EP #55: Product management lessons from India’s housing finance pioneer, HDFC Ltd.

Santosh (Host): Hi listeners, welcome to yet another exciting podcast episode of Martechno beat a part of Netcore and with me today I have the Managing Director of HDFC limited Renu Karnad and we’d be talking about The Changing Times and ever revolving times of holding a house. Honestly home buying is always been experience and for many industries and then there are those who aspire to build it into an asset when we have more than one home and there are many milestones as you move along into the events that lead to a definitive moment which led to the purchase of a house and given back, I have a few interesting questions that coming your way and I’m hoping she would have a nice little bit here. We’ve been in the business long enough now and how is the journey so far in terms of you know, making so many dreams come true.

Renu (Guest): Well Santosh, it’s been a fabulous journey for us not only because of housing but I think over the years we have grown from being just a small housing company to being a financial conglomerate, but I don’t think we are talking here about the financial conglomerate. I think we’re really talking about the housing piece but before I start, I just wanted to tell you how this company came to being, you know, a lot of people say that the British left us the railways, the British has left us governance, but one thing they did leave behind was housing loans. They did leave behind what in Britain were known as the building societies. And so, our first chairman Mr. H D Parekh, who had studied in the UK always wondered why that hadn’t been so and decided that whenever he could he would try and see how he could set up an entity that could help the middle income to lower income Indian own a home, you know. So, this was a dream that you had and that’s a dream that I think all of us every individual has to have a house of his own and with his laying the roots for that dream I think that 43 years have been one of the most satisfied years. I would say we had helped lakhs and lakhs of people own homes and to ask you know, your question whether the recent Stone durability events that have had been a definitive moment. You do one of the positives Santosh of the covid epidemic has really been a lot of people got a little rattled, all of the sudden death was staring at you no matter what age you were, what strata of society you were. It was a very equalizer sort of a pandemic and People realize that if something were to happen to them, if there was a home for them families that they may leave behind it would really make things so much easier and also going forward we saw with a lot more people realizing that working from home is a very real and a viable option, real formal employee point of view and viable from the employer point of view. It’s something that people realize now that if I have a home of my own and I don’t have to keep shifting particularly if you’re in a rental house every 11 months or every 24 months, having a home of your own actually in some ways also gives you a place to work, a place of work and that’s mean a definitely a positive you know Fallout of what of covid-19. If you asked me two years ago read oh will you allow half your employees or even for that matter 20% of your employees to work from home, I would have said of course not you know we are a customer facing organization we are a transaction organization how can people work from home but this proved everything just the other way that given the technology that is available today, given the facilities that are available today I think working from home is a viable option if not for all hundred percent of people, but if early large percent of people can make use of it and Santosh very honestly the beneficiary of this is really going to be women. All the years that I’ve seen in HDFC, women fall out of the workforce where they have children and they always regretted because they’ve been educated as good as any other man, but you know nature designed it such that only woman you have children at boom one is the Primary caretaker of the family. So, at the time when kids are born, we see a huge drop out of you know, people women from the workforce. This will stall that. I think you we can now even as an employer I think so often we had now thinking of planning job profile which for a few years can work from home. I think that has really been a hugely defining moment in the recent years. 

Santosh: I think that means that I think is very beautifully put that how it really empowers women out and make a difference one of the key challenges you would have also faced would be and how to set up the new processes which is social distancing Norms.

Renu: Yes, you know Santosh just to take it in two parts one was when we were completely closed, you know, as you can surmise from my you know sentences that actually we were just not used to working from home at all. So even in terms of Technology though, we had a lot of Technology available much of it was not being used. Okay, we realized in the first three weeks that this is going to be a long haul and it does first, you know one and a half months it took us one and a half months to come up to speed and fortunately the first month of the covid as you all know was completely closed for All of us but by the time things started looking better, you know, we had reached a certain level of usage of Technology and even in many case it was even having as small thing as having internet connection at home or we take so many things for granted it certain, you know levels of, you know income levels we are in but you realize so many people don’t have internet connections at home or even have a having a laptop it home, you know just making sure that all your people had the equipment at or took you some time. Then there was this whole training or retraining I would say of using all that was available in technology. But since it was so easy to actually sit across the table and deal with either a customer or a colleague or a problem right when they were used it and here, you know this there was this whole retraining that was required to get people to use what was available and then also to develop new technologies, you know, I’ll tell you one of the things that has happened as a Fallout to forget cover covid-19 was that used to happen is video KYC. You can’t do any transaction if you don’t have KYC. So we try really to assess who the person is and we came as it can be done over the video. So over time just like everyone else grew it’s not just us there are you know, very certainly even the way the government has gone up as a user of technology. I think we kept up to speed and I think that was one of the better fall outs and this is not me saying it it’s been said by so many leaders that what we thought we would take two years to do I think we did in 10 months in terms of adopting technology using technology and improving what we had. 

Santosh: Absolutely, how was the experience of moving customers be to the online Channel having it go it was very default by nature.

Renu: Yeah, so I have to admit that we did use a sales teams in a big way. There was a lot of advertising that we did there was a lot or you know, if you go to our website, we tried to make it far more customer friendlier than it was, you know, it was catering literally thinking like a customer and how can we encourage them to come and apply but having said all that, you know a home loan is very difference at those from say taking a car loan. When you taking a car you need the money, you need the model. Nobody needs to check what this model is all about. It’s all known and the process is very simple. Okay. The amounts are smaller. But in when you’re looking at a home loan, each property different each agreement is different. Each title is different. The values are much higher the ticket size is much higher. You have to make sure that the person’s job at that time in particularly the beginning was Secure, how do you make sure that the person continues to work where he said he was working, right? So all these things were there. So even though we had the best technology for it nudging a customer to actually fulfill it in the beginning was quite a challenge. So we used our Channel Partners very well in that so we have a sales team Santosh and the first the sales team people had to be actually trained on how they how these forms should be filled up at what stage you get in her even a simple thing like uploading a document from somebody who’s sitting in that home. Everybody doesn’t have equipment but how to upload a document all those things first. We had to train our Channel Partners in the channel Partners were had holding these customers. So in the beginning, even though the applications that came in from the digital mode were huge but the completing of the application and having them actually bring it in as an application that we needed to work on not just an expression of Interest required a lot of work a lot of hand-holding by our teams and I think they did it very well over time. I think people also became smarter. Even we became smarter in terms of I think safe can also tell you later how we also worked on our application how we try to make things simpler so that, you know, even the number of documents that we were asking in the beginning, you know were so many we realized let’s truncate those. Let’s only take the ones that we immediately require the rest can be actually collected later. So we did a lot of tweaking even in the processes even in the requirements that we needed and eventually there was a time where you know close to 95% of our applications were coming in, you know through the digital mode, but the funniest thing is that once things started easing up, you know, the manual mode came back, of course even today I would say about 65% of our applications are still coming through the digital mode, but the comfort of people talking to somebody and not just, you know, sitting and entering all the details on a form again over time people started telling our Channel Partners why did you come over and pick up the application? You know, so we are still we have we have contests going where we want to you know encourage the channel Partners to encourage the customers to come in the digital mode. So, it’s a learning. So, I think in it’s going to it’s going to grow having said that so there’s one more thing. I want to say about a housing loan. The house look is again slightly different when you coming to me for a housing loan. You not only coming for money. You’re also wanting to know this Builder that I’m buying from is he Okay. Have you funded them. Are you sure the title is okay what has been your experience? So, a lot of people also want to get that feedback from HDFC and from you know, the experiences we’ve had with the past customers. So, I think it’s not just a monetary transaction. They’re looking at we’re also looking at for some comfort levels just to understand how what HDFC thinks of this Builder and what sort of a control is the wrong word but what sort of an influence their HDFC could have on a build I see so it’s a combination of both. It’s just not money. 

Santosh: Yeah, It is about demand management building the confidence and also being able to stay engaged with the consumer in the right moment with the right Channel with the right medium of communication is making a huge difference in enabling the experiences with these are difficult times where we don’t have a face to a name and assigning a property deed. It is not going to be easy. It’s going to be the need of the hour, but did you see any changes in the requirements to be extended to Consumer or the current offering seen.

Renu: So, the current offerings Okay, you know because at in a housing loan Santosh, there isn’t much that you can do with a product you normally what you do is you either have a differential in rates or you have you know in terms of how the interest is calculated know. We didn’t really need to do anything in the product at all except for the fact that you know in the process is we try to do a lot of things so a simple thing like if you would be customer in the past. Okay, and you had a good experience in both of us have had a good experience during this period we had a process by which there is a complete online sanction, you don’t need to talk to anybody. You just get out to the system. There was an offer that was made by us that if you’re looking for any extra money, you know, that is how you can do it. You cannot get out to the good onto the system and get a sanction through it through and since your property was already mortgaged to us, we could also even disburse won some money but having said that sorry, let me come back, Yes, we did, we did have much before the government came up with this whole concept of restructuring loans in trying to help customers. We for our own customers came up with issues. Like if somebody needs a small amount of money to tide over the next three months or the next six months not big money. So those small money is when a borrower is salary hasn’t come in for the next three months. We did have a small loan that did that you know any individual can come and take with us with hardly any questions cost other than the fact that do you still have your job. 

Santosh: Could be the most beautiful trying to find out whether it is the job security or ability to pay back the loan. I mean would that have any impact on the detention side, did we have to do anything differently there. 

Renu: So, there was you know, there was some bit of what is the word to use, you know then sit up customer that if this customer has not ever defaulted in the last five years that he’s been with us and he’s going through a difficult time checking whether there was a spouse who is earning in the spouse is the job. Yes, they could be a part of the incomes have come down as a family but as a customer and as a borrower and as a client they have never defaulted. I think we had to take that call. It wasn’t as if you were giving huge money but to help out that last minute. So, I think that was some bit of change of our Norms as one would say it wasn’t so much as you know calculator and it’s just, you know, it’s cut and paste in you. This is what you can get to know if there was a bit of empathy, they were submitted of understanding that had come into the appraisal process.

Santosh: It’s great and it speaks volumes how you feel about the customers and what to what lengths we go to help out borrower live a comfortable life. I think you right the home buying is such a beautiful experience and you don’t want any bad, press there. How what would be some of the technology enablers that we were able to leverage during the entire growth process. 

Renu: So, I think we did, you know to some extent tie up with some of the new, you know fintech that could get us information which hitherto we were looking for in a hard format, you know in a hard copy so we did do some of that so they were tie-ups, more tie-ups than we normally would have done in that period with entities that could help in our processing so they were lesser questions that we needed to ask a customer. One of the things that we did again, you know, the sad part is Santosh we already always had them but we were just not using them for example disbursements the second time over the first disbursement you have to come and sign documents and that is not been allowed by regulations where you can do a transaction without what they call a wet signature. So, you can’t go buy a house on the internet because you actually need, I have a wet signature. Okay, similarly, it should be because if you look at this some of these things that you know, we could do everything else we try to do in such a manner that we could we would make it much easier for the customer to actually deal with us in many ways. So, one of the things that we also did pretty successfully was even in terms of the you know with the salaries and this the income tax ,the taxes that they pay use technology rather than tell him to upload each and every document that he had to you know, give us normally for us to take a decision if there was a second disbursement that had to be made we’ve always wanted to do it electronically, but very often customers would say no, I’d rather come and pick it up and go and give it to the Builder. We had to put her feet foot down and say nothing doing we’re not going to do it, you know we are going to do it through in the through the electronic medium. And so, you know, these changes happened in a way that midnight easy even for us rather than have so many people coming we opened offices of time it May you know in a very small Banner we started with just a few people just the front line and we realized that we had people, you know coming into the officer that we were trying to of course keep the social distancing 6 feet between each person norm And so we had lines of people going not through the main door but to the lobbies that we have offices in in some places down staircases, you know, I have a lovely picture of people who from the first or offices are standing around the stairs to try and get to do our office. All these people we used to tell them you don’t need to come you know; these services are available online. Please don’t come to the office. We are just 10% then 50% of the people working. We became 100% only about maybe a couple of months ago. Yeah, but people still wanted to come so educating people setting their messages worked some bit, but it didn’t work as much as I think it should have. 

Santosh: It’s all about habits, we want some assurance and some habits we can’t chang.

Renu: Especially when you’re coming to give the documents of your home, you know, they don’t want to give it to somebody else. They were the comeback you’re in for a deposit. You know, we are a deposit taking company. You want to read you your deposit we used. Some you know, you can today as far as our Technologies get you can deposit with us, you know sitting from your home. You can change it. You can redraw it. You can do anything but people would still want to come because I guess it just gives you that sense of comfort actually with so many companies around having trouble and having problem. I think they just want to come and see a brick-and-mortar; you know place where they’re going to either put in their money or leaves their original documents 

Santosh: You take on AI and crystallization so much being spoken of becoming an integral part of most organizations with so much data so much customer information being available. 

Renu: So, very honestly, we have we are right now in a situation were working very much fun it with let me tell you that you know over the last couple of years if you just look at you know, what my marketing teams have been using, we’ve been using you know, the what you call the smart Technology Solutions. There is you know online, you know, we have online marketing campaigns across channels. So just to tell you a lot about our business actually over the years now comes through channels very few people Santosh those walk in to ask you for a loan people will You either come through a bank or come through agent or come through our own sales people, you know, that’s how they come in. So we had the trying to see how we can automate, you know, all these campaigns. We will try to use we are using voice. We are using text. We’ve used WhatsApp. I think the marketing team and the communications team have tried to use whatever that is available. Based on what customer you’re looking at whether you looking at somebody in the rural areas, but you look except that somebody in you know in the open areas. And so I think they’ve used it. We are also using chatbot, you know AI with the use of chatbot. We are able to engage with customers we’re able to you know address simple queries, you know, what’s my outstanding and things like that or questions that are you know, often asked by customers, but having said that I think we can do a lot more we are in the process of marketing automation tool, basically this is also for you know it’s like your experience or the web it’s a web personalization tool. I think they are in the process of you know coming up with something. You know in some ways we are very different Santosh from a normal banking entity because in a bank there’s so many things that you keep going back to the bank for right You want your Or you want to make a demand draft you want to draw your money you want to put in money you have you know various types of loans we at the end of it and one product company we are a home loan company so to that extent you know when you asked that are you using a lot you know of the AI available, I think we are using what is enough for the business that we do have except that having said that I think also in a way very singular product. Once you have taken up home loan and you’re not looking at buying another house. You don’t come back to me. How do I keep myself engaged with you? I think that is always been a challenge and you know and a home loan is such a long-life product. It’s what you take a loan you increase they’re from anything from 5 to 10 years. Okay. Now during that time, they will be other entities coming in with different products with different Marketing techniques, you know younger your it does happen whatever you say if you’re 42 years old, you have company which is two years old. It comes up with a different set of marketing techniques or marketing gimmick. So, whatever you did say, so how do you keep your customer involved because I want to be there when he’s going to buy that second house and I want to be there with 30 years later his daughter or son is going to buy a house in anyone’s I would want him to say just say go to HDFC. So, we have something what we call a life cycle management to let where we try to be engaged with some of our customers maybe not always for housing loan and we decided that maybe it’s better to be engaged with them for other types of loans. So, we have an education loan company. We try to give information on that. We have insurance companies in our stable as you know, a life company in a Non-life company. We have an asset management company. So at various points in time, we try to see how we can keep contact with the customer. I think so that is what we’ve been trying to do with the recent past may be lasting for years. 

Santosh: Share of family.

Renu: Yes, exactly. 

Santosh: Each moment is captured right from the first buy to probably doing of the house 10 years later ensuring it. If another big I think that was an interesting experience I went through and I keep getting these reminders of So what’ll be point? I would say the person sharing any you always end up living in your ancestral property right is other you see that house. If you are somebody who’s moving to another place that you’re in house one is about buying a house and then the second is about buying an asset. That’s another concept that one needs to get traditional into a miscibility moment with little bit into the interesting experience of going to be home buying experience from other times when you don’t even know you can afford a house and then suddenly Eureka moment that you have enough and go to money flowing into my bed how and they will you take a load and make things happen. But yeah, right come owning one to ensuring one to finding moments of Education within the family watching the children grow to probably living up to getting them a new house. I think it’s a beautiful journey and expense to be traveling in one household. Very well put in, what would be some of these few advise our key by the market for young or old think that they should do differently this favor engaging with their customers or prospects. What would be your advice to them? 

Santosh: I think one of the most important thought must really have this you must provide various channels for customers to reach out to you. You know, they are various ways people want to get through to you. They are various types of people. As you know ours is a company that you know, we give loans to somebody who’s earning ten thousand a month to somebody who’s earning 10 lakhs a month, you know, so each one has different Comfort levels even with dealing with you, right? So, we must make sure that we are there in every for better customer you really can, you know reach out to you and there is this so many of these, you know mushrooming of channels and Brands Etc. We have to make sure that how quickly can we as HDFC be available there like the other day I was thinking I never thought of it in you know you I will you know, I’m not really such a great technology person but even this QR code and the fact that there is this QR code which sort of makes it so much easier for the person of the road to reach out to us, you know, we haven’t used it as yet. I mean my teams are tried it somewhere but you know, how can we be you should be where your customer is and in our case a customer is everywhere, a customer at the airport a customer standing at the bus stop a customer’s you know, who’s gone to the building office is obviously a customer with anyone can be a customer from the time. If that person is 25 years old to the time that person is 80 years or 85 years old and you know, so I think that is very important and if you need to be where you know, you are going to be available and I think more digital platforms have become easier. I think as I said earlier covid is just tasted it and with people sitting at home and realizing that so much could be done on the digital platform. Your brand has to be there had to be; you know be the seed ideas in some ways. But at the same time just being seen as not good enough. You also must make sure that the service you provide once a person reaches out to you on a website or media. That service has to be as good as the service you were going to provide when the person was going to walk into your office and that is a challenge, you know, so those if you came into my office and talk to me for a housing loan, I will in half an hour when you walked out you will be absolute have absolute Clarity of thought what needs to be done. You will never need to come back to me second time because I would have done such a great job right when you’re on a digital platform that interaction is not there, you know, it’s very different, but that is how you need to build it so that the customers experience is as good as when a customer is talking to you across the table, and you know, I think that is so important particularly in the BFSI sector in our sector where you need to you need to make sure that he doesn’t have to keep coming back to you again. And again, I think that’s so important. 

Santosh: Thank you. Thank you so much Renu. It was a fantastic conversation. There’s so much to learn about so many different things to be done with the consumer, and I’m hoping the listeners would have had good session from this and we look to yet another conversation with you. 

Renu: Thank you. Thank you so much.