changes even affect them.
* Maximizing the cost of people — To set up a Title company, staffing it with experienced people and setting up a back office is a big investment. Vendors have already done that and they know how to deliver it to lenders faster and cheaper. We have to. We compete on our ability to do that. And we have to continue to look at ways to do it better or we will lose the business.
* Delivering customer service — Customer service is what the borrower remembers. Was the title insurance process pleasant? Was it tiresome? It all hinges on the right customer service people. Unfortunately, those who are good at handling paperwork are often not the best at customer service. An outside vendor can provide the level of customer service needed to keep the customers happy throughout the mortgage process. We hire people who can handle both processing and customer service well because, as outside vendors, we know they are responsible for keeping our customers happy.
In the end, outsourcing means more control over overhead, fewer headaches from irate customers and quicker closings. Outside vendors have to make it our business to find a solution to every problem. That is our job. We are not limited by technology, staff and what has been done before. What all this means to lenders is that, as an outside resource, we can provide what our clients do not have access to. In the long run, that allows the companies to look good to their customers and close more loans and issue more title policies.
Bottom Line: “V Win only if U Win”
The Author is CEO, ESS Solutions.