Impact of Customer Preferences on

Home Loan Sales

 AGENDA

 Objective
 Background
 Key findings
 Recommendations
 Appendix:
 Data sources
 Data methodology
 Data model assumptions
 OBJECTIVE

 Improve our shared understanding about the market conditions

 Improve our shared understanding about our customers
 Provide early recommendations to our marketing and operations teams
 BACKGROUND

 Home loan sales globally have been trending between 5% to 15%.

 Specifically in Asia, the trends have been inconsistent with some countries
showing an above average growth.
 Similarly, most Indian Banks have reported declining growth rates since the past
24 months.
STAGNATING SALES IS PRESSURISING OPERATING MARGINS

 Overall, home loan application numbers have been increasing, but the growth has
been slow
 In Q3 2019, the loan amount applied was the highest in the last 3 years (since Jan
2017) at Rs 8,111 lacs.
 The lowest during this time was Rs 5,920 lacs in Jan 2017.

Applied Loan Amount

8.1
8 6.8 6.9 7.0 7.0 7.1 7.2 7.2 6.8 7.0 6.8 7.2 6.8 6.8 7.1 6.9 6.8
7.3 7.2 7.3 7.1
6.8
6.3 6.3 6.4 6.7 6.5 6.7 6.4 6.5 6.7 6.2 6.5
6.7
6.3
5.9
6
4
2
0
y y h il y e y t r r r r y y h il y e y t r r r r y y h il y e y t r r r r
uar uar arc pr Ma Jun Jul gus be obe be be uar uar arc pr Ma Jun Jul gus be obe be be uar uar arc pr Ma Jun Jul gus be obe be be
n r A u m t m m r A u m t m m r A u m t m m
Ja Feb M A pte Oc ove ece Jan Feb M A pte Oc ove ece Jan Feb M A pte Oc ove ece
Se N D Se N D Se N D

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019
TOP CAUSES FOR THE DECLINING GROWTH ARE

 Changing customer behaviour

 Demographic shifts in our customer segments
 Economic uncertainty
 ONLINE CHANNELS PROVIDE US WITH A
HIGH OPPORTUNITY OF CONVERSION

 Between 35% to 36% of customers prefer online channels, irrespective of gender.

 However, younger customers in the age bracket of 26 to 33 years tend to use online more.
 About 50% preferring to use online and none of them preferring to use tie-ups.

Channel Distribution Young Customers prefer Online Channel

TieUps 63+
Direct Sales
33892 1048, 12%
Agency
14%
61083 56-63
25% 1075, 13%
26-32
4250, 50%
Online 44-55
89406 Walk-In 1103, 13%
36% 60854
0.25% 33-43
1013, 12%
 RECOMMENDATIONS

 Focus efforts on marketing and advertising

 Reduce home loan processing fees
 Improve channel experience: Increase the number of
branches from where loans can be sanctioned
 APPENDIX - DATA SOURCES:

 Here is a snapshot of our data dictionary.

 Customer demographics such as gender, occupation, age and salary.
 Bank information such as branch, loan amount applied for and loan amount.
 The team used the following data sources:
 CRM data
 Customer feedback data
 Survey conducted on 20.2.2019
 APPENDIX - DATA METHODOLOGY

 We conducted a thorough analysis of the home loan. The process included:

 Cleaning the data set using fuzzy logic
 Creating a pivot table to compare segment versus age
 Using scatter plots to remove outliers
 APPENDIX - DATA ASSUMPTIONS

 There were certain gaps due to data unavailability as well as dated information.
 Marketing spend is 2% of revenue
 Customer per branch ratios are: 8,000 in tier I, 4,000 in tier II cities and 1200 in rural areas
 Third gender and ‘prefer not to say’ have been clubbed