Improving financial inclusion: Home Credit India
It has been an interesting two years for the team at Home Credit India (HCIN). The entity, which operates as a central bank licenced Non-Banking Finance Company (NBFC) while also providing insurance services, and other value-added services through partnerships, has been operational in India for the past ten years.
The parent company was founded in 1997 in the Czech Republic and has since branched out into a number of other key markets. HCIN’s core aim is to empower people to live the life they want now, by focusing on financial inclusion and responsible lending. Home Credit Group is known for providing regulated, trusted financial products and services to the ‘unbanked or underserved’ parts of the population’ through seamless loan applications, fast credit scoring and responsible lending.
Home Credit India has an employee base of around 5,000 people and has been consistently expanding operations since its entry in 2012, with its services spread across 625 cities across India. The company has a strong network of over 50,000 point-of-sale (PoS) locations and is growing with a customer base of over 14 million customers. Embracing digital transformation,HCIN is fast expanding its digital presence and offerings since 2020, to build an omni-channel connection with our products and services.
Transforming the Asian financial marketplace
While India is generally considered a well-developed nation with a fast-growing fintech industry and a wealth of technology talent, it is also home to an extensive unbanked population. A recent report by the Reserve Bank of India revealed that, with 190 million adults currently operating outside the global financial system, India currently has the second largest unbanked population in the world. It is this dynamic that makes the region an excellent launchpad for HCIN’s products and services.
Milan Dolansky, Chief Digital Officer or CDO for Home Credit India, has been leading the institution’s digital transformation for the past five years. Formerly the change manager for digital products and services at CSOB, a Czech bank in Prague, he has over a decade of experience in the banking industry, enhancing services and driving technological innovations.
He says of HCIN: “Our services are simple, easy and fast, with a focus on enhancing credit penetration through responsible lending, which empowers our customers, who generally come from a demographic that is outside of the banking system. Basically, we enable them to access financing or credit easily and safely, in both online and offline modes.”
Dolansky points out that the main purpose of the parent HCI – especially in India – is to work on improving financial inclusion and opening access to the financial industry to the unprivileged segment of subprime. “For that reason, a lot of our customers are first time borrowers or new to credit,” he says, referring to the cultural aspect of lending in India, where those who have been bypassed by the traditional banking system, have, in the past, had to rely on loans from their communities, and in an environment where loan shark practices are rife.
“In the Indian market, the credit card is an aspirational product,” says Dolansky. “There are 1.3 billion people in India but there are only tens of millions of credit cards. So, a big part of the population is aspiring to have a credit card one day. But the banks are much less flexible on who actually gets one.”
It is this rigidity in the traditional financial marketplace that HCIN is attempting to address through a number of innovations. “We see our role as one that brings pre-approved lending services to many more people,” he says.
As part of the initiative, HCIN has plans for a virtual card launch in the next few months, which will allow their customers to have the benefits of a pre-approved or flexible loan product. “This is definitely an innovation for the market,” Dolansky states.
“We are trying to help our customers improve their lives and fulfil their aspirations. A lot of them are buying their first smartphone, their first fridge, their first AC unit. Our mission through lending is actually to improve the lives of people.”
A developing space
In March 2020, as part of his role, Dolansky found himself managing the digital transition of a company that had typically served customers face-to-face, and a workforce that was unused to the concept of remote working practices.
He explains: “When the pandemic started and the country locked down, we had to move very quickly. But it was a challenge because of the way India operates regarding technology. In most developed countries, every home has a laptop or home computer, for example. But although India has excellent mobile technology penetration, it's as though the country skipped a step and “missed out” on the home computer stage.”
This factor meant that Home Credit had to mobilise an entire software and hardware operation to ensure it could maintain its operations seamlessly and continue serving its customers.
“Very few people have laptops at home,” Dolansky says. “They are all very technically proficient and have fully embraced mobile and IoT technology – but you can't do the same sort of business on a mobile phone as you can on a laptop.”
Initially, it was a massive task, as Dolansky explains: “Home Credit went through a period of time where we were literally shipping laptops and desktops all over the country. It was hectic.” But, after just two weeks, the company was fully remote in terms of its workforce and it was business as usual.
New opportunities in an emerging marketplace
The period has, according to Dolansky, driven forward Home Credit India’s digital transformation strategy. As a result of the transition, there are more innovative systems in place, and this has meant the team has been able to launch new products and services despite having spent the best part of the last two years operating remotely.
Over the next few months, HCI will be launching its brand new mobile super-app, which is going to offer customers an entirely new point of service. “The main differentiator is that we are offering them applications that are meaningful to their lives – and not only the services of financial lending.”
Users of the new HCIN super app will be able to manage a multitude of daily tasks directly through the app, from shopping and arranging insurance cover, as well as managing their lending. Dolansky says: “We are building an ecosystem in which the customer is able to fulfil all their daily needs through one platform that functions seamlessly and frictionlessly, through us and financed by us.”
The digital ecosystem and strategic partners
As part of HCIN’s digital transformation journey, the organisation has forged a partnership with HyperVerge, a leading AI documentation and data technology company. The collaboration means the application processes for customers have been completely streamlined: documentation is scanned, read by AI and then filed for future use.
Dolansky says of the partnership: “We were looking for a partner to improve our customer journey. And, at that point in time, we knew that one of the biggest struggles our customers have is to retype information from documents. India culturally is very bureaucracy oriented and paperwork is a big part of life. But the aim of new financial technology offerings is to make all those processes frictionless.”
HCIN discovered that HyperVerge’s OCR was already enabled to scan and aggregate the data on Indian documentation. The adoption of the technology has enabled customers to take three pictures of their paperwork via their mobile phone, and the software platform does the rest, reading information with an 85% accuracy – which then simply needs checking for confirmation once the online fields are ready to view. “The process takes away the need for the customer to type in numerous details, saving them time and stress,” Dolansky says.
Other ecosystem partners have been instrumental in developing the super app with its access to numerous products and services. At the moment, the majority of our partnerships are in point of sales. As part of our extended digital services, we will also be forging new collaborations with affiliated businesses. We’ve also developed an entire new technology stack as part of the shift to the new mobile application.”
Customer centricity, data and KYC
HCIN’s culture is one of innovation through strategy. As part of its developments, the company is seeking advice from its users in the journey towards better products and services. Dolansky believes fintech is as much about bringing the customer needs into sharper focus, as it is about delivering better services.
“We are talking to our customers. Our customers are part of every small piece of the development process. Their feedback on an idea, before the development process begins, is critical. Later on when we have a pilot product, we test it again and get their feedback on, for example, how the screen functions – is it user friendly and intuitive enough?”
Once the first official production begins, HCIN gathers feedback again. “Working with the customer is the biggest inspiration for innovation in fintech,” Dolansky states.
Ultimately, the goal is to bring better opportunities to people who have been shunned by the traditional banking system. “It’s about improving lives,” says Dolansky. “Providing a family with their first laptop or smartphone so they can study better and enabling home improvement loans so they can have a nicer environment. These are things that, prior to our services, were unattainable.”