All papers were in place and all credentials satisfied, yet availing a home loan had turned into a nightmare for Santosh Sharma, because of the umpteen trips to the bank branch for filling up one after another document, and endless demand for papers from the promoter.

That was 2001 and Sharma was taking his first loan home from SBI. “They asked for all sorts of documents, and it was a real uphill task to get all of them in order,” recalls Sharma.

After his first loan was repaid, Sharma, now blessed with twin sons, decided to sell off the house earlier this year and buy a new one with another loan, as he needed a larger house. “This time my experience was entirely different. I approached PNB Housing Finance for the loan, and  I learned that the application process and the sanctions are all online, unlike my first experience, and I need not leave home,” he says.

The process involves minimal physical contact as the sales team digitally backs all documentation and offers end-to-end guidance. It also provides video-based KYC, including geo-tagging that further secures the whole process. OTP verifications also add another layer of safety to the process. Consumers these days get tenure options of up to 30 years to pay off their loan, there are no prepayment charges, and 90 per cent of the total property price is available as a loan.

The home loan industry went into a digital re-imagination being driven partly by the growing demand from millennials and new-age borrowers who require fast and seamless processes. The process reduces costs and improves efficiency. With interest rates falling over the last several months, the segment has turned immensely competitive. Lenders now need to be more digitised to create a customer-centric ecosystem to profitability.

In a hurry to sanction loans when the government restricted movements because of the pandemic, all home loan entities concentrated on the front-end of the lending process, such as enabling digital loan applications and consumer portals, for both purchasing and refinancing options.

With the competition being more intensified and profit margins tightened for lenders, a second wave of digital transformation has kicked off. Riding on next-generation technology like Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA) and Natural Language Processing (NLP), the lenders are aiming to sharpen lending efficiency, accelerate cycle times, enhance customer satisfaction and retain clients. Processes such as verification, title decision, property valuation, borrower income, assets and employment will be automated by banks over time.  

Borrowers now want an array of convenient self-serve options to improve the lending process while retaining the ability to engage home loan providers on a channel of their choice. This could be email, chat or phone. They also expect customised services based on their previous interactions with lenders.

According to experts, in 2030, home loan sanction is likely to be automated. As a result, the time taken between customer onboarding for a housing loan company and receiving disbursement is expected to be drastically reduced to a day.

Bankers may have ready tie-ups with builders, and customers may have the option of visiting their potential home virtually before settling on a home loan. In addition, banks will use new digital interfaces that enable contextual conversations in real time. Lenders will leverage AI-based applications to drive repeatable intelligent decisions based on the available data mix to ensure that consumers meet specific credit requirements, saving them significant time and effort.  

The result: Consumers choose their homes and close their loans barely in hours.

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Select Online Home Loan Providers

ICICI Bank

Kotak Bank

Bajaj Finserve / Bajaj Home Finance

HDFC Bank

Bank of Baroda

IIFL

LIC Housing Finance

Features

• Low-interest rates
• Nil/Low processing fee
• Nil or minimal human interaction
• Quick approval
• Fast disbursement
• Extended loan tenures up to 30 years
• Easy repayment options
• Waiver of prepayment penalty
• Maximum funding up to 90%