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.”

Screen Shot 2017-02-24 at 4.07.54 PMJilliene Helman, CEO at RealtyMogul

“The impact of digital technology on the real estate industry and mortgage technology is still in its infancy, but I see both less experienced and more sophisticated investors, alike, moving toward a process that takes place entirely online. With over $250 million of capital invested and 100,000 registered investors on the platform, RealtyMogul.com is a testament to this change. The more that technology can offer real estate borrowers and lenders transparency, as well as the efficiency of process and convenience, the faster both sides will adapt.”


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

Finovate Alumni News

On Finovate.com

  • “Zooz Raises $24 Million in its Largest Funding”
  • “Fiserv and INETCO Team Up to Enhance ATM Management”

On FinDEVr.com

  • “What’s in a Name? Plaid Earns “Cool Vendor” Status from Gartner”

Around the web

  • U.K.’s oldest bank, C. Hoare & Co, goes digital with Backbase.
  • “Crowdfund Insider: CAN Capital Forms Agreement with Entrepreneur to Provide SME Loans”
  • Huffington Post names Tactile Finance on its list of 15 women-led startups to watch in 2016.
  • Qumram opens offices in London and San Francisco. See Qumram at FinovateSpring in San Jose next week.
  • Core banking solutions from Wipro to power Paytm’s new payments bank.

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

  • “Mark Shifke Named Green Dot CFO After Interim Term”
  • “PaySwag Helps Cloud Lending Solutions Go Mobile”
  • “Finovate Debuts: DAVO Automates Sales Tax”

Around the web

  • Utah Community Credit Union chooses DNA(R) account platform from Fiserv.
  • TechEU interviews Sebastian Siemiatkowski, Klarna CEO.
  • Tactile Finance CEO Nicole Hamilton earns spot in The Inman Group’s Top 101 innovators.
  • VentureBeat names Twilio as 1 of 36 tech companies that could go public in 2016.
  • Bankless Times: Pindrop can tell you who is really on the phone.

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

FinovateSpring: Behind the Scenes with Tactile Finance, Visible Equity, and Vorstack

In our third FinovateSpring Behind the Scenes feature, we’re taking a look at three companies that demonstrated for the first time on the Finovate stage. We sat down with Tactile Finance, Visible Equity, and Vorstack to capture more information about their solutions.

If you missed our first and second Behind the Scenes features, you can check them out here:


TactileFinanceLogo
What they do
Tactile Finance’s Tacfi makes the mortgage process easy to understand and more transparent for borrowers. It helps the borrower navigate mortgage options and connect with lenders.
Stats
      • Launched in April 2014 at FinovateSpring
      • Tacfi’s target user is any home buyer, whose average age is 35 to 40 years old 
The experience
To sign up for Tacfi, users only need to provide their name, email address, and create a password.
TacfiSignup
They start by entering details of the home they’re interested in, such as the home price, property taxes, and other monthly expenses such as condo fees.
TacfiHomeBuilder
The calculator shows users what their mortgage payments will look like over time. 
TacfiBuilder2

From here, users can save the information about their loan, have the option to determine the amount of the home loan for which they are eligible, or can proceed to get a real quote from a lender, based on the information they entered into the mortgage calculator.



VisibleEquitySmall

Visible Equity

What they do
Visible Equity helps financial institutions determine their compliance with fair lending laws, which apply to all parts of the lending process including pre-application, underwriting, loan pricing, post closing activities, and modifications.

With the click of a button, its software can detect unfair and biased lending practices, which can often times lead to fines, degraded ratings, lawsuits, and negative impact on the brand. Visible Equity gives institutions a way to mathematically prove that their lending practices are in compliance.

Stats

    • Serves 300+ clients 
    • Analyzes over $120B in loans daily
The experience
Occasionally, financial institutions have lending policies in place that result in unintentional bias against certain groups such as age, race, gender, geographical location, etc.
The screenshot below shows a loan pricing discrimination analysis that has been generated to determine discrimination against race. The table shows loan count by race and breaks down the interest rate to show the difference between the actual rate and the expected interest rate. 
VisibleEquityPricingDiscrimination
Lenders can view all outstanding loans and are able to sort by loan attributes.
VisibleEquityLoans
Visible Equity’s responsive design web platform can be optimized for viewing on a tablet or mobile device, so lenders have a portable way to view and share metrics, data, and charts.
VisibleEquityipad

VorstackLogoNew

What they do
Vorstack is a cyber defense platform that helps online security professionals more efficiently target fraud. Its system helps them deal with the massive volume of emails they receive by automating reports based on the fraud in question.

Additionally, the open-source nature of Vorstack’s platform enables sharing of details under certain parameters with a trusted circle of other security professionals. Using this collective intelligence, Vorstack helps target fraud more quickly and efficiently.

Stats

  • Raised $5.2 million in Series A funding
  • 15 employees
  • Launched for financial services at FinovateSpring 2014
The experience
Security breaches, such as the recent ones reported by popular retailers, not only impact end consumers, they also take a toll on security professionals. Shortly after such breaches, security reps at banks can be inundated with emails asking if the institution should be concerned, and what areas are impacted.
The Vorstack platform functions as the graphic depicts below. Information is gathered, organized, analyzed, then is returned to the user, outlining potential areas of fraud concerns.
VorstackCOARGraphic
The screenshot below shows the dashboard where the security professional can view a break down of the number of fraudulent events they should be concerned with. It combines data from multiple organizations in order to give visibility of potential fraudulent activity before it happens.
VorstackDashboard
The Events section of the platform enables the security professional to take a closer look at both global and local events on an individual basis.
VorstackEvents

We’ll continue featuring more companies behind the scenes in the coming weeks so stay tuned.

Tactile Finance’s Tacfi Helps Borrowers Control the Mortgage Process

TactileFinanceLogo

This post is part of our live coverage of FinovateSpring 2014.

Then, Tactile Finance launched Tacfi, a website that helps borrowers select a mortgage provider:
“Tacfi is a consumer mortgage website that, for the first time, allows mortgage shoppers to truly control their outcomes throughout the mortgage process. Tacfi puts the intelligence of the mortgage industry up front and accessible to consumers where it belongs. 
The website will also allow consumers to seamlessly connect to select mortgage providers, while providing an easy way to safely and effectively navigate the mortgage process from end to end.”
Presenters: Nicole Hamilton (CEO) and Shivie Mannshahia (Architect)
Product Launch: FinovateSpring 2014
Product distribution strategy: Direct to Consumer (B2C), Direct to Business (B2B), through financial institutions
HQ: New York, NY
Founded: May 2012
Twitter: @tactilefinance

Finovate Alumni News — March 3, 2014

  • Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgLeaf adds chief operating officer, vice-president of finance, and vice-president of engineering as company expands to bigger offices.
  • Fiserv appoints Kevin Gregoire as group president of financial institutions group.
  • CashStar launches new edition of digital gifting platform, CashStar 5.
  • Actiance Socialite available through the EMC Select Program.
  • IDology’s ExpectID Global launches in Canada.
  • Tactile Finance PRO’s new features target mortgage loan officers’ ability to compete and increase referrals. See its live demo at FinovateSpring next month.
  • Pikanik Bakery discusses its experience with ShopKeep POS.
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.