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For Servicers, Orchestration Can Be Sweet Music

Editor's note: This article appears in the July 2021 issue of DS News magazine, available here. 

It should go without saying that today’s servicers need to be efficient, flexible, and nimble in their operations, more so now than ever. Between new regulatory rules and guidelines, low rates, and an increase in defaults and loan workouts—all factors being driven by COVID-19—the challenges for servicers have arguably never been greater.   

To deal with these challenges, many servicers are likely to look toward business process outsourcing, or BPO. They’ll find tons of choices. In fact, the sheer volume of tasks and processes that can and are being outsourced has grown tremendously in recent years, especially since the pandemic, which accelerated a long-term trend toward utilizing remote labor.  

However, there is another type of “BPO” available to servicers that is lesser known but much more powerful. And its advantages are providing sweet music to servicing operations.  

Understanding Orchestration  

In the typical BPO relationship, a third party provides a certain technology to help servicers automate a specific process. Business process orchestration, on the other hand, involves a broader view, in which automation is not siloed within individual teams and processes but rather integrated throughout the company. Similar to the way a symphony orchestra performs a musical arrangement with woodwinds, brass, strings and percussion, business process orchestration enables organizations to work better together through automation.  

Business process orchestration generally takes the shape of blended digital and automated processes working cohesively with people managing the appropriate controls. Servicers can achieve orchestration in their servicing operations by gaining access to digital platforms that connect to their legacy systems and create a more data-driven approach to servicing and generate greater efficiency.  

Interestingly, business process orchestration—sometimes referred to as workflow orchestration—is a popular concept in other industries, where it has been proven to improve efficiency and results. It’s relatively new to the mortgage industry, but that’s likely to change as the limitations of a fragmented approach to technology become more evident as industry challenges mount. 

Because business process orchestration is still relatively new in our business, there is some misunderstanding about the term. Many assume that orchestration is the same thing as automation, but orchestration refers to the overall strategy—how all a servicer’s automated tools, processes, and human staff work together. It’s helpful to think of orchestration as an enterprise-level solution rather than something designed to tackle one or two processes within one’s operations. 

Business process orchestration can vary greatly, but some sort of automation and digital process is key. At the end of the day, it’s about eliminating inefficiencies, and the only real way to do that is to combine truly functional, automated digital processes with human effort overseeing internal functions that can’t be automated. Both pieces work in harmony to lower costs and accelerate growth.  

What Holds Servicers Back 

It’s hard to fault organizations for having trouble grasping this concept. It’s quite common for servicers to have a narrow approach toward automation because they tend to zone in on problems they feel need to be solved immediately.  

As a result of this behavior, however, many servicers wind up with technologies that solve only one of their problems or pain points and must continue to invest in new technologies as new problems arise. They also often find themselves stuck with redundant technologies. On the other hand, when they can look at business processes from an enterprise level standpoint, orchestration becomes a much more sensible approach.  

Another obstacle is how servicers approach the business from a cost-controlling perspective. A servicer’s costs are often tied to helping borrowers solve problems that could be more easily addressed with technology. For this reason, the adoption of customer-centric tools provides a clear example of the typical ways a servicer can orchestrate business processes.  

Often, for example, a borrower needs help with resetting their password on the servicer’s website. Or perhaps they have a simple question that really shouldn’t involve having to speak to someone on the floor. With automated self-service technology, borrowers can get what they need without expending staff resources.   

Let’s expand that out a bit. What about when a borrower does need staff help? In this case, an orchestration strategy might involve technology that guides human staff when helping a customer. There are call center technologies available, for instance, that can analyze the speech and tone a customer uses on the phone and advise the agent on what questions, comments or responses to make. It’s like having someone standing over your shoulder, showing you how to provide better service and enhance the customer’s experience.  

These technologies often blend AI and data analytics with information from prior calls and borrower activities—including self-service interactions—and the servicer’s own policies and procedures to give a borrower the appropriate response, every single time. It’s almost like giving customer service representatives an extra brain, so they aren’t stressed about having to get it right every single time. In fact, it gives them confidence and makes their job much easier. That’s powerful, considering call centers typically represent a servicer’s biggest expense and frequently experience high attrition and turnover.  

At this point, it’s not too difficult to see how business process orchestration drives down costs. When you have a tool guiding an agent’s next steps, they spend less time figuring out how to solve a customer’s problems on their own or involving management. Because they are happier at their jobs, servicers spend less time and effort constantly recruiting and training new employees. Let’s not forget to mention that the borrower gets what they need as well, which reduces the chances they’ll file a complaint with the CFPB or rant about what bad service they received online.  

We just looked at one aspect of business process orchestration, however. Within the outsourcing industry, the speed and breadth of technological innovation has been incredible—and it’s only continuing to accelerate. Across the mortgage spectrum, there are countless opportunities to structure and integrate automation through a business’s operations, and many more technologies available than mentioned here.  

For onboarding loans, for example, the right outsourcer can take artificial AI and OCR technology and classify 500 document types and more than 5,000 data elements within minutes. This capability has applications on the front and back-end sides of the lending business. Addressed from a business process orchestration standpoint, the potential to create a customized blend of automation designed to lift any organization is unlimited. 

Orchestrating Your Own Success 

While business process orchestration is relatively new in our industry, the people I talk to are definitely warming up to the concept. COVID taught us that you don’t have to have physical offices to be successful. Unless you’re handling physical documents that require you to be in an office, there’s nothing that really prohibits servicers from working in a remote environment. Leaders are now seeing this as an opportunity to drive down costs and embrace automation in broader, more compelling ways. 

These capabilities are also important considering the group that comprises the largest segment of today’s homebuyers. As more millennials become homeowners, they won’t want to talk to anyone—they’ll want to do things on their cell phone, which is even more reason to integrate automated technologies through an orchestrated strategy.   

There is no good time or bad time to embrace business process orchestration, but any company that considers itself to be forward-thinking shouldn’t be putting it off. It’s important to realize that our industry is quickly moving past the notion that any one technology will solve their problems. Technology must be an ongoing exercise, because the pace of innovation will continue to accelerate. If you take a gap in between rolling out new products and initiatives, it will place you back several years. Servicers won’t be in business too long with this approach. Identifying, adopting and refining technology needs to be a continuous process. That’s why business process orchestration is so powerful.  

Not too far into the future, the ability to extract data from any mortgage document is going to be standard. This is going to play a key role in the contact center business and the ability of servicers to drive costs down. It will also fuel the standardization of loan documents across the industry, whereas now there is great disparity between documents based on differing state level requirements. Business process orchestration gives servicers the ability to incorporate automated data extraction throughout their organization instead of limiting them to specific processes.  

To achieve the type of business process orchestration I’ve been explaining, most servicers will need a trusted partner. That partner must be committed to thoroughly understanding the servicer’s business and their goals and equipping them with the right blend of technologies and resources. Within today’s outsourcing world, many outsourcing executives and senior leaders spend much of their time on things that are internally related. They’re constantly looking at revenue, and they’re very hesitant to administer the same level of attention to every client. Smart servicers will want to find partners that place their needs above their own.  

The bottom line is that challenges of running a servicing business are only going to grow, and the more challenges a servicer faces, the more expensive the business becomes. Taking a more holistic approach to automation and adopting business process orchestration is really the only way to fight back against these costs. Even better—it makes servicing more efficient, improves retention, and generates happier borrowers.  

Like a symphony orchestra, where timing, rhythm and discipline create a unified and powerful performance, business process orchestration generates results that everyone will enjoy. 

About Author: Roshan Sethi

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Roshan Sethi is SVP, Head of Mortgage Servicing Operations at Sourcepoint.
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