In our last blog, we discussed the various challenges that growing credit unions tend to face. As a quick review, those challenges were:
- Keeping up with increasing regulatory requirements
- Growing membership
- Competing with larger lenders
- Upselling to existing members
- Hiring additional staff
- Cost of technology
In this blog, we’re going to discuss one strategy to overcome some of these challenges: outsourcing certain responsibilities and lender services.
Why outsource lender services and responsibilities?
As credit unions or any financial institutions grow, they must take on additional responsibilities. These include added regulatory requirements, new lender services for members, and just keeping up with the increased volume of loans on the books. Of course, this adds financial, technological and staffing burdens to the institution.
One strategy to reduce the stress of these added responsibilities is to consider outsourcing non-core components of the credit union, rather than developing solutions in-house or hiring additional staff. Although at first it may seem like an additional expense to hire a third-party, in the long run it tends to be more cost-effective. Benefits of outsourcing include:
- Cost savings (versus developing a solution in-house or hiring more staff)
- Time savings
- Ability to allocate resources elsewhere for more impact
- Reduced risks (risk is transferred to the vendor)
- Easier to grow (vendor likely familiar with regulations and processes in all 50 states, so no need for lender to learn new processes if it expands)
Which lender services should be outsourced?
Choosing which lender services or responsibilities to outsource depends entirely on the institution, but there are a few common processes that often make sense to outsource.
Want to learn more about the challenges of growing credit unions, and multiple strategies to overcome them? Be sure to download our latest ebook, Overcoming the Challenges of Credit Union Growth. And if you have any questions or comments on the topic, please share in the comment section below.