Digitisation, a key enabler in disbursing home loans

Household shopping, festive gifting, daily odd jobs, or necessary arrangements for that trip you have been planning for months – try imagining going through any of these without the help of your smartphone or your laptop.

It would be fairly accurate to predict a majority of today’s population to find themselves at odds to complete any of these tasks without the advantages that digitisation brings along with it.

Banking and financial services too have reaped the benefits that digitisation has to offer. The lending space for instance, recognised multiple areas that could be bettered. Long, tedious processes, lack of transparency and flexibility are only a few of the reasons that one could blame for inferior customer experiences.

Longer work hours and the ever reducing window to close in on your perfect home meant that missing out on visiting the housing financier could set one back immeasurably. Digitisation has made it possible for one to sit back at home and get a home loan approved within the same day.   

If we go back, say, even by a decade or so, home loan seekers would have to make multiple trips to the lenders’ offices, starting from the initiation of the loan, and through the duration of loan management. Just the approval would take anything between 20 days and a month.

Pre-empting the needs of customers in the industry, home loans providers have made everything from the loan application, to the submission of documents, to the know-your-customer (KYC) process, to loan disbursal to the seller/ builder available online.

Companies can now eliminate large amounts of paperwork. Systems to help store documents automatically and allow centralised access to different departments add crucial effectiveness. It also greatly reduces the time taken for processes thereby improving customer convenience.

Convenience is amply complemented with transparency for consumers. With greater digital support, people have more access to information. Customers earlier unaware of processes are now privy to the entire system since every step can be brought online.

The mantra for the sector now is that it must innovate at the pace of its customers. To meet this, companies have introduced mobile applications that bring the entire gamut of their services to customers with regular updates and a more fluid loan management system.

Every major shift in ideology and execution needs a champion for the cause. In this case, efforts from both the government and financers have shown the way.

Technological advancements, be it the help from National Securities Depository (NSDL) for real-time permanent account number (PAN) verification and eKYC that has helped in faster authentications, or Unique Identification Authority of India (UIDAI) and the Centre for Development through Advanced Computing (C-DAC) for e-signing facility, and authentication using one-time password (OTP) has helped in cutting down paper and time.

While digitisation is making home loans easier and easier for customers, housing finance companies too can benefit with the creation of leaner organisational structures.

This would bring down the cost of loans for them. Computerised data collection provides better analysis of consumer behaviour, and in turn cross-selling services to customers.

Features like e-signature, which is part of the Sarfaesi Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act), not only eases the customer load of processes but also provides a stronger base for loan recovery thus potentially reducing non-performing assets. The wave of digitisation has just begun and better, bigger and newer things are in works. Traditional methods will soon be replaced by digitised options only for them to be bettered by newer more efficient ways. It is an exciting time in the housing finance space.

In an industry where differentiation is key, the more customer convenience is increased, the better the company’s prospects. Digitisation thus, is the key to a sustainable future for the sector.

(The writer is Deputy Managing Director at Indiabulls Housing Finance)