Until now, home loans were mostly unaffected by the technological revolution, due to traditional lenders’ appetite for larger amounts of credit, which is not common with new-age businesses. and also the size of the ticket which requires an offline (face to face) process. However, the pandemic changed everything and literally overnight.
The increase in online activity caused by the pandemic, along with fintech gaming, has propelled the mortgage industry into a technological era created by necessity. Even the RBI has come up with simplified policies and facilities such as video-KYC thus enabling digital lending for homebuyers.
Smartphone and internet penetration in India has exploded over the past decade. Combined with a large population of young millennials, this has helped create a base of consumers willing to adopt mobile products and services. So, in an ever-changing digital world, industries across all sectors are mobilizing to innovate and redefine their customer experiences.
Lending is no stranger to this wave of digitization, directly from autonomous fintech companies and banks digitizing their processes, and online lending is becoming more mainstream.
Let’s dig deeper to understand the central role of fintech in reshaping the mortgage industry.
Speeds up the loan process
The days when home loans were considered a traditional mode of transaction where borrowers had to visit the bank branch for every step of the process, from loan application and disbursement to interest payment and loan closing ready, is over. However, with digital home loans, fintech players are making the lending process instantaneous by leveraging the confluence of technology and finance.
Tech home loans democratize access to banks
One of the main advantages of a digital home loan is its accessibility. Individuals in remote areas can use their smartphone to apply for a home loan. This is particularly useful for rural populations who may have access to few or no banking institutions in their environment. Therefore, tech home loans are a solid way to democratize access to banking services across the country. It also works well for city dwellers who have all the access but limited time to go from one agency to another for a home loan.
Presents many options for buyers
When it comes to availability, digitization has made comparing a variety of financial institutions for a home loan much easier for potential applicants. Individuals can compare home loan interest rates from other lenders and other terms associated with their loans using a variety of tools, which help them get the best loan deal.
Improves privacy by eliminating physical paperwork
The traditional method of getting a home loan involves a lot of paperwork, and you have to constantly be wary of documentation when entering the bank. However, the digital process eliminates the need for physical paperwork; the consumer is not required to provide physical copies of personal information, such as bank account statements, income data, address or identity documents.
This is done through portals intended to retrieve, optically scan and read your information without storing it. Thus, with most of these automated procedures, the customer’s time and effort is saved. Moreover, with strict ISO compliances, data security is also maintained.
In the modern digital economy, rapid adoption of technology is key to improving customer experience while reducing overhead. Understanding this, the traditional banking industry is embracing technology and partnering with fintech companies to create a more comprehensive financial ecosystem.
Data and AI-driven solutions will play an important role in improving efficiency in financial lending, enabling them to deliver a seamless customer experience. Additionally, stand-alone fintech companies go the extra mile by being online-only from the start and are able to provide a seamless and efficient online home loan process from start to finish.
(Pramod Kathuria is Founder and CEO, Easiloan Digital Home Lending Marketplace)
(To receive our E-paper on WhatsApp daily, please click here. We allow the PDF of the paper to be shared on WhatsApp and other social media platforms.)
Posted: Wednesday, April 20, 2022, 10:40 a.m. IST