'The pandemic spurred digital processing of home loans'

Buying a house is a tedious and draining process. It usually involves visiting houses, applying for loans, visiting the offices of home-financing companies, and discussing loan details with them.

“We tracked the level of seriousness at the customer's end in terms of how often they visited the site, and how many times you met the customer,” said Manish Shah, CEO and Managing Director, Godrej Housing Finance, at the BFSI Leadership Summit 2021, hosted by YourStory and EnterpriseStory on July 16.

Watch the fireside chat from the BFSI Leadership Summit 2021 here.

“This was not an industry that was built around being able to function without meeting a customer,” Shah told Priya Sheth, Senior Anchor, YourStory Media, in a fireside chat on ‘Leveraging data for population-scale innovation’.

Prior to the COVID-19 pandemic, customers did not get their loans approved—home or otherwise—without meeting in person with the company or banks, who would go through their documents, verifying all their details thoroughly, and then take a decision.

Not anymore.

The nationwide lockdowns because of COVID-19 in 2020 made physical contact impossible.

“It really turbocharged what digital means,” said Shah, as the pandemic changed a few core tenets of the housing finance industry. “It has been an interesting and challenging time.”

In the past 15 months, interest rates have been low, consumer incomes have been growing steadily, and property prices have been stable.

“There has never been a better time to buy a home,” he said.

Shah said customers are more interested in buying homes due to COVID-19-induced insecurity around buying homes. “Work-from-home does seem like a partial reality. You would want to upgrade to a larger home,” he added.

What posed a challenge was to verify customer identity and get the documentation done—online. 

The pandemic accelerated these changes.

Proofs like PAN and Aadhaar could be used to authenticate customers online. To estimate their incomes, housing finance companies went through their bank records and GST data. The final step involved signing loans digitally, which can now be done easily.

“Any paperwork that cannot be done digitally—power of attorney for example—can be exchanged via courier,” Shah said.

Financial firms had to redesign their processes to offer loans to customers digitally and with certainty. The pandemic has made the process more convenient for customers with the help of technology.

Godrej Housing Finance started its operations during the pandemic. It got the advantage of being a late entrant. “We don’t have legacy technology systems that need migrations,” Shah said.

Shah’s company, being in the early stages, is focused on organising customer data, so that it is easy to learn and develop more insights from it.

Large-scale data allows companies to serve large numbers of customers, but also be specific and target smaller clusters of customers in specific areas such as interest rates, incomes, and so on. It allows them to “offer differentiated products, by projects,” Shah said.

The applications process can be made efficient based on data about what worked with customers, what they liked, and what they did not.

Shah noted the importance of putting customers at ease. He said companies like Godrej Housing Finance can find out where users got stuck and use that knowledge to pre-populate chatbots with the queries customers might come up with before they do.

Remote interactions have catalysed improvements in customer-experience, so that customers can focus on buying a home. “A loan is merely a facilitator of making that happen,” said Shah. “How do you deliver it, and how do you make it easier for the customer to apply (for a loan).”

With financial data, there are always concerns around security, which is common along the financial services industry. “We have to keep working on it and make sure we stay on top of our game,” Shah said.

Watch videos of all sessions from the BFSI Leadership Summit 2021 here.