In a nutshell, I see Aashiyaan standing out among its competitors by virtue of four key differentiators:
Even though we occupy the affordable housing space, I think the term ‘affordable housing’ is slightly problematic, because it is used generically and has wide interpretations. So if you are offering home loans of, say, INR 25-30 lakh, that’s affordable housing, while a loan of INR 4-5 lakh is also affordable housing. As is obvious, these two segments are completely different.
I therefore define Aashiyaan as a micro housing finance company, not just an affordable housing finance company. When I say micro housing finance, what am I talking about? I’m talking about loan sizes of sub-10 lakh. I suspect that is all that about 75% of the households in this country can afford.
How else are we distinguishing ourselves? First, the geographic focus – we do not have any home grown players serving the East. Some of the other companies, which are more South and West-based, have only a nominal presence in the East.
Second, and I would say the key differentiation, is the use of technology – to reduce turnaround times (TAT), to lower costs, better efficiency, better controls, better planning and portfolio management, and better data analysis. If you’re launching a financial services entity in 2016, pen and paper is redundant. I believe you should go digital from Day One. When you enroll a client, don’t fill in a paper form. Use a tablet, and enrol the client. Take pictures of the client, of his house, his KYC documents. The geo-location of the customer is automatically picked up, so you can centrally see where he is located.
This will help eliminate movement of paper from the field to a central office, because data is immediately relayed in real time. So decision-making and answering questions at the central level become easier, and the information is relayed quickly to the field guy. Our idea is that we will only gather as many paper documents as are legally required in the country.
To give you another example of the use of technology, we are looking to use psychometric tools to do a mental mapping of customers to build a database over a period of time, to try and see if a correlation exists between credit behavior and the mental makeup of a client.
The third way in which we would like to differentiate ourselves is to take the relationship with a customer beyond a home loan and meet his other financial needs. A home loan, of course, is the most significant financial relationship that a person builds with any institution, since he is borrowing quite a few lakhs. For a customer in the informal sector, the entity who has given him a home loan is far more significant than one who has given him a microfinance loan or sold him an insurance policy.
Apart from the quantum of the loan, the relationship is also significant because it is long-term. Unlike a microfinance loan which will build a one or two-year relationship in a particular loan cycle, here we’re talking about seven years, 10 years, or more. This gives Aashiyaan the opportunity to cater to the other financial needs of a customer. For example, we may lend to a customer who runs a workshop. Having taken a home loan from us, a couple of years down the line, that person may need working capital for his enterprise. Aashiyaan can lend to him, and meet that requirement, which helps him enhance his business, which in turn helps secure the home loan.
Fourth, we could also sell appropriate insurance products to the customer, let’s say health or life insurance policies, which need a lot of financial education for the customer, and given the long relationship with him, we have the time to provide such education, like a financial literacy program.
Apart from these measurable differentiators, there are also some qualitative elements. I think in this space there is a need for greater transparency in an entity’s dealings with clients, in terms of pricing, the total cost of borrowing, the terms and conditions, etc. And we want to be leaders in this area.