Until now, home loans were primarily unaffected by the technological revolution, owing to traditional lenders' appetite of larger credit amounts, which is not prevalent with new-age companies and also the ticket size compelling an offline (face-to-face) process. However, the pandemic changed everything and literally overnight.
The pandemic-driven rise in online activity, as well as fintech play, propelled the home loan industry into a technological era created out of necessity. Even the RBI pitched in with simplified policies and facilities such as video-KYC thus enabling digital lending for home buyers.
Smartphone and internet penetration in India has been burgeoning in the past decade. Combined with a large young millennial population, this has helped create a consumer base that is willing to adopt mobile-first products and services. Thus, in an ever-evolving digital world, industries from all sectors are stepping up to innovate and redefine their customer experiences.
Lending is no stranger to this digitization wave, right from standalone fintech firms and banks digitizing their processes, and online loan is increasingly becoming commonplace.
Let's delve deep to understand the pivotal role of fintech in reshaping the home loan sector.
Speeds up loan process
Gone are those days when home loans were looked at as a traditional mode of transaction where borrowers needed to visit the bank’s branch for every step of the process from loan application and disbursement to interest payment and loan closure. However, with digital home loans, fintech players are making the lending process instantaneous by leveraging the confluence of technology and finance.
Tech-enabled home loans democratize access to banks
One of the key benefits of a digital home loan is its accessibility. Individuals in remote areas can use their smartphones to apply for a home loan. It's especially useful for rural populations who may only have access to a few or no banking institutions in their surroundings. Hence tech-enabled home loans are a robust way to democratize banking access across the country. It works equally well for folks in cities who have all the access but limited time to go from branch to branch for a home loan.
Presents ample options for buyers
When it comes to availability, digitization has made comparing a variety of financial institutions for a home loan much easier for prospective applicants. Individuals can compare house loan interest rates charged by other lenders and other terms associated with their loans by using a variety of tools, which help them get the best loan offer.
Improves privacy by eliminating physical paperwork
The traditional method of getting a home loan entails a lot of paperwork, and one must constantly be wary of the documentation when entering the bank. However, the digital process eliminates the need for physical paperwork; the consumer does not have to provide physical copies of personal information, such as bank account statements, income data, address, or ID documents.
It is done through portals meant to fetch, optically scan and read your information without storing them. Thus, with most of these automated procedures, the customer's time and effort are saved. Also, with strict ISO compliances, the data security is also maintained.
In the modern, digital economy, rapid technological adoption is the key to improving customer experience while reducing overhead expenses. Understanding this, the traditional banking sector is embracing technology and partnering with fintech companies to build a more comprehensive financial ecosystem.
Data and AI-based solutions will play a significant role in enhancing efficiency in the financial lending space, allowing them to provide a seamless customer experience. Also, standalone fintech companies go a step further by being online-only right from scratch and are able to provide a seamless and efficient home loan process online end-to-end.
(Pramod Kathuria is Founder and CEO, Easiloan-digital home loan marketplace)