The outstanding individual home loans in India have surged to Rs 27.37 trillion in FY24, marking a 16.4% year-on-year growth. However, despite the significant growth, nearly 20% of the home loan lifecycle remains undigitised, revealing inefficiencies in the system that need urgent attention. This is according to a new report by The Digital Fifth, titled ‘Re-imagining Home Loans: Unlocking Speed and Efficiency through Digital Transformation’, released at the 3rd Edition of the Bharat Fintech Summit.
The report sheds light on the persistent roadblocks in the home loan process and stresses the importance of adopting advanced technologies to make home loan operations faster, more efficient, and user-friendly. The India Stack, which includes components like Aadhaar-based eKYC, UPI, and Account Aggregator, has played a significant role in enhancing the financial services landscape. However, the report points out that key stages such as legal verification, property valuation, and land record digitisation continue to be manual processes, creating major delays in loan approval and disbursal.
“The home loan sector is undergoing a major shift, with lenders adopting technological solutions to improve customer experience, personalise services, and expedite verification and disbursals. However, challenges persist. We believe the time is right for organisations to embrace digital-first solutions that create a more efficient, inclusive, and future-proof home loan ecosystem,” said Sameer Singh Jaini, Founder and CEO of The Digital Fifth.
As India faces a housing shortage of 100 million units, including a significant shortfall in the affordable housing segment, the demand for secured home loans is rapidly increasing. While 80% of the secured lending processes can be automated, the remaining 20% still requires manual intervention. The report suggests that emerging technologies, including artificial intelligence (AI), automation, and machine learning, have the potential to significantly enhance lender efficiency, improve customer experience, and personalise loan services.
Although the disbursal process has been fully digitised, critical steps such as sourcing, property checks, credit health assessments, and valuation reports are only partially digitised. Many critical processes—including title search reports, legal verification, original document verification, and mortgage charge creation—still rely heavily on manual workflows.
The report calls for several digital solutions to address these gaps, including:
- Real-time lead generation and digital application forms
- End-to-end digital KYC and credit assessments
- Automated fraud detection and risk management
- Virtual personal discussions and digital valuation practices
- Automated title search reports and centralised loan recovery mechanisms
The report concludes with a recommendation for a hybrid ‘phygital’ approach—merging the efficiency of digital automation with the human touch in the verification and due diligence process. Such a strategy, it believes, will help create a more efficient, inclusive, and streamlined home loan ecosystem, ultimately reducing bottlenecks and accelerating access to home loans for the Indian populace.
