Tech Innovations Fueling Speedy Loans: A Look into the Future of Borrowing”

CXOToday has engaged in an exclusive interview with Atul Monga, CEO and Co-Founder, Basic Home Loan

  1. What are some of the tech innovations that are fuelling the growth of speedy loans?

In the past, loan applications were processed manually, which involved verifying documents such as bank statements and employment records. However, technological advancements have made it possible for lenders to verify this information digitally, reducing the need for paperwork and speeding up the loan process.

The availability of large amounts of data, such as transaction records, social media activity, and online behaviour, has enabled lenders to gain deeper insights into borrowers’ financial profiles.

Online platforms, too, have also made it easier for borrowers to apply for loans and receive speedy approvals. These platforms leverage technology to streamline the application process, thus allowing borrowers to submit information digitally.

Big data analytics also allows lenders to make more informed decisions on lending, resulting in quicker loan approvals. Robotics and machine learning (ML) are the other tools that have had the greatest impact on digital lending. ML-based alternative credit scoring models have amped up lending.

In addition, automating the loan application process with artificial intelligence (AI) can reduce the burden of repetitive manual tasks.

  1. How are these tech innovations changing the way people borrow money?

Technology is changing the way people borrow money in a number of ways.

First, online lending platforms are making it easier for people to compare loan terms and rates from different lenders, from the comfort of their homes. This can help borrowers find the best deal on a loan, and also help avoid predatory lenders.

Second, the use of artificial intelligence makes loan processes faster and easier for borrowers, and it can also help lenders to identify and assess risk more accurately.

Advanced technology such as the product eligibility matrix (PEM) allows lenders to personalise loan offers based on borrowers’ profiles. This enables the latter to access loan products tailored to their specific needs and financial situations.

PEM is an automated tool that BASIC Home Loan uses to calculate the home loan and loan against property (LAP) eligibility of a customer in partner banks, based on the latter’s policies and customer profiles.

  1. What are the benefits of speedy loans?

The primary advantage of an instant or speedy loan is that it offers swift access to funds. Such loans can, at times, act as a lifesaver, say for emergency cases. Instant home loans can be helpful for people who need to buy a home quickly. They can also be helpful for people who have bad credit or who don’t have a lot of money saved up for a down payment.

Moreover, the digital nature streamlines the loan application process by reducing the paperwork and making it more user-friendly. These days, getting a speedy loan is easier, thanks to the emergence of dozens of such loan providing apps.

  1. How can BASIC Home Loan use technology to provide end-to-end fulfilment for its customers?

All technology and product development at BASIC is done with the principle of ‘built for purpose’. So, they either digitise or automate home loans, or improve customer convenience, or promote sales efficiency and cost reduction.

The platform, through its omnichannel customer relationship management (CRM), supports paperless transactions — from logins to loan sanctions — thereby automating documentation and disbursement processes.

As mentioned earlier, BASIC uses PEM to enable matchmaking between customers and banks/products. In other words, applications by customers are better matched with banks that result in higher conversion rates, thus reducing financial loss to customers on account of processing fees. Additionally, agents use a specialised tool to handle customer profiles, in order to live track the cases.

We also make use of the Dynamic Document Rule Engine that enables a faster turnaround time and lesser operational hassle. It also saves operational costs arising due to back and forth on account of pending documents. Such a system has been brought in for the first time in the industry.

Moreover, we also have an automated backend for agents, that allows efficient customer KYC and document verification and improves internal workflow efficiency.

  1. What are the challenges of developing an automated platform for home lending in India?

The first and foremost is to understand bank policies. Obtaining and comprehending the policies of different banks involved in home lending can be time-consuming. Understanding their requirements and translating them into code for automation purposes requires thorough research and collaboration with banking partners.

Without a robust CRM or file management system, it can be difficult to organise and access files such as property documents, income proofs, and employment details. It is critical to develop or implement a suitable CRM system that can securely handle large volumes of files.

Another common challenge is the delay in receiving updates from banks regarding the files that have been sent. If there are delays in such communication and coordination, it can have an impact on the efficiency of the automated platform.

  1. How can BASIC Home Loan overcome these challenges and achieve its vision of changing the way Bharat finances its affordable homes?

To overcome such challenges, it is essential to build strong relationships with banks and proactively engage with them to understand their policies and requirements. Regular communication and updates from the banks can ensure that the automated platform is aligned with their processes.

Efficient channels, such as dedicated points of contact or digital interfaces, can help overcome such communication challenges and ensure a smooth flow of information between the automated platform and the banks.

  1. What are your thoughts on the future of borrowing in India?

The future of borrowing in India is bright. The country has a young and growing population, which means there is a large pool of potential borrowers. Additionally, the Indian economy is growing rapidly, which means there is a lot of demand for credit. As a result, lenders are likely to be more willing to lend money to borrowers in the future.

It is there in the numbers to see. There have been increased disbursements across lenders in the country. While the first quarter of almost every fiscal is typically a slower quarter for banks and non-banking lenders, most of the players in the segment have reported 4-6 per cent growth in advances, going by their Q1 provisional data.

The latest IIFL FinTech report estimates the digital lending market to grow to $515 billion by 2030. Additionally, the pause in interest rate hikes by the Reserve Bank of India looks like a good sign for borrowers.

The future of borrowing in India will involve increased digitisation and streamlined processes. However, there are some challenges such as high levels of debt and lack of financial literacy among several Indians.

  1. How do you see BASIC Home Loan playing a role in the future of borrowing in India?

Affordable housing remains a critical focus in India, and home loans that cater to this segment can play a significant role in addressing the housing needs of the population. If we continue to focus on providing affordable and accessible financing options for aspiring homeowners, it could contribute to fulfilling the government’s vision of ‘Housing for All’ and boost homeownership in the country.

The ability to offer customised loan products that are tailored to specific borrower profiles and needs will be crucial. We take into account the diverse requirements and financial situations of borrowers.

Improving the customer experience will remain a key focus in the future of home loans. Digital tools, such as online calculators, interactive loan portals, and real-time customer support, ensure a seamless and user-friendly borrowing journey.

  1. What is the vision for BASIC Home Loan? How does the company plan to change the way Bharat finances its affordable homes?

BASIC Home Loan’s vision is to make availing of home loans faster, stress-free, and basic for mid- and low-income households in India. The company plans to achieve this by digitising and automating the documentation, customer verification, and disbursement processes, for efficiency and cost reduction.

Besides, BASIC also offers specific products and services to consumers — a proprietary technology platform that matches borrowers with the best lenders in the market; free advisory service that provides guidance on the home loan process; a step-by-step tracking system that allows borrowers to monitor the status of their application; and a dedicated relationship manager.

We believe these processes can help change the way Bharat finances its affordable homes.

  1. What are the company’s growth plans for the next five years?

Our brokerage business is currently profitable. We are looking to grow it to a point where the profitability will make the company an attractive IPO candidate.

In addition, BASIC is also planning to launch its own lending business. We are currently working on the first loss default guarantee (FLDG) round; we would like to obtain our own licence later and enter the lending market.

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