Strategic Outsourcing: Enhancing Productivity in CU Lending Operations

All credit unions face similar challenges in providing lending services. Navigating an unpredictable financial landscape can be overwhelming. While the commitment to delivering personal member service and managing costs drives credit unions toward a traditional in-house lending model, current economic conditions have encouraged many to explore outsourcing to achieve these goals. Outsourcing not only helps credit unions meet member needs but also enhances efficiency and productivity.

Staffing, Service and Productivity

Staffing has always posed challenges, and the situation is particularly tough now. According to a report from Cornerstone Advisors, 50% of financial institutions surveyed struggle with staff recruitment and retention, while 31% face recruiting difficulties despite staff retention not being a concern. Staffing issues are grueling, and that plays into why outsourcing is such a necessary consideration.

For example, staffing up to handle peak volumes is not cost-effective when volume declines. On the contrary, maintaining lean staffing levels can compromise service levels when volume spikes and leads to overburdened staff, resulting in employee burnout and turnover – a vicious cycle. Engaging an outsourcing partner can relieve these staffing pressures. Having a resource to tap into, especially during an unpredictable market, provides a safety net as loan volume ebbs and flows.

Staffing concerns encompass more than just volume fluctuations. Retention challenges make outsourcing a valuable option as well. Medical leave, vacations and disruptions in business continuity can leave credit unions short-staffed or overburden existing employees. An outsourcing partner helps whenever needed, ensuring seamless operations regardless of circumstances.

Outsourcing time-intensive lending tasks can provide internal staff the time to focus on member service. Service excellence is the foundation of credit unions and is the core of everything they are and do. If internal teams can’t meet member needs, service is impacted. Leaning on an external partner that understands credit union expectations can lead to a better experience for the member and support the commitment to service. Additionally, 24/7 support for tasks like underwriting and loan processing improves efficiency and productivity beyond what internal staff can achieve. Improved productivity allows internal staff the time to cross-sell additional products and foster member relationships, which is vital for credit union growth.

Tech Debt, Enhancements and Innovations

Implementing technology updates and improvements demands significant resources, and credit unions frequently find themselves burdened by a backlog of tech debt, slowing the adoption of innovations. Implementing progressive capabilities such as artificial intelligence and document processing automation can be costly, but outsourced solutions frequently incorporate these advancements into their core offerings. Gaining these capabilities through outsourcing provides a cost-effective way to embrace such innovations. This enables credit unions to not only enhance their member experience but also remain up to date with the latest technological lifts.

The decision to outsource all or portions of your lending operations as a strategic option holds significant merit. While the core principles of credit unions center on delivering an exceptional member experience, the complexity behind staffing fluctuations, borrower demands and technological advancements require new solutions. Outsourcing is an opportunity to navigate with agility. By leveraging the strengths of external partners and integrating technological efficiencies, credit unions can adapt to changes and thrive. Ultimately, outsourcing not only meets member expectations but also exceeds them while securing a foundation for future growth.

Brian Hamilton is President of Origence Lending Services in Irvine, Calif.