The housing finance market in India is poised for substantial growth over the coming years. As of 2024, the market size is projected to reach USD 385.14 billion and is expected to grow at a compound annual growth rate (CAGR) of 24.1% to reach USD 2,669.39 billion by 2033 (Mordor Intelligence).

Despite this growth, onboarding new customers in this industry presents unique challenges, particularly for banks and financial institutions. These challenges can hinder the smooth transition of potential homeowners into the financial system, ultimately affecting both the customers and the banks. Here are the key challenges faced during the bank onboarding process in the housing finance industry in India:

1. Lengthy and Complex Documentation Processes

Excessive Paperwork

The Indian housing finance industry is heavily reliant on extensive documentation. Potential homeowners are often required to submit numerous documents, including identity proofs, income statements, property papers, and more. This excessive paperwork can be daunting and time-consuming for customers.

Verification Delays

The process of verifying these documents is equally cumbersome. Banks need to ensure the authenticity of each document, which can lead to significant delays in the onboarding process.

2. Stringent Regulatory Requirements

Compliance with KYC and AML

Banks in India must comply with stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. While these regulations are essential for preventing fraud and ensuring the security of financial transactions, they also add layers of complexity to the onboarding process.

Regulatory Changes

Frequent changes in regulatory requirements can further complicate the onboarding process. Banks need to constantly update their processes and train their staff to ensure compliance with the latest regulations.

3. Limited Digital Adoption

Dependence on Physical Branches

Despite the growth of digital banking, a significant portion of the Indian population still relies on physical bank branches for financial services. This dependence can slow down the onboarding process, especially in rural and semi-urban areas where digital infrastructure is limited.

Inadequate Digital Solutions

Even when digital solutions are available, they are often not fully integrated or user-friendly. This can lead to a poor user experience, causing potential customers to abandon the onboarding process.

4. Creditworthiness Assessment

Lack of Credit History

Many potential homeowners, especially first-time buyers, may not have an extensive credit history. Assessing the creditworthiness of these individuals can be challenging for banks, leading to delays in loan approvals and onboarding.

Manual Assessment Processes

The assessment of creditworthiness is often done manually, which is not only time-consuming but also prone to errors. Automated credit assessment tools are not yet widely adopted, which hampers the efficiency of the onboarding process.

5. Market Competition

High Customer Expectations

With numerous players in the housing finance industry, customer expectations are higher than ever. Potential homeowners expect quick and seamless onboarding experiences. Banks that fail to meet these expectations risk losing customers to competitors.

Competitive Pressure

The intense competition in the market forces banks to constantly innovate and improve their onboarding processes. However, balancing innovation with regulatory compliance and risk management can be challenging.

Addressing these challenges requires a multi-faceted approach, including streamlining documentation processes, adopting digital solutions like Onboard, and ensuring compliance with regulatory requirements.  ONBOARD, provides,

1. Smart forms to make customer onboarding a hassle-free process

OCR using Deep Learning

Auto fill identity and address information from images of document proofs with an accuracy of 99.5%, using modern OCR technology that use Artificial Intelligence.

Know Your Customer (KYC) API

Auto fill customer information by using KYC API integration to fetch details from KYC registries or populate the details from an organization’s central Customer Information System (CIS).

Online Payment Collection

Accept online payments from the customer for account opening charges, initial margin or annual fees, enabling the customer to start their investment journey immediately.

2. Automated verifications allow quick processing of forms

Verification Checks

Ensure the correctness of data provided, by validating against regulatory and non-regulatory authorities. System verifications like OTP additionally verify the mobile number and email address.

Webcam IPV

Technology now allows In-Person Verification (IPV) to be done through a web camera. A series of verifications like Face Match and OTP on the video recording allow the process to be completed online.

Regulatory Compliance

Generate and submit files for upload to KRA / CKYC registry as per regulatory guidelines. Additionally export files for both internal and external systems like Exchanges or Depository Participants.

3. Digital Identity Verification

The online account opening software acts as an identity verification platform. The solution supports multiple methods of verifying the identity of your customer. Each of these methods are compliant with regulatory norms and cover both Fresh KYC and accessing KYC details from depositories.

• Aadhaar Online e-KYC

• Aadhaar Paperless Offline e-KYC

• Digital KYC

• Central KYC

• KYC Registration Agency

• Video KYC

• DigiLocker

Celusion's Onboard platform offers a comprehensive approach to addressing the challenges of banking customer onboarding in India. By leveraging digital KYC, automated workflows, enhanced customer experience, robust security measures, and seamless integration, Onboard transforms the onboarding process into a quick, efficient, and secure experience for both customers and banks. This innovative solution not only improves customer satisfaction but also helps banks reduce operational costs and enhance compliance with regulatory standards.