Technology has been a game changer for Shubham Housing Finance
Realty+ in conversations with Rupa Basu, Whole Time Director, Shubham Housing Finance.
How has technology played a role in Shubham’s journey?
Technology has been a significant enabler in Shubham’s journey so far. When we commenced business in 2010-11, our mission was to be the lender of choice for families with informal income. Since this customer segment was largely underserved till then, our loan processing was entirely decentralised and based on storyboards built through face to face discussions with customers.
Over the years, after gathering a substantial amount of data and experience on various customer segments and occupations, it is the adoption of advanced technology platforms that enabled us to drive efficiency in the process and achieve significant business growth. For example, today our loan files are 100% digitised and uploaded in a document management system. This system has enabled centralisation of loan processing to drive standardisation and superior process control while reducing cost of processing and enhancing customer service.
Similarly, the adoption of mobile based applications for customer acquisition and collections has increased process transparency and enabled paperless execution of many of our frontline processes. As the size of the company has grown the need for best in class systems for finance, analytics, lead management, HRMS, employee training etc. was felt and Shubham has invested significantly in all these platforms ahead of pressing the growth accelerator.
How can technology be used to limit risk?
Technology can be leveraged to contain risk in multiple ways. In a purely basic sense, technology minimises the risk associated with any manual or human intervention. Whether it is a best in class accounting systems seamlessly integrated with the loan management platform that controls financial risk, an efficient dedupe engine that controls fraud risk or an automated credit rule engine that ensures adherence to policy parameters and minimises operational risk.
Technology has pervaded all areas / functions and is integral to minimising residual risk in various processes. At a more sophisticated level, relatively recent technologies like geo-tagging and real time authentication of identity, banking and income surrogate information have helped in further sharpening of lending processes. Central Registry set up by the government for KYC and mortgage data is a great example of how technology can and should be leveraged to contain systemic risk.
Risk in a housing finance company and how technology and analytics play an important role in it?
At the outset, it is worth mentioning that housing finance as an industry in India still depends heavily on manual and document intensive processes. The property market is highly heterogenous with prices fluctuating wildly even within small micro markets. Title records are not completely digitised and there is no comprehensive business intelligence on property prices. Hence the most critical leg of the process – that of collateral underwriting and mortgage creation – still relies on the highly subjective property valuation by field engineers, title verification by lawyers and deposit of physical documents by customers.
Technology cannot be leveraged to design a straight through decision process for housing loans – at least not yet. Having said that, there are many ways in which technology can be used as an overlay to optimise the underwriting / verification effort on a loan as well as measure and monitor credit and portfolio risks. Multi-dimensional scoring models help in initial risk rating of customer to determine the workflow for loan sanction.
Geo-tagging applications used during customer discussions and property visits can greatly help in locating the customer or the property later which is often a challenge in the informal segments due to incomplete addresses. A data analytics platform integrated with the loan system can help identify portfolio trends by granular segments so that red flags are identified and addressed promptly. This is especially useful in a widely distributed business across multiple product and customer segments such as ours.
One of the key risks facing a housing finance company, especially one catering to informal income customers, is that of portfolio attrition once the customer builds a credit history. A good technology platform catering to customer relationship management (CRM) can enable service enhancement and portfolio actions in a timely fashion to address attrition risk. These are just some of the examples of how technology can be an effective tool in risk management.