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The Indian domestic housing finance market has seen a wave of housing finance companies being established under the auspices of the Government’s ‘Housing for All’ scheme. Amongst these lending institutions, competing in a market traditionally dominated by banks, is Roha Housing Finance (Roha HF), which was established in 2017 and has already started making its presence felt with its innovative finance offerings. The company is part of the JJT Group, an Indian business conglomerate with diverse business ranging from food colours to energy production.

Roha HF’s strategic focus was to have a digital-first approach for all its customer offerings and to ensure a smooth, quick and transparent borrowing experience for its customer’s housing loan requirements. A large part of this strategy was driven by Roha’s Managing Director, Mr. Sunil Kapoor, who strongly believes that technology is a key enabler in making mortgage lending processes flexible and expanding business distribution quickly. From his past experience at GE Capital, Mr. Kapoor recognized that the underwriting process in lending was heavily dependent on people, which often created bottlenecks, for example if a person left the company or changed role. Dependency on people also placed limitations on how fast a company could scale-up. He also recognized the need to reduce the time taken to disburse loans which in the housing finance industry is taking an average 2-4 weeks to complete.

Roha HF knew that technology could be used to disrupt the traditional approach in lending, and so the lender kicked off an RFP process. After evaluating multiple suppliers, it shortlisted 3-4 suppliers, from which  Roha selected the lending specialist, Nucleus Software. Roha attributed three key factors that were in their favour – the configurability of the system, future readiness and most importantly, the comfort and support demonstrated by the team in helping Roha HF achieve its vision.

The solutions implemented were Nucleus’ flagship solution – FinnOne Neo and FinnOne Neo Lending Mobility with a time horizon of 4-6 months. The deployment was done on the cloud rather than the on-premise solution and notably, this was the first implementation of its kind for FinnOne Neo on the cloud. For Roha, a hosted solution was not only cost-effective but also provided them with operational flexibility to rapidly expand their branch network without the need to set up a physical server in each branch location.

The contract for the implementation was signed in September 2017 and work started in November with the base system delivered by Nucleus within 60 days in January 2018. The first version with requested configurations was delivered in March 2018 and the final rollout of the system with all configurations went live in July 2018. A large factor contributing to the agility of the system rollout was Roha’s decision to implement the core system without any customizations. Here, the flexibility of FinnOne Neo was important, as most of the change requests from Roha could be accommodated through system configurations within the workflow without the need to customize the core system. For Roha, a standard system also meant that system updates and version upgrades could be done quickly and easily without the need for customizations.

For seamless automation of the lending process, FinnOne Neo was integrated through APIs with four other systems – SAP for accounting, CIBIL for credit bureau checks, CRIF Sherlock for identity verification and fraud prevention and Perfios to analyse bank statements. This integration was achieved in just under 30 days. Among the interesting features that Roha introduced through the FinnOne Neo solution was the concept of ‘Responsible Lending’ where the lender calculated the loan eligibility of individuals (salaried and businesspeople) based on their disposable income, instead of the industry practice of FOIR ‘Fixed Obligations to your Income Ratio’. To enable this, the system needed to have a universal profiler database that stored standard income profiles of various occupations and businesses which was used to input data and arrive at the disposable income of the applicant.

Overall, Roha HF was extremely satisfied with the implementation and the continuous support provided by the Nucleus team, especially in challenging situations where the team had to explore solutions to meet Roha’s requirements without making any changes to the core solution. One such challenge entailed Roha requiring the provision to compare an original loan quotation with a modified quote based on customer negotiations and then get the deviation approved by the respective department in a seamless manner. Typically, loan quotations are not stored, so comparisons would not be possible in the system. However, the project team came up with a solution, which involved creating placeholders where the original offer could be stored and allowed the system to compare it with a modified quote.

Talking about the highlights of the implementation, Mr. Sunil Kapoor, particularly commended the project team, which comprised of members from Nucleus as well as Roha, for their critical role in the successful implementation of the solution. According to Mr. Kapoor, the 8-10 member project team, christened by him as ‘VFirst’, operated as a single team instead of the more typical client-supplier setup.

The implementation brought direct as well as indirect benefits to Roha HF. The most evident was the complete automation of the underwriting process, where the institution’s credit policies were embedded in the system using 120 parameters, which meant that the underwriting of the customer can be done in a few seconds and the customer is instantaneously informed of loan eligibility. This enabled Roha HF to disburse a home loan in as little as 3 days – a record in the industry. Mr. Kapoor attributed Roha’s rapid growth in business to the robustness of the implemented technology solution – FinnOne Neo.  Between March 2018 and January 2019, the business grew nearly 2,700% – from INR 10 million ($140k) per month to INR 265 million ($3.7 million) per month.

Having successfully automated the credit decisioning and backend systems, Roha HF now plans to focus on strengthening its front end systems and is working with Nucleus Software to deploy a lead management software. The housing finance institution also plans to start offering unsecured products and aims to use technology to complete the entire underwriting and disbursal of personal loans to the customer’s account within 1 hour. Long term plans include enabling Roha’s customers to apply for a loan and get disbursement of the loan from the online portal without any manual intervention.

Key facts

·  Bank: Roha Housing Finance

·  Headquarters: Mumbai, India

·  Supplier:  Nucleus Software

·  Solution: FinnOne Neo Cloud and FinnOne Neo Lending Mobility

·  Timeline: 6 months

by By Megha Bhattacharya
Megha is a Market Analyst at IBS Intelligence.