How Big Data Is Transforming Home Loan Market
There was a time not too long ago when serpentine queues of home loan seekers outside bank branches were a common sight. But now you can avail of such services at the click of a mouse; you don't have to visit any brick-and-mortar location. This has made the process easier, not only for you but also the lender.
A recent survey revealed that the bulk of home loan seekers today have 'zero credit history'; their number is much higher than those with some credit data to show. Then how do lenders gauge creditworthiness and genuineness of loan seekers, given that most have a CIBIL (Credit Information Bureau (India) Limited) score of minus 1, implying they have no past record of credit?
Behind this banking revolution is an ocean of digital data facilitating the process. Makaan IQ tells you how banks and financial institutions are making use of big data to streamline banking products.
Data mining and interpretation
Big data are huge data sets that can be analysed to draw trends and associations, particularly about human behavior. These data sets can be interpreted through various technologies. They provide bankers new and flexible solutions for measuring and reporting regulatory credit risks associated with an applicant's portfolio.
The home loan purchase etiquette is vigorous and incalculable. But with innovations in the digital marketing field and an advancement in data tools, your intent for a home purchase and interest in a home loan can be inferred easily.
Differentiating and then catering to the needs of an existing customer and the prospective home loan seeker can be studied in great detail using big data. They also help in segmentation of loan applicants on the basis of their needs, income categories, type of loans products, employment, etc. The goal is to serve home loan buyers with greater precision.
To track these data sets and mine them for analysing credit risk, banks have enhanced their digital presence and employed several tools, for various metrics:
Online transactions: The record of the frequency at which you purchase and sell goods online is used to draw the picture of your consumption and saving pattern.
Social media: Your social media profiles provide a lot of information about your needs, thoughts, connections, past and present employers, assets and liabilities, etc.
Bank account statements: These can be used to gauge your financial position, repayment track of existing loans, inflow and outflow of funds, inter-bank transfer to other accounts, procurement of a new loan, etc.
Bills: Your mobile, telephone, electricity and other bill payments help establish your regularity in clearing obligations.
Technology in home loan
Digital data, or big data, help banks optimise their allocation of credit risk reduction tools while computing credit risk measures.
Besides, there also are other data gathering tools and technologies that are making banking easier in today's times. Here are a few of them:
Text messages, mails: Text messages and mails are being used to provide loan account and other transaction details in real time. Information on receipt of original property documents is also notified through messages and mails.
GPS: Global Positioning System helps track offices, branches, residential addresses, etc.
Online application: Quick and easy home loans can be applied for online, with multiple options for interest rates and product facilities.
Bonuses: Home loan providers also offer loyalty points to applicants online, on the basis of the amount of loan amount disbursed.