One of the biggest challenges facing the housing sector in the country is the under-compliance with Tier II and III city lending requirements. Also, banks focus on expensive loans as they operate on a branch-driven model in which costs are fixed and bank revenue is a percentage of the loan amount. Thus, only a part of society is truly served by banks and financial institutions.
Pramod Kathuria – Founder and CEO of Easiloan – says, “The traditional loan application process is tedious and paper-intensive, and disbursement of home loans takes a long time. However, digitizing home loans could be a potential solution to the problems.
In order to ensure that credit and lending facilities are truly available pan-India, digitization of home loans is a crucial step undertaken by new era tech and fintech companies.
In addition to covering different regions of the country and not focusing on major cities, the process of digitizing home loans benefits borrowers in various ways.
Quick and easy processing of loan applications
Digital technology ensures that capturing different candidate details is faster than traditional methods, which can take days for documentation, verification and disbursement. Kathuria points out, “The overall risk of human error in data entry is also reduced. The overall customer onboarding process is faster and more efficient. »
Optimization of the subscription procedure
When it comes to banks, experts say there are important non-digital relationship-building exercises that banks need to perform in traditional lending processes. Kathuria explains, “The cloud integration allows the system to synchronize data from credit bureaus, alternative credit rating data, assessments and risk management services. The decision rules are also implemented in accordance with the various applicable laws.
He further adds, “As a result, underwriting is faster because it considers a combination of AI-powered algorithms and machine learning that are more efficient than human judgment.”
Enable borrowers with no credit history to easily take out loans
Traditional loans consider the credit scores of the respective applicants to disburse the loan amount. Through this process, applicants with poor credit ratings and insufficient collateral to offer typically witness loan applications being rejected.
“With the introduction of digital lending processes and the integration of alternative credit scoring information used by fintech companies, new applicants can access home loans quickly,” adds Kathuria.
Match the best lender to the potential borrower
Industry experts say digital lending provides an applicant with loan quotes and offers from all lenders, rather than making separate applications to different banks or NBFCs. Since the traditional process is slow, an applicant cannot search for loan offers from more than one lender, which has become largely possible thanks to digitization.
According to Kathuria, even though financial service providers and new-age technology companies are working together to digitalize the entire loan disbursement application process, some challenges (such as a possible high default rate) require corporate attention.
That said, despite the hurdles faced by service providers, experts say the digitization of home loans has indeed benefited borrowers. There are more credits and loans available, and the process is faster and more efficient than before.