As pressures on financial services increase, demand for BPO is increasing too. But why is BPO important and what is it, exactly?
Keep reading to find out more about the different services BPO encompasses and the varied benefits BPO could bring to your business.
What is BPO and What Does it Stand For?
With Business Process Outsourcing (BPO), standard business processes are undertaken by a third party or subcontractor.
Processes such as administration, customer services and document processing are often outsourced when the organisation is experiencing one or more of the following:
- A sudden peak in demand for services
- Changes in legislation or best practice that requires a change in process
- A short-term project with a high demand on resource
- A lack of the required specialist skills and experience
- Pressure to reduce costs
Business Process Outsourcing in the Financial Sector
In financial services, BPO is commonly used to service more niche, challenging or under-performing loan and savings books, or where there is a peak in demand.
External factors such as the Covid-19 pandemic of 2020 has put significant pressure on banks to carry out good standards of servicing, while supporting customers in financial difficulties. The sheer volume of inbound requests, frequent changes to guidance and legislation, as well as the burden on collections and arrears management in the recession, has heaped pressure on banks.
BPO services can help relieve some of this pressure. Commonly outsourced financial services include:
- Loan and mortgage servicing
- Collections and arrears management
- Investments administration
- Child trust fund servicing
- Junior ISA servicing
- Remediation and complaints servicing
BPO servicing can include customer support, accounting, telemarketing, data recording and more. In the case of the examples above, a BPO solution can encompass the entire process, from origination, through account servicing and arrears management.
Why is BPO Important?
Whether a business is looking to expand and diversify, respond to increased demand, or simply streamline costs, BPO can help meet these goals. There are a variety of advantages to business process outsourcing, including:
- Decreasing costs. Outsourcing cuts down on operational costs such as staffing, training, IT systems and premises, as well as allowing businesses to avoid significant investment in key servicing infrastructure. Smaller outsourcing specialists can scale up (and down) resources very quickly, and cost effectively.
- Ensuring an excellent level of service. By engaging a trusted BPO provider, businesses can be sure of the level of service provided. Specialist BPO providers, such as Target, have a wealth of experience managing complex accounts, and this expertise is part and parcel of the BPO service.
- Increased ability to deal with regulatory challenges. As regulated servicers and specialists in their field, BPO providers are best-placed to handle regulatory changes and hurdles. Organisations often choose to outsource processes to enable them to respond quickly to changes to their environment, as new legislation or behaviour trends can impact businesses significantly, and drain their resources, especially if their large infrastructure prevents agility.
- Freeing up time for businesses to focus on core activities. Outsourcing gives businesses extra time to hone in on their key functions and get a competitive advantage. For instance, by outsourcing loan and mortgage servicing to a BPO provider like Target, businesses can focus on bringing new products to the market faster, diversifying their offering and achieving growth.
- Limiting risk factors. Another advantage of outsourcing is that businesses can act faster and more efficiently when it comes to managing risk, as well as having the agility to rethink propositions and business models. This is crucial in order to stand out in an ever-changing market.
While the reason a business may choose to employ BPO services differs, these benefits remain the same. And, as an added advantage, many providers are capable of employing sophisticated business process management to improve and automate back-end processes, alongside ongoing business process outsourcing.
How Does BPO Fit In with Existing Operations and Systems?
The benefits of BPO are numerous, from streamlining costs to improving the quality of service. That being said, an important factor for many businesses will be how well the outsourced processes integrate with existing procedures. If BPO is managed poorly, problems that can arise include lack of industry or domain knowledge, slower turnaround times and lack of control.
However, by choosing a high-rated and specialised provider these issues can be avoided. Outsourcing the right processes, to the right provider, adds value either in short-term tactical activity, or in longer-term strategic initiatives.
While reactive outsourcing to handle short-term challenges can be very fruitful and support banks in achieving objectives and maintaining good service levels, proactive management of outsourcing also supports banks in achieving long-term strategic goals.
Building relationships with trusted and well-aligned outsourcing providers ensures in-depth knowledge transfer and deep domain experience.
Transform Your Business with Class-Leading BPO from Target
From mortgage and loan servicing to remediation and complaints servicing, we offer a broad range of BPO solutions that can help your business grow. If you are searching for a specialist, experienced and customer-focused BPO services provider, look no further.
To find out more about our highly rated BPO services, contact us today.