Outsourcing expert Michael Galilee says data security is on the line
Outsourcing is more popular than ever among mortgage brokers.
Once limited to high-volume, low-value data entry, the increasing sophistication of offshore teams now allows for more complex processes to be managed abroad.
Today, Philippines-based teams routinely handle advanced servicing calculations, loan recommendations, valuation processing, virtual assistant tasks and even direct borrower interactions.
Furthermore, smaller and smaller brokerages are beginning to tap the benefits of outsourcing, despite it being the reserve of larger brokerages in the past.
Outsourcing to the Philippines has some distinct advantages that go beyond simple cost effectiveness.
“Many Filipinos have experience in finance, banking and customer service,” says Michael Galilee, chief executive of outsourcing provider GBSS. “Over the years, the Philippines has developed a robust talent pool that is well-versed in Australian lending practices, credit policies and compliance frameworks.”
There is also a level of flexibility that comes with having a trusted team based in the Philippines. It allows brokers to extend their operating hours while reducing loan processing turnaround times.
Galilee says: “Outsourcing to the Philippines provides access to equally capable professionals at significantly lower rates, enabling brokers to scale faster and reinvest savings into business development and client acquisition.”
However, these benefits don’t come without risks.
Data security concerns escalate
For any brokerage contemplating the benefits of outsourcing, it always pays to go through a trustworthy provider. While it is possible to employ directly, you open yourself to all manner of security and compliance disasters.
“Engaging a direct hire without enterprise-level IT security, encrypted data storage and compliance protocols opens the door to data breaches and serious legal liabilities under Australian privacy laws,” says Galilee. This includes finding yourself in breach of the Privacy Act 1988.
A quality offshore partner will have all the requisite data privacy and security-related controls in place in order to safeguard your sensitive data.
The recent Joanna Pascua case should give any broker pause for thought.
Pascua, a Filipino paralegal, was dismissed by her Australian employer in March 2023 after being accused of copying confidential company and client information to her personal drive – an allegation she denied.
Her employer classified her as an independent contractor, arguing she was not covered by Australian employment laws due to her overseas location.
However, Pascua challenged her dismissal at the Australian Fair Work Commission, arguing she was in fact an employee and entitled to Australian workplace protections.
Pascua won the case, setting a precedent that overseas workers engaged by Australian entities may be entitled to Australian employment protections, including minimum wage and unfair dismissal rights, even when working remotely from another country.
This case “exposed how Australian businesses risk breaching employment laws when they misclassify offshore workers as independent contractors while treating them like employees”, says Galilee.
He explains that, because of these inherent risks of going direct, many mortgage aggregators will only permit the usage of employees who are recruited through trusted offshore providers.
Work from home adds new layer of risk
The post-Covid shift towards working from home has created even more risks in the outsourcing space.
Galilee says: “Work from home staff, particularly those employed directly where no controls are in place, will often be using their own personal laptop, often over an open internet connection and potentially in a public physical environment such as an internet cafe or similar which clearly is not ideal when dealing with sensitive client data.”
A decent offshoring provider, explains Galilee, will mitigate these risks by ensuring the work environment is safe and secure, the hardware being used is monitored and updated by the provider, and the connection being used is secure.
Why should brokers go through an outsourcing provider?
Given the immense risks involved in outsourcing, it sounds like a no-brainer to employ staff through a trusted partner. Sadly, not everyone in the mortgage broking industry has received the memo.
“For an industry where data privacy and security are absolutely paramount, it is baffling that there has not been enough done to ensure that any work being done by offshore staff is being controlled via the protection of an approved offshore provider,” says Galilee.
He believes there is simply too much at stake – not just from a data privacy and security standpoint, but also from an HR and legal perspective – to leave it all to chance.
“Brokers especially should be very careful about going down the route of direct employment as the risks are far too great and there are so many other viable options out there.”
