What should an asset finance provider look for in a loan servicer?

Thought Leadership
24th November 2015

What should an asset finance provider look for in a loan servicer?

The administration of your asset finance loans can be costly and resource-intensive. Outsourcing the task can negate those problems without putting your reputation or your relationship with your customers at risk.

If you’ve already taken the decision to look for a loan servicing partner, here are some factors to consider in your search:

Industry experience:

Whilst the loan servicing process is fairly similar across products, specialist experience and capabilities in asset finance is an advantage worth seeking out. Searching for experience in managing and servicing loans tied to assets will help you to determine which company has enough expertise to handle your portfolio.

A good servicer within asset finance should also have relationships with relevant third parties such as repossession agents and auctioneers that can dispose of recovered assets effectively and minimise any losses.

Reputation & track record:

Remember that a servicing partner should represent your company in a responsible and professional manner as well as also maintaining and protecting your brand. Whilst your organisation will want to derive maximum return from your chosen partner, in the case of loan servicing, this needs careful consideration. Price is an important factor but experience, quality of service and performance should also be high on the agenda. Giving your business to the lowest bidder can lead to poor results or worse, damage to your own reputation which can be costly to restore.

Invest the time to dig deeper into an servicer’s track record and accreditations. A reputable company will not only have an established management team, but will have been in the market long enough to have proven its worth – years of experience in the industry, success rates, strong industry ratings and feedback from past clients. Take a visit to its premises and meet key people to assist with your decision. In addition, understanding training programmes can help confirm that compliance and operational training is up to scratch.

Technology:

Technology has allowed the industry access to square the circle of simultaneously increasing cost efficiency and customer service. A sound and established servicer will pride itself on its loan management platform and a true expert will have a system that allows it to store details of multi asset/multi loan agreements and interrogate and report on the data at customer and asset/loan level.

Finally, data protection should be considered carefully. A breach can result in severe consequences so ensure you closely examine the security policies and compliance of your servicer in this area.

Scale & capability:

Servicing partners range in size from small local companies to large multinational firms and one size certainly doesn’t fit all. The scale of your chosen partner should reflect that of your company; if you’re a smaller organisation, then a provider with strong local contacts will be able to handle your accounts just fine. However, if on the other hand you handle nationwide or international assets, look for a servicer with expertise across the UK and other countries where you do business.

Value added services:

Rather than searching for a pure servicing firm, find one that has end to end capabilities including origination, servicing, collections, trace/asset investigation, litigation and debt purchase. For example, at some point you may decide that you’d prefer to sell the portfolio or part of it. It is therefore advantageous to use a servicer that has the capability to purchase portfolios as well as service them under a white label brand as required.

These “value adds” are often a signal of an outsourcer’s experience, commitment to the industry, and ability to provide quality service.