Digital home loans: Things you should know

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Consumers are becoming increasingly digitally savvy with time. Today, they use ride-sharing apps to reach the office, order lunch on their mobiles, stream movies, shop for groceries, clothes and other household items online and plan vacations through online travel agencies. While the trend began with retail with consumers accustomed to purchasing from the e-commerce market for fashion and consumer durables, it has made inroads in the world of financial services as well.

The home loan application is moving into the digital age, largely propelled by the stark change in buyers’ expectations coupled with the emergence of a supportive regulatory environment. This combined with technological advancements has enabled buyers to envisage a whole new world where they can research and apply for a home loan at their fingertips. It’s safe to say that the home loan market seems to be on the cusp of the digital innovation wave, prepared to make the entire process intuitive, seamless, and convenient.

The conventional home loan process can be tedious with multiple visits required to banks. The pandemic has triggered a paradigm shift in the way home loans should be processed, leveraging technology to bring in offerings that can ensure contactless application with minimal time and effort for buyers, developers as well as lenders.

E-commerce platforms

For the above vision to be realised, the industry has seen the entry of many players that is creating a unified technology platform that brings all stakeholders together. An online marketplace that offers buyers a variety of customised lending options utilizing AI and ML technologies and should also provide end-to-end processing of loans.

Customer details and historic data from lenders can help develop AI logics. Machine Learning (ML) can boost the accuracy on validation of multiple data points such as income, outgoings, other loan payments, investments earning. Such processes can be completely automated offering higher accuracy and speed.

ML technologies can be used to automate auto filling, fetching and validating this information. Thus, reducing human error in the process and making it much efficient over-all. Multiple verification documents details can be extracted and verified through Optical Character Recognition (OCR) making it simpler and faster for customers.

OCR is transforming paper-based processes into digital and demonstrating very interesting experience. In most occasions, the loan provider still requires a human intervention even after they have all the documents scanned for classification and inputting in the LOS. AI can change this and eliminate manpower currently required to get the data from document into LOS for further processing. This way the process is much efficient with lower human errors, higher productivity, and much lower resources.

Things you should know

The most crucial part of a home loan application is credit appraisal that involves the collection of personal and financial details of buyers followed by their verification. Even today, this remains dependent on human intervention, leading to elongation of timelines and level of buyer frustration added by multiple layers of checks, back and forth.

This process can be made much more efficient with a digital onboarding experience using e-KYC, auto-fill/fetch through OCR, and analysis using third-party SaaS providers that also authenticate the information from government databases. In the end, the customer saves time, bank saves resources and real estate developer or the seller gets cashflow much early.

(The writer is co-founder and CEO, Easiloan. Views expressed are personal)