Girish Kousgi, MD & CEO, PNB Housing Finance, in an exclusive interview, explores the pivotal role of digitisation in housing finance, elaborating on the trends and preferences of the consumers.
Excerpts below:
What is your outlook on the real estate and housing finance sector in the country? What opportunities do you see for yourself?
India has a relatively low mortgage penetration rate compared to other countries, at ~11% as of FY23. Recent estimates indicate a combined shortage of 100 million housing units across consumer segments, leading to a potential market opportunity of INR 58 trillion at current prices, which at present is about INR 29 trillion.
On the positive front, factors like favourable demographics, increase in per capita income, affordability and government support have created a robust demand for housing finance in the country. While the population has grown consistently, the nuclearisation of families has resulted in the number of households increasing manifold. Rising urbanisation (from 17.6% in 1955 to 35.0% in FY 2020) and higher per capita income have also significantly impacted the housing demand. Notably, the median age of individuals buying a home has reduced from 35 years to 28 years in a decade, indicating the rise in per capita income of young individuals now.
The overall size of the affordable housing segment (loan amount < INR 25 lacs) was around INR 8.5 trillion as of FY21, constituting ~39% share in the overall home finance industry. It has emerged as the key driver of incremental growth, primarily witnessed in tier II cities and beyond, reflecting the expanding demand in these regions. Furthermore, impactful policies like ‘Housing for All’ and ‘Pradhan Mantri Awas Yojana’ by the Government of India have given the much-needed boost to the housing requirements of the urban poor.
As a leading housing finance company in the country, PNB Housing Finance is well-equipped to cater to both prime and affordable segments, thereby putting it in a favourable position to fulfil the home-buying journey for all consumer segments. The Company introduced its affordable home loan scheme ‘Roshni’ to drive last-mile financial inclusion and enable aspiring homeowners to buy their dream homes.
The underlying objective of Roshni is to widen the customer base by including new-to-credit applicants, with household income starting as low as INR 10,000 a month and having serious intent to pay. There is a dedicated distribution network of 88 branches & outreaches, along with separate teams for sales, credit and collections to cater to Roshni customers.
Are there any trends or shifts in consumer preferences in the housing sector? How are housing finance companies approaching these changes in terms of their market positioning & communication strategies?
In the recent years, there has been a sea change in consumer tastes & preferences and emerging technologies. People are swiftly making decisions to secure their dream homes, driven by the desire for housing solutions that cater to their evolving needs. The housing finance industry is adapting to these trends by aligning product offerings, marketing strategies and communication approaches to meet the diverse preferences of homebuyers while promoting financial inclusion and sustainability.
At PNB Housing Finance, we realize the criticality of adapting to these shifting dynamics and providing innovative solutions that meet the evolving needs of our customers. The journey from a conventional mortgage lender to a more agile provider of financial service emphasizes our commitment to embrace transformation and become more relevant in a highly competitive market. Our foray into the affordable housing segment with ‘Roshni’ is one such example that shows how we are attuned to market trends by building a strong foundation for growth.
From a communication strategy perspective, PNB Housing Finance uses distinct imagery across its traditional and digital communications to resonate with diverse consumer segments. For instance, when catering to prime customers, the emphasis is on premium lifestyles and aspirations, while the messaging strategy for affordable housing segment revolves around financial inclusion, seamless processes and empowerment.
How is digital transformation reshaping the housing finance industry, and what are the key drivers of this transformation?
Digital transformation is significantly reshaping the housing finance industry by enhancing the overall customer experience, improving efficiency, managing risk, optimizing operations, expanding reach, ensuring data security and personalizing services to customers. It is exerting a profound impact on housing finance by changing the way it is delivered, making it more convenient, efficient and accessible for customers.
One of the key drivers of this transformation is the rapid evolution of consumer preferences and their tech-savviness, leading to greater adoption of latest technology for overall organizational efficiencies. Another factor driving digital transformation in the housing finance industry is the Government’s push towards a cashless economy, fuelled by the Digital India initiative which resulted in growth of digital payments.
At PNB Housing Finance, we have embraced digital transformation across various aspects of our business operations like credit, underwriting, risk management, marketing, etc. Our digital tools like ACE, FICO, STP (Straight Through Processing), etc. have helped us automate our processes, improve efficiency, enhance distribution network, mitigate risks & reduce losses, and offer personalized services to customers. Further, we also leverage multiple digital touchpoints such as WhatsApp, chatbots, mobile apps, etc. to enable customers to reach us conveniently.
