A fortress of regulations

For the past 6 months or so, I have been involved in building up a fintech based business. You might have seen me post about real estate and how the young Indian workforce needs help to own a house. This organization is HomeCapital which provides home down payment assistance for first time home buyers. In fact, it’s India’s first home down payment program.

The product itself is pretty unique and involves a bit of financial engineering. It’s an unsecured personal loan made available to the home buyer at 0% interest. To know more feel free to drop by our office for a chat and a cuppa!

Business traction and growth

The business is doing well and therefore it has quickly attracted a good set of investors. As we are gearing up for a Series A run, one of the question that I am increasingly seeing in conversations is this –

What technology barriers to entry does your business have?

The first time I heard this question, I was stumped. It’s not as if the core product was a technology driven product. Given enough time and money, any competent person should be able to build any of the following systems –

  • Loan origination
  • Application management
  • Loan management
  • Customer Relationship Management

These are business support systems, and they will never be a technology differentiator. The simple reason being that there are too many service providers and SaaS products out there which provide alternatives for them.

Yes, I could always claim a better UX, a robust and secure system. However, these are fast becoming hygiene factors and thanks to cloud based solutions fast becoming a commodity.

How does this impact a relatively new industry?

Read on. It’s a good case of how the mayor of Paris has decided to take matters in her hands in order to stop an overcrowding of a young industry.

There are a dozen electric scooter companies operating in Paris right now. There are so many that the Mayor just announced that she will reduce that number to three with new rules for electric scooters in Paris.

via Low (No) Barriers To Entry — AVC

Artificial barriers are being constructed in order for three of the businesses to be sustainable. The young electric scooter industry is being protected in this case by Paris.

Very similar to this, the FinTech industry in India is relatively young, and the Government of India has taken an active interest in this. One of the instances where the banking and lending industry in India was protected was where RBI drastically changed the P2P startup landscape by limiting individual investors to 10 Lakh INR.

Most developing countries are taking this approach for multiple industries. A wait and watch approach with a beady eye on the innovations and changes ensures that most policies that are being passed are in situ with the economic environment.

Protecting lush markets

What the mayor has beautifully done is protect the largest european market of electric scooters. One reason for more than a dozen startups to spring up in this market was that it was fairly easy for someone to join a business, learn the ropes and then start on their own. However, what will happen if one of these fly by night operations were to suddenly go down under? Suddenly the entire market starts stumbling. Would you as a governing body allow this to happen?

No. I would rather have 3-4 stable operators providing this service as opposed to 12-15 firms. It’s regulation, yes. It’s against the natural laws of economy, yes. However, it is being done to protect the market. Over a period of time this triopoly will try creating a seller’s economy, however the regulation will ensure that no one player can generate super normal profits. This creates a pretty strong barrier. An impregnable fortress of regulations that cannot be overcome.

India and FinTech

If you now look at the FinTech industry in India, then there are many regulations. This is not so much a concern as much as the fact that these regulations keep evolving as the industry evolves.

Take the fact that since September 2018 the Aadhar based KYC norms have come to a standstill. It is only last week that the RBI has allowed for e-KYC to be re-initiated. Now through in a recent trend such as DeepFake in their, and now you have regulators in a dizzy. What the major players in banking and lending are doing is looking up to the regulator to take decisions … these decisons are being taken over a long period of time (approximately 6 months in the case of e-KYC).

That’s two business cycles. Enough time for an upstart to start-up. India is a lare country and we haven’t really started making fintech products for the 66% of the non-english speaking Indians. There is hope of growth there, and hence the regulation barriers will be slowly built in that area.

Is a barrier needed?

A barrier to entry is needed when the market becomes small and the players have to compete for transactions. However, what is unique about billion people economies such as India and China is that the sheer volume of users is so high that there is always room for more.

Even in such a space where every month there is a new lender or two cropping up, the Indian real estate and lending space still remains under utilized. Housing for all still remains a distinct dream, and until then, instead of building barriers, perhaps we might want to think about building bridges.

Why Working Class Indians Still Struggle to Buy a Home & What Can One Do?

Working class

There’s room at the top they’re telling you still

But first, you must learn how to smile as you kill

If you want to be like the folks on the hill

A working-class hero is something to be

John Lennon

When you think about it, a working-class hero with a dream to build a home is something to be, especially in the dubious world of rising property rates. You are either of the two – the one who had booked a flat years ago and have lost the hope of waiting for the builder to deliver, and have decided to say goodbye to the dream home that never came to be. Or the one struggling with finances to actually buy a home.

Imagine if you may, a middle-class worker plagued with the thoughts of home loan EMI, house rent till he gets the possession, kids’ school fees, and household expenses – all to be managed in his meagre salary; a seemingly endless loop of payables even before the salary gets credited. Not to mention the big question – how to secure finance to pay off the chunk of the home down payment. Sounds familiar? Perhaps a struggle you yourself might be facing!

With RERA (Real Estate Regulatory Authority) in place, there is some relief to the home buyers when it comes to putting their trust in developers. That resolves the first issue of untrustworthy developers. However, the problem of securing finance still remains the biggest concern.

Today, with subvention plans or no-EMI-till-possession plans buyers are more hopeful. Under such schemes, home buyers are asked to pay some percent (in between 10 to 30 percent) of the amount as the down payment. The rest is paid by a bank to the developer as a loan. While the project is under development, the developer pays the interest on the loan to the bank. The buyer’s EMIs begin only after he gets possession. A great deal, isn’t it? But like all good things, this too comes with a catch. Home buyers need to understand the nitty-gritty of the schemes before venturing into a deal. After all, knowledge is power!

Coming back to the current situation, while no-EMI-till-possession plans resolve 70 to 80% of the problem, the massive 20-30% upfront down payment remains a hurdle equivalent to a massive chunk of an iceberg submerged underwater. Here is where HomeCapital comes to the rescue with it’s Home Down Payment Assistance Program. What this program does is it facilitates interest-free loan equal to the contribution towards down payment which will be provided by the partner-lending institutions in participating projects. The interest is borne by HomeCapital and the principal amount is divided by the number of months to arrive at monthly payments. The program increases your home loan eligibility and makes your home buying faster and simpler. Sounds too good to be true? But it is true. Tried and tested, the program addresses the challenge of the down payment for home buyers, particularly first time buyers from working-class with dreams to have a home sweet home.

To sum up, in the ever-changing real estate market, one thing that never changes is the challenges faced by the home buyers. However, with more strict regulations in place and evolving home finance sector addressing a few of the big problems, owning your dream home doesn’t seem like a far fetched idea anymore. All you need to do is make a smart move to move into your dream home today, rather than five to ten years down the line.

Helping GenZ find their place

When do backpackers settle?

A few decades back, the only time a fresh out of college fledgling would consider buying their own house was when they contemplated marrying and even then within a joint family system they saw buying property as investment.

Over time, with escalating rents and increased self independence, the robust Gen Z is showing an inclination to own homes by the time they turn 27. The Homebuyer Insight Report shows a majority of prospective home buyers between 18 and 23 who want to buy a house in the next 5 years (this is in the developed countries). About 52% of the above numbers have already started saving for their own property.

But what about the developing nations?

The story in developing nations is completely different. With a majority of individuals going through lengthier schooling periods, and taking more time to find their way through their careers and eventual independence, the average Indian Gen Z has all the aspirations of the Gen Z, but also has all the legacies to manage.

I say aspiration because the typical Gen Z in India first rushes headlong into a job to ensure financial independence. Over time as the bare necessities are funded, then the Gen Z aspires to travel … the generation is also called as backpackers because of the affinity of unstructured experiences which are valued by this generation. For example instead of a Kesari tour (meh!), this person would want to backpack their way on a beaten down path.

So when do Gen Z finally settle?

The research done points to a couple of reasons.

When starting a Family

Starting a family is the largest motivator for settling down and buying a home. Even if that means taking a loan or financial aid for buying the home.

One of the major challenges that Indian Gen Zs face is that the down payment required for real estate is so high that it’s difficult to buy this house early. What that means, that an entire generation starts becoming more career focused so that they can finally afford their homes.

To solve this problem, HomeCapital has launched India’s First Home Down Payment Assistance Program. Wait … what?

Yes, it is a mouthful, but it’s worth it. What this program addresses, is the challenge that most first time home buyers in India face. The down payment.

Started by a team of professionals from varied fields, the program will provide up to half of your down payment requirements. The program lets you to double your down payment capability and widens your reach in terms of home affordability. It increases your home loan eligibility and makes your home buying faster and simpler.

The cool part

The best part is that this program is engineered in such a manner that the user is not charged interest for the unsecured personal loan that the user gets on this form of assistance. That’s as good as a 0% interest for the user!

Yes, you got that right. If you want a home and you are buying a home on any of HomeCapital’s listed properties, then the HomeCapital team will help you with an unsecured personal loan to pay the down payment, the stamp duty and the registration fees. At zero interest.

So, if you haven’t been thinking of buying a home because of the insanely high prices, now think again.

Solving the problem of Discovery

The real problem that Google solves, is the problem of availability. When you have a problem and are searching for the solution, Google provides you with a list of most likely content that can address the problem. The problem is created by information asymmetry. You just don’t know and are willing to try out or read about the different solutions.

However, over a period of time this has turned into a problem of plenty. So many content providers are creating content for the average internet user, that the options tend to give all the creators a sliver of traffic. This has led to a bulk of copy-cats and me-too content providers eyeing for their search visibility. So much so that one of the default rules of inbound marketing is to start a content creation cycle and hope that you keep attracting traffic via Search.

What can new brands do?

Stay away from the whole attack of the clones! All marketers would swear on grabbing the attention of the customer as many times as possible in order to drive a higher brand share. However, at the cost of what?

Instead of creating very similar content? How about solving things that matter instead?

How about identifying a niche area where there is a genuine need and people are struggling to find answers?

This might seem contradictory to what I was saying, but once a brand (or a team) starts engaging with the customers, then you start seeing a slew of issues that no content provider is addressing. Talking about these issues and solving them via your product or service is a far better way to get discovered, rather than to keep talking about how your me-too offering is different from the competitor’s me-too offering!

tl-dr;

Engage with customers to discover what message and positioning you need to take when it comes to working in a crowded market.

🎯 Why You Need to Stop Tracking These 5 Metrics

This article was written as part of the SEMrush Big Blogging Contest.

One of the things that going digital does to any brand, is that it suddenly gives access to a lot of data. Data, that opens up a world of possibilities.

Possibilities which had not earlier been anticipated or even thought of. Somehow, it propels teams to start thinking in terms of achieving certain data metrics … and that seems to justify the sheer obsession with data.

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Gold

Gold

I am in the middle of reading Shashi Tharoor’s An Era of Darkness: The British Empire in India. If you have been living under a rock like I was, then you may not have heard about his Oxford debate where he smashed his contemporaries on why Britain should do reparations to India.

At this time, I chanced on the movie Gold in Amazon Prime. What perfect timing! A movie about India’s first Olympic gold medal – as a free country. The movie stars Akshay Kumar as a sports manager of the British India National Hockey team, and their ability to keep winning the Olympic gold for British India. History buffs and hockey buffs (preferably both) would be quick to point out that during that time the team was led by the Wizard of Hockey, Dhyan Chand.

For the sake of preserving identities of the negative roles, the names have been changed, and Dhyan Chand is portrayed by Kunal Kapoor as the legendary captain Pritam. If you do not know who is Dhyan Chand, please stop reading and head on to the wiki link. India was well known in the history of hockey largely due to this chap. We owned the international circuit from 1928 (pre-independence) up till as late as 1980. Pretty much the time cricket took over as the national craze and the national sport lost its crowds. Ironically, in 2014 when Dhyan Chand’s name was being considered for Bharat Ratna (the highest civilian award in India), it was never nominated and the award winner was none other than apna Sachin!

But I digress, this is about the movie and not a diatribe about hockey losing out to cricket!

The movie is about getting India’s first Olympic gold, and how the main character in the story (a Bengali team manager played by Akshay Kumar) helps the team get its gold. This under the backdrop of the partition and post-independence struggles that the new country faces make for a riveting story.

Bollywood has oft taken an anti-Pakistan stance in the past, and it’s very easy to take this stance. However, you should see how this movie has spun the entire India-Pakistan tale. It’s heart-rending and one might wonder … a magnificent what-if … our national leaders back then were brave and foolhardy to take such a decision then. What stops from doing something equally foolish now?

History tells us the outcome of this story … India dominated the hockey scene for a long time. However, the story also talks about the role of administration in ensuring that the sport has enough backing. In the chaos of IPL and slogans like fan banna padega … I ask you this … what about our national sport? I wish this movie had done much better on the box office, it deserves to be seen, not only for the acting – but also for the narrative.

AMP and Advertising

Mobile Content

This blog is a modest small-tier blog. It does not get too much traffic (much to my chagrin) and therefore expecting the blog to monetize is too much. However, I have steadily written my thoughts and opinions on this … for the past 7-8 years now.

Looking at such a long time range allows me to study how blogging and blog monhersetization has changed over the years. Especially now with mobile form factors being the main devices that users tend to consume content with.

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