Today’s investors want to see strong portfolio performance, predictability and forward-thinking systems for maintaining future financial health. Loan servicing can make or break investor confidence in a company. If rating agencies and investors don’t see what they want, companies won’t be able to operate in that space anymore.
With so much hanging in the balance, companies are well advised to seek out a third-party loan servicing partner that can reliably and successfully address all key issues impacting portfolio performance, and in turn investor confidence.
These issues involve everything from compliance and customer service to technology enhancement and trend identification. Investors need to see integrity, transparency, consistency, and a commitment to innovation in a fast-paced world, where today’s unicorn can become tomorrow’s under-achiever.
Investors recall 2009, when poor performance led to an economic meltdown and an investment drought. Today, there is more corporate and government debt and even more leveraging coupled with abundant investment capital—creating concerns about a repeat performance.
Loan servicing can help keep everything running profitably and predictably, in part by helping client partners evaluate and adjust underwriting guidelines, constantly work to understand and meet the needs of their customers, continually address loss mitigation, and provide guidance to ensure “staying in their lane.”
This last point is particularly poignant. Companies need to stay with what they know and be strategically cautious. A lack of appropriate underwriting guidelines and customer service collection protocols spurred defaults and deficiencies galore in 2009.
Investors must see prudent loan underwriting policies and borrower performance, and evidence of execution of a well-thought-out overall strategy. Further, investors must see bullet-proof compliance, data backup and security and technology that positions the company positively for future growth and expansion.
Importance of keeping investors confident and comfortable in every way possible cannot be overstated. Just look at what happens to financial markets rattled by a trade war, tariff or other “jarring” announcement.
Loan servicers around during the last recession are particularly well suited to partner with companies today to prevent future mistakes and missteps.