Technology has transformed the business of most consumer-facing industries, such as retail, healthcare, and banking to name just a few. But, the processes involved in real estate seem to lag somewhat behind the rest of these industries.
Since the housing crisis hit in 2008, many lenders have spent years wrapped up in its devastating aftermath, reluctant to evolve with the times. But change is on the horizon, with many lenders now more open to embracing new tools, tech, and automated platforms. All around the globe, PropTech is quickly gaining ground and disrupting the industry.
Combining property and technology, PropTech is used to describe any digital innovation that serves to streamline the buying and selling processes in real estate – some may also refer to this as ‘RETech’ or ‘Real Estate Technology’.
Some notable trends seen in PropTech so far include:
- Mobile first – Each year, mobile devices become increasingly important to society, and it’s no longer a safe bet for companies to simply offer up a mobile friendly website to potential consumers; individuals want access to everything at the swipe of a screen, and innovative tech companies are making this increasingly possible through specific, purpose-built applications.
- Virtual reality – VR is creating one of the biggest shakeups in the industry enabling clients to tour properties without ever leaving their own location. This helps cut costs and time spent travelling for all parties.
- Paperless mortgage lending – Paper documents slow down the lending process and increase the risk of administrative errors. Paperless solutions save time and money, and ensure everything is stored in a single location, while reducing paper consumption and environmental impact.
- Automation – Paperwork requires numerous repetitive and time consuming steps, whereas online communication presents opportunity for automation; enabling forms to be completed quickly, and checked and signed in an instant.
The above innovations highlight just some of the ways that PropTech is transforming the real estate industry today. While there are clearly benefits for lenders and consumers alike, not every party is welcoming these changes with such open arms.
Face-to-face operations still retain importance, as it’s unlikely that every single property buyer is going to feel at ease carrying out the entire buying or selling process online. Even the savviest of lenders of today are still providing much of their business through offline communication.
Data security and privacy is another concern stalling widespread adoption of PropTech. No industry is immune to cyber threats, and with so much sensitive data involved in a single mortgage application, it’s no wonder organizations are nervous about making the switch.
The lending industry currently sits in the early stages of PropTech’s evolution, and is well poised to catch up to the level of tech adoption seen in other industries. While PropTech has a long way to go before it achieves the level of disruption that FinTech (financial technology) has reached, there are huge changes expected within the next few years.
Now the PropTech ball is rolling, it’s not hard to imagine that a fully automated process will become the norm in the not too distant future. Fannie Mae already uses an automated property service to predict property values and confidence scores as part of its eligibility testing. As more major industry players begin streamlining their processes in these ways, lenders large and small will be in a better to position to support and offer more PropTech solutions to consumers in the future.