Why PropTech and MortgageTech Are the Future of Fintech

If this is the first time you’ve heard the term proptech, it won’t be the last. Proptech (also known as real estate tech or REtech) and its subset mortgagetech have been around since 2014. Here’s why 2017 is poised to place proptech among the ranks of wealthtech, insurtech, regtech.

This year has already been favorable to mortgagetech and proptech companies. SoFi, for example, is about to close a massive, $500 million round, its competitor LendingHome topped $1 billion in mortgage loan originations last year, and RealtyShares has seen over $300 million raised on its platform. According to CB Insights, since 2012 the real estate technology sector has closed 817 deals worth $6.4 billion. Of that amount, $2.6 billion closed in 2016 alone, which represents a 40% increase from that sector’s funding in 2015.

In the U.S., there are a handful of reasons 2017 will be favorable to real estate. Interest rates are projected to rise for the second time, millennials are starting to buy their first homes, and investors are looking to diversify out of the volatile stock market. On top of all of this, regulations are slated to loosen under the Trump administration, and changing in regulation brings opportunities for innovation.

Players

The broader category of proptech can be broken down into four basic segments.

1- Mortgagetech
These are mostly B2B companies specifically focused on facilitating part of all of the mortgage application process. They do not lend or service the loan.

2- Digital mortgage lending companies
These online lenders facilitate the mortgage application process and service the loan.

3- Real estate investment tech
Companies in this category are focused on the investment aspect of commercial and residential real estate.

4- Pure property plays
These don’t have a fintech angle but play a role in the broader proptech industry. Since this category is out of scope for this blog, this list only encompasses a fraction of companies in this category. Check out CB Insights’ coverage of commercial real estate technology for more.

What’s ahead in 2017

  • Expect to see more mortgagetech-bank partnerships along the lines of Roostify’s recent deal with JP Morgan Chase. As banks try to gain a competitive edge for market share, more established banks will need to leverage mortgagetech offerings.
  • We’ll see more niche alt-lending solutions such as SoFi that facilitate the application process and save borrowers on closing costs.
  • Expect to see more players offering real estate investment technology, coupled with some consolidation in real estate crowdfunding companies.
  • Outside of fintech, we’ll see more platforms aimed at cutting out the middle person, the realtor; and more business models such as Knock and GoldenKey that make the selling process easier.

You don’t have to take my word for it

We posed the question, How do you see proptech/ mortgagetech growing in 2017? to these Finovate alums working in the space. Here’s how they responded:

BhatRajesh Bhat, CEO and cofounder of Roostify:

“We expect to see further widescale adoption of digital mortgage solutions – to the point where one should expect it to be table stakes in 2018. We should also expect to see more players emerge in the space as investors see larger market adoption and validation.”

 

Screen Shot 2017-02-23 at 9.52.53 AMLinda Schicktanz, Chief Advisor of CK Mack*:

“If there is one area ripe for fintech innovation, it’s real estate investing. Why put 30% down just to gain massive management headaches when you can now invest in rental cashflow online with very similar returns? Fintech and Real Estate are like peanut butter and jelly, they just go together!”

Screen Shot 2017-02-23 at 8.30.31 AMNima Ghamsari, cofounder and CEO at Blend:

“There is going to be an explosion in the use of data driving the mortgage process in 2017. Both Freddie Mac and Fannie Mae have announced their data initiatives toward the end of 2016, and lenders are starting to push consumer financial data aggregation into the core components of their customer experiences. This ties in nicely to the industry-wide push forward to a more digital, end-to-end process that started in 2016.”


*Full disclosure: I’m related to Linda Schicktanz. Yup– she’s my mom.

Roostify to Power Self-Serve Mortgage Platform for Chase Bank

Screen Shot 2017-02-16 at 2.10.08 PM

As a borrower who is in the middle of a 3-month process of closing on a house, the phrase faster closings speaks to me. JP Morgan Chase must have had a similar realization when it inked a deal with Roostify today.

San Francisco-based Roostify is a SaaS-based, self-service mortgage application platform that places borrowers in control of their loan process, enabling them to track their application all the way through until close. Mike Weinbach, CEO of Chase Mortgage said that leveraging Roostify will allow the bank “to be where more of our customers are, which is online and on their phones, while still offering the option to work with us in person if they prefer.”

Aside from mobile and web accessibility, the Roostify integration connects borrowers, loan officers, and real estate agents. Combining this line of direct communication with eSign capabilities speeds up the documentation and paperwork process. This sounds like a dream compared to the process I’ve been through so far– I’ve hauled a 1980’s-era file full of documents to the bank branch three times during my mortgage application process.

Roostify presented at FinovateSpring 2016 where the company’s Nathaniel Sokoll-Ward, Head of Product, and Jonathan Kirst, CTO, showed off integrations with TurboTax, Equifax, as well as account aggregation capabilities for asset verification. Founded in 2012, the company debuted a number of new integrations last year, including one with Optimal Blue for mortgage pricing, PCLender for loan origination, and DocMagic for automated mortgage documentation.

Finovate Alumni News

On Finovate.com

  • AutoGravity Earns Multi-Million Euro Investment from Daimler.
  • Roostify to Power Self-Serve Mortgage Platform for Chase Bank.

On FinDEVr.com

  • Payoneer Launches Cross-Border, Mass Payment APIs

Around the web

  • Northern California’s Kaiperm Diablo FCU to deploy core banking technology from NYMBUS.
  • Shopkeep integrates its POS technology with First Data’s Clover platform in extension of current partnership.
  • Arxan launches Arxan Application Protection for JavaScript to protect JavaScript-based applications.
  • CuBroadcast interviews CUneXus CEO Dave Buerger.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News

On Finovate.com

Around the web

  • RealtyMogul.com surpasses $50 million milestone in distributing returns and principal to investors.
  • Roostify teams up with Equifax to ease and accelerate mortgage-decision processing.
  • FinDEVr alum Worldpay launches new, omnichannel payment platform, Worldpay Total.
  • Modo Payments to provide Bank of America Merrill Lynch with access to its COIN Operated Digital Payments Hub as part of new strategic relationship.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News

On Finovate.com

  • SecureKey Raises $20 Million in New Funding

Around the web

  • Roostify teams up with Optimal Blue to improve the online experience for borrowers.
  • Partners FCU to deploy Kony Mobility Platform.
  • Forte Payment Systems to serve as the single premier gateway provider for Acryness Inc.
  • Portugal’s Banco CTT chooses FusionBanking Essence from Misys.
  • International payments provider, OFX, integrates with cloud accounting-software innovator, Xero.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

 

Roostify Announces Integration with PCLender to Streamline Loan Origination Process

Roostify_homepage_June2016

Making the loan origination more efficient is the goal of any firm that provides mortgage solutions to community banks and credit unions. This helps explain the decision by Mortgage Bankers-owned PCLender to integrate with Roostify’s mortgage-transaction platform.

Roostify’s CEO and cofounder Rajesh Bhat says their platform “eliminates most of the headaches for lenders and consumers in the home-buying process, allowing lenders to close more loans in a shortened time frame and provide an optimal digital experience to consumers, real estate agents, and third parties.”

Speaking for PCLender, CEO Lionel Urban called the loan-application process “a sore spot” very much in need of a “technological update.” He praised the partnership with Roostify as an opportunity to provide a less stressful data- and documentation-collection process for both borrowers and lenders.

Roostify_stage_FS2016

Pictured (left to right): CTO Jonathan Kirst and Nathaniel Sokoll-Ward, head of product, demonstrated Roostify’s platform at FinovateSpring 2016.

Roostify makes the home-buying experience easier for both borrowers and lenders. Available as a web and mobile technology, Roostify’s platform can be used by mortgage brokers to guide homebuyers through the process, step-by-step, from initial application to closing the sale. “We believe home buying should be fast, easy and transparent,” Nathaniel Sokoll-Ward, head of product for Roostify, said from the Finovate stage this spring. He noted that Roostify is available as a white-label solution, and can be either fully customized for a client’s specific needs or as a solution that can be up and running “literally overnight.”  Sokoll-War added that clients using the platform have “routinely reported cost savings of 10-15% per loan.”

Founded in 2014 and headquartered in San Francisco, California, Roostify demonstrated its technology at FinovateSpring 2016. Recent headlines for the company include the announcement this spring that Genworth Mortgage Insurance would use Roostify’s technology to digitize its home-buying process. In February, Roostify announced an integration with zipLogix that will make it easier to pull data and documents into its system. The company began the year by adding new talent to its management team, naming Iyad Darcazallie, as both CFO and COO, and Scott Stein as vice president of sales. Roostify has raised $8 million in funding, and includes USAA, Tier 1 banks, and Colchis Capital Management among its investors.

Finovate Alumni News

On Finovate.com

  • Roostify Announces Integration with PCLender to Streamline Loan Origination Process.
  • New Version of the Pendo Data Platform from Pendo Systems Brings Machine Learning, AI to Spreadsheet Data.
  • Fiserv Makes In-Branch Customer Identification as Easy as a High Five.
  • Radius Selects Chief Product Officer.
  • Tuition.io Has Saved Users More Than 5,000 Years of Student Loan Payments.

On FinDEVr.com

  • Mambu Unveils FinTech Startup Program.

Around the web

  • Indopay to leverage Up eCommerce Payments platform from ACI Worldwide.
  • Thomson Reuters named 2016 European Tax Technology Firm of the Year by International Tax Review.
  • Revel Systems partners with Vantiv Integrated Payments to launch the “Rev Up Your Dream” social media contest.
  • FICO acquires cybersecurity firm QuadMetrics, announces plans for “enterprise security scores.”
  • Betterment named Fastest-Growing Firm in the 2016 Financial Times List of 300 Top Registered Investment Advisers.
  • Independent Research Firm Designates GMC Software a Leader in Customer Communications Management.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

The Art of Mobile Banking Engagement

Customer engagement word cloudIt’s been fascinating to watch mobile banking take hold. The path has been much the same as online (desktop) banking a decade earlier, but at about double the pace (at least in the parts of the world that are highly banked).

Modern online banking started 21 years ago this month, when Wells Fargo began web banking in May 1995. It took 12 years before Mint came along and made it all look good and introduced the masses to more advanced concepts such as account aggregation, goal-oriented online budgeting, and expense tracking.

Mobile banking, which got its start in the post-iPhone App Store era (2008), took only about five years before it was “Minted” by Simple and then others. And in fewer than eight years mobile banking is already far better than desktop by almost every measure. From touchID access, to location awareness, to that very useful camera for depositing checks, there is just no way desktop online banking can compete.

But we have just barely scratched the surface of its biggest advantage: the always-on, always-with-you benefits. Account and transaction security is one of the first features having huge impact both on consumers (peace of mind, less hassle) and financial institutions (fewer false negatives, lower fraud costs, less customer-service expense).

Another area where huge benefits exist? Proactive communications about finances. Simple, Moven and Capital One’s Level Money are on the forefront with tools that help mobile customers know where they stand BEFORE they drop another $12 for a fancy cocktail or $35 on Uber.

And while monitoring spending in real-time has big theoretical benefits, it’s universally loathed by most consumers as the ultimate buzz-kill, kind of like having your parents hovering over you at point of sale. A more exciting always-on benefit is guidance to achieve bigger aspirations, like replacing your aging vehicle, trading up from your dinky apartment, or buying a house.

Take home buying. Many of our readers have been through this multiple times. But do you remember how little you knew about it back in the day? It’s a daunting task today even forHip_Pocket_Art0 the financially savvy.

That’s why I love tools that help people understand all aspects of the home-buying process: the mortgage, the purchase, and dealing with all of the ancillary expenses. We’ve seen a number of companies working on various aspects of the mortgage process. And next week at FinovateSpring, you’ll be treated to demos by two of the new breed of mortgage startups: Blend Labs which powers mortgage processing on the back-end and Roostify which helps consumers through the process.

And as luck would have it, last week Mark Zmarzly from Hip Pocket visited Seattle to present at a CU event, and was able to spare a few minutes to meet me for coffee. Mark wowed the crowd when he demo’d at FinovateSpring last year. Hip Pocket’s first product is a mobile app that allows anyone to input mortgage rate and monthly payment to see how their company stacks up against its peers (see inset).

The Hip Pocket mortgage app is a compelling value-prop for users, and potentially a great lead-gen tool for banks and credit unions. While Hip Pocket has had some great traction since then, it is still looking for additional seed funding to build more tools and fine-tune its customer-acquisition model. Hip Pocket is in a sweet part of the market—mobile mortgage (MoMo)—and is at a point in their company arc where relatively small dollars can make a big impact. They are a great candidate for “bank strategic seed funding.”

FinovateSpring Sneak Peek: Roostify

Roostify_homepage_April2016

FS2016-wdateA look at the companies demoing live to 1,500+ fintech professionals on May 10 & 11. Register today.

Roostify simplifies and accelerates the home lending experience.

Features:

  • Automated mortgage approval
  • An integrated borrower/lender/real estate agent experience
  • Consumer self-serve capability in the closing process

Why it’s great
You can give your borrowers a lending experience that’s fast, easy, and something they’re actually excited to tell their friends about.

Presenters

Roostify_NathanielSokollWardNathaniel Sokoll-Ward, Head of Product 
Sokoll-Ward is a former Google consumer-tech veteran taking on broken financial transactions.
LinkedIn

 

 

Roostify_JonathanKirstJonathan Kirst, CTO
Kirst is a former Salesforce engineering maven taking on broken financial transactions.
LinkedIn

 

Finovate Alumni News

On Finovate.com

  • “BlueVine Receives Boost from Citigroup”
  • “Infosys Launches EdgeVerve Blockchain Framework”

Around the web

  • “Cartera Commerce-powered Splender Doubles Membership Since End of 2015 and Drives $15 Million in Sales”
  • Linqto to pilot LEVERAGE App Store with nine credit unions.
  • Fiserv integrates commercial lending capabilities of AFSVision into its core account processing platform.
  • BBVA announces having 15.5 million digital clients, including more than 9 million mobile clients.
  • U.K. e-commerce provider EKM to team up with Klarna.
  • ACI Worldwide to run the card processing operations for The Co-operative Group.
  • Insuritas chosen by First Atlantic FCU to install insurance agency solution.
  • Employee Benefits News recognizes Blooom CPO Randy AufDerHeide as a Top 50 Benefit Technology Innovator.
  • Xero for Payroll goes live in Pennsylvania, making the technology available in a total of 22 states.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.