Digital Transformation
Manoj Viswanathan, Director & CEO, Home First Finance, discusses the business scenario of affordable housing finance, technology upgradation and geographical expansion:
Manoj Agrawal, Ravi Lalvani: What is the impact of the lockdown on your business?
Manoj Viswanathan:
A little background first. Home First Finance is 10-year-old company, and we are in the business of providing affordable housing finance. Our customers are salaried and self-employed, and they belong to the middle class and most of them are buying their first homes.
Covid has impacted our business and customers. However, our customers are quite resilient to disruptions like covid; they were confused during April and May, but from June onwards, most of them have gone back to their respective jobs or businesses and they are regularly paying their EMIs. We had low business in April-May, but from October onwards, we are expecting to reach 80% of the pre-covid levels. In the initial period, some of our customers have availed moratorium because their business and income got impacted. In September, 95% of our customers came back to us, and they said that they do not want to avail the moratorium and wanted to pay their regular EMIs.
Mumbai, Delhi, and Pune were the hotspots of the pandemic, so these cities were most impacted. From a geographic perspective, there is a uniform demand from the rest of the cities. We mostly get business from the periphery areas of the cities because the central parts are expensive areas.
Have you launched any new products during this period?
There are no changes in our products. As a matter of precaution, we are evaluating proposals a little more stringently. Covid has impacted sectors like hospitality and travel, so we are careful in evaluating customers belonging to these sectors. We provide affordable housing loans between `500,000 to `2.5 million to customers who have an income range between `20,000-`50,000 a month.
Have you changed your sales and marketing strategies since the covid days?
Things are coming back to normal and slowly these will go back to earlier methods. Because of the restrictions, we do not organize large gatherings and the customer interactions that we have used earlier - loan melas & loan camps – are not possible now. Earlier, we used to counsel our customers about their loan requirements at these events, but nowadays, we are getting most of the business through direct marketing, referrals, and channel partners.
How has your digital transformation journey progressed? What new projects are you planning?
Home First Finance is at the forefront of the digital experience and digital process. We have adopted a cloudbased strategy for storing, processing, and applications of our data. Nothing has changed due to the lockdown for us. Everyone in our organization had started working from home because we always used to work on the databases stored on the cloud. So, it does not matter whether you are in the office or any other place. The employees can login and start work by using the same systems and laptops.
Disruptions were very minimal in terms of application processing, disbursals, etc. We had started our digital journey 8 years ago; this has helped us during this disruption. We collect 95-97% of the repayments electronically and this has helped us during this period because it is difficult for us to meet the customers because of the social distancing norms. Electronic payments method like NEFT and Google Pay have helped us to transfer money during this period.
Who are your main technology partners?
A lot of our software and app development happens in-house. We have an integrated CRM & Loan Management system on the Salesforce platform, providing a 360-degree view of every customer. Nearly 100+ data points are digitally captured data for all customers since inception. API integration with third party independent sources like Vaahan, Hunter, EPFO, Perfios has been done along with our proprietary Machine learning and customer scoring models, which are used for credit decisioning.
What is the size and composition of
your IT team? What new IT skills are you planning to add?
We are a tech-focused company. There are 15 members in our IT team, and we look for new emerging areas to adopt for enhancing our technology team. Collaboration is crucial for the coming years as lot of our applications are API-based, and we are giving API-based applications to our partners for providing leads to us.
Who are your key partners? What kind of business comes from them?
We have a partnership with fintechs who provide us leads. For example, customers login to PaisaBazaar for a home loan, and the Paisabazaar team passes on potential customers to us. We have a tie-up with institutions like Paytm Payments Bank and Paisa Bazar. When their customers who login into their applications and enquire about a home loan, the leads of affordable housing loans are passed on to us.
What are your geographical expansion plans?
We cover 70% of the country’s GDP. In terms of states, we cover all the states that have larger GDP like Delhi, Rajasthan, Gujarat, MP, UP, Maharashtra, Telangana, AP, Karnataka, and Tamil Nadu. We are focusing on the more industrialized and urbanized states as there is greater development of affordable housing in these states. We receive most of our business from Gujarat and we have presence in 15 cities in the state. Currently, we have 70 branches, and this year we plan to increase it to 80. We are opening branches in potential cities such as Coimbatore, Jaipur and Ahmedabad.
NBFCs are now selling off some of the portfolios to larger banks or other buyers so that they can focus more on customer acquisition using their capital. Does your organization do this?
We also sell some of our portfolios to our banking partners. While 80% of the business comes from our book, the rest is from direct assignments. There is a good market for quality companies having quality portfolios.