Is your consumer reporting agency (CRA) running 2012’s back office in 2022?
Demand for background screening data is surging, but volume is just part of the story.
Your end-users are competing fiercely in turbulent markets such as employment, healthcare, and real estate. They cannot tolerate delays filling their seats or leasing their property. Nor can they risk hiring unqualified people or renting to untrustworthy tenants.
The opportunity for CRAs to grow their background screening business is unprecedented, but only if the back office, the infrastrastructure that supports scale, compliance and data access, evolves to meet the expectations of the moment: faster turnaround times, greater flexibility, absolute reliability, and crystal-clear transparency.
Unfortunately, too many CRAs maintain data sourcing and business models based on an outdated, inefficient, and cost-intensive retail approach centered around a hodgepodge of technology platforms and dashboards managed by error-prone humans.
This isn’t necessarily the CRA’s fault! Until very recently, no real alternative existed.
But as we’ll explore in this article, now is the time for CRAs to update their back office operations to focus on the most valuable intangible asset of our time: data. Here’s a quick history of the evolution of the CRA’s back office. At what level of automation and data-centricity is your CRA?
3 stages in the evolution of the CRA back office — and why you must reach the 4th
The evolution of the CRA’s back office started about two decades ago. Since then, the back office has transitioned through three distinct stages:
Stage 1: The compliance-driven back office
At first, timely and accurate regulatory compliance was the primary concern for CRA operations. Operational overhead was considered an unavoidable tradeoff.
Manual work, spreadsheets, and local data storage were commonplace. Collaboration tools were not used, so siloed data management (each application maintaining its own data) was the norm. At this stage you may even have been receiving and sending screening requests by FAX!
InformData was around back then (as SJV and WSS!). We had a small army of researchers canvasing the nation to manually pull court records, take handwritten notes and make endless phone calls to verify resume data. Hard to imagine that today!
Stage 2: The process-centered back office
As workloads and background screening demand increased, CRA’s strove to boost operational efficiency while remaining compliant and cost-effective. Logically, this led to streamlining processes — who does what and how — and a focus on sound governance and compliance.
However, even the most well-organized CRA continued to perform the vast majority of time-consuming activities manually. (Many CRAs still operate this way to some extent.)
As InformData scaled its operations to meet CRA’s needs, we too focused on process… everything was process, process, process… to ensure our people performed tasks consistently and data was stored so it could be retrieved easily for our CRA customers.
Stage 3: The technology-centered back office
This is the evolutionary stage where most CRAs find themselves today and many CRAs stopped thinking about the evolution of their back office once they felt saturation of technology in their operations.
A host of technological solutions have emerged to help remove some of the manual steps from the background screening data acquisition process. Custom integrations and dashboards with user interfaces have been designed to optimize human management of orders and reports.
But each data vendor has its own platform or dashboard. So in this stage, the focus is on managing different data sources, technologies, and standards into a cohesive whole. (Making the workflow even more complex, some CRAs rely on redundant data sources to improve system-wide reliability and capacity.) There are even companies who provide commercial solutions to allow CRAs to create their own data and tech stacks and integrate data and tools from different vendors to speed compliance for a specific niche or optimize their data and technology solution in a way that makes their CRA more attractive to particular customers.
While technological solutions have revolutionized the speed and cost-effectiveness of completing background screening requests, there are some significant downsides:
- With so many vendors to oversee, managing data security, controlling fraud vulnerability, and creating audit trails can be a challenge.
- The technology-centered back office remains susceptible to human error, especially as the data volume increases.
- Retail pricing (on a per-order, per county basis) is complex, unpredictable and doesn’t scale well.
The technology-centered model can work well for smaller CRAs, but the efficiency cost can become insurmountable as CRAs look to fulfill more inquiries and offer greater customization. The modern background screening marketplace calls for another leap forward for the CRA’s back office.
Stage 4: The data-centered back office
To compete and grow amid the current background screening landscape, CRAs need to adapt their back offices not to any particular technology or process but to the data itself. Data is your primary asset — what your end-users require from you and what persists even as your tools change.
A data-centered approach is also the key to aligning costs with sales, improving auditability, enabling scale with predictable expenses, and maximizing efficiency.
How to create a data-centered back office in four steps
Creating a data-centered operation involves four critical transformations:
- Embrace direct-source data as your standard
- Stop living inside the platforms and embrace productized APIs
- Managing data sources as a supply chain rather than disparate endpoints
- Aligning your data costs with the way your CRA packages and sells screening
1. Embrace direct-source data
The most fundamental asset of the data-centered CRA is data. Obvious, right? We’ve all lived with data since the dawn of our industry. But in the past, focus was on what we did to the data. Because data came from so many sources, with so many nuanced differences and because clients want different reports and types of information, the focus was always on the operations we performed on the data to get the answer the client needs when they need it. Direct-source data changes the focus. When CRAs require direct source data they cut out layers between information and operations. Eliminate the middlemen. Get closer to the data. Efficiency goes up. Turn-around-time goes down. Reliability increases. Security increases. Automation becomes pervasive. The organization is transformed from being process-driven to being data-driven.
2. Leveraging productized APIs
Productized APIs (application programming interfaces) allow background screening data providers to offer data access on a wholesale scale. Instead of forcing CRAs to continually be inside of platforms, APIs facilitate integration between the CRA’s systems and the data provider’s (third-party or proprietary systems), allowing the data to flow independently of the particular tools used on either side. This is true whether the tools that operate on the data are commercial tools or home-grown applications.
Productized APIs enable computer-to-computer communication, which paves the way for robotic process automation (RPA). Scheduling, acquisition, auditing, and custom reporting can all be handled without human involvement (or human error). Human workers can step in by exception, focusing on the requests that can’t be automated rather than the entire workflow.
An API First framework, where APIs are productized and published, also has the advantage of future proofing solutions. In the past tools operated on data. If the tools changed, the relationship between tool and data was broken. CRAs had to upgrade, many times with great cost and risk to the organization. In the API First model, the APIs operate on the data and remain even when tools change. This greatly reduces cost and risk associated with adding or removing tools from the configuration.
3. Viewing data sources as a supply chain
If data is your primary asset and product, your data sources comprise your supply chain. And the most important aspect of a supply chain is visibility. If you’ve embraced direct-source data, visibility is possible because you’re closer to the data.
Insight into where your data is coming from and how it gets to your back office, including any potential delays, can help your company:
- Estimate turnaround times more accurately
- Anticipate volume changes and adapt your workflow quickly to accommodate increased or reduced demand
- Monitor for fraud or security risks
- Create reliable end-to-end audit trails for compliance and reporting
InformData’s first effort at creating data supply chains is its direct source data initiative where the goal is to eliminate the middleman and bring CRAs closer to the data. As the data supply chain evolves, real time heuristics measuring the state of the data supply chain - capacity, turn-around-time, outages - will become commonly available through APIs.
4. Aligning costs with sales
The measures described above, such as more accurate forecasting and greater insight into the data supply chain, make it possible to align data acquisition costs with how that information is packaged and sold.
In other words, if your CRA offers your end-users a simpler, fixed price model for screens, your partnership with your data providers might offer single-price research regardless of whether a search is automated or manual. This opens up scalability; your costs remain linear and predictable as your volume increases.
The data-centric 4th generation CRAs back office has evolved to address the main friction points that prevent CRAs from scaling profitably: High performance and high intelligence integration, visibility into and predictability of data sources, CRA-friendly pricing models.
The decision all CRAs face in 2022
With the advent of 4th generation CRA back office solutions just over the horizon, and demand for CRAs’ services at an all time high and forecasts predicting further increases, it’s time to consider the state of your back office solution. Whether you choose to continue to embrace a technology centric solution or migrate to a data centric offering could mean the difference between whether your CRA can take advantage of market conditions or whether the market passes you by in the next 12 to 24 months.
Be sure to visit this blog frequently over the coming months or subscribe as we explore evolving CRA business and data acquisition models in greater detail.