Digital transformation presents a significant opportunity for financial institutions to enter under-penetrated markets in India

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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Digital transformation presents a significant opportunity for financial institutions to enter under-penetrated markets in India

Technology has become an integral aspect of growth strategies for the BFSI sector. Digitization is enabling customised and omni-channel engagement with the customers. Further omni-channel platforms are empowering all self-servicing customer touch points, such as web-based customer portals, mobile apps, live chats, emails and call center support. With the help of AI (Artificial Intelligence), lenders are now able to roll-out ‘Spot loan offers. Technologies such as Video KYC, AI, Machine Learning, Big Data, etc., have been the true game changers. All this is resulting in an operational efficiency and improved customer service.

We recently partnered with Digi Locker to enable customers to access their essential documents, such as the Interest Certificates and Account Statements, anytime and anywhere. Digi Locker – a document wallet, is a flagship initiative by the Ministry of Electronics & IT (MeitY) under the Digital India programme. The documents in Digi Locker can be retrieved in real-time and are legally at par with originals under the Information Technology Act 2000. This paperless governance initiative, furthers the digital sharing of documents seamlessly. This will hugely benefit all retail borrowers of HDFC Ltd.

The Covid-19 crisis acted as a catalyst in accelerating the digital transformation across businesses. It drastically transformed the way companies operate and how they communicate to offer their services to the customers.

The Housing Finance Companies in the last few years have seen a healthy growth, given the inherent demand for housing. The Covid-19 pandemic has enabled a faster adoption of technology by HFCs, as well as automating many processes, which have enabled the customers to transact digitally.

Today, the way we do business has undergone a tremendous change – be it underwriting procedures, on-boarding and interaction with customers, etc. They are increasingly becoming digital. For financial institutions, this digital transformation provides a huge opportunity to access under-penetrated markets across India.

To grab this opportunity, financial institutions will need to invest in human resources and technology to optimise customer service and business processes. Continuous training on new technologies will be required and products will need to be tailored to different categories of customers, across all age groups.

For us at HDFC, we graduated from incremental “digitization” of our processes to a large scale “digitalization” of our core loan origination and underwriting processes. This has helped us to reach out to our customers and offer services seamlessly even during the Covid pandemic.

We introduced a number of digital and online initiatives to reach out to our customers. One such initiative has been the ‘HDFC Customer Connect’, a one-stop convergence platform for all customer requests. In fact, in the housing finance space, we were the first ones to focus on online loan processing, which helped us during the lockdown. Today, over 92% of new loan applications received are through digital channels which was less than 20% in the pre-COVID era. Both, our digital sourcing and appraisal models have enhanced loan approvals online.

To cater to our customers, the deposits are being serviced online through a deposit platform. Further, our deposit agents are being trained by us to use this online platform. Our deposits have performed well as retail investors are parking their savings with us due to its convenience. We offer an additional ROI of 5 bps, if customers place the deposits online.

Renu Sud Karnad, Managing Director – HDFC Ltd

Technology has a significant role to play in meeting India’s ‘Housing for All’ goal. Technology will increasingly disrupt the real estate market, changing the way customers search, buy, lease or manage property. Capitalising on technology will also help the real estate sector. For instance, progress of projects can be monitored through the digital dashboards. Funding for projects based on achieving construction milestones can be better monitored online. This will bring in the much-needed transparency and accountability, thereby improving cost efficiencies.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members