How are the big trends in fintech like virtual reality, the blockchain, and big data analytics dictating trends in proptech?
It is worth keeping in mind that trends in proptech are controlled by the same forces that drive trends in other parts of technology such as fintech. So when it comes to goals like improving the customer experience, in proptech this means making it easier for customers and investors to search for properties that are appropriate to them and ensuring that the customer’s financing needs are met with as little friction and cost as possible. We could also add the importance of a process that is clear and transparent, so that both property seller and property buyer/investor feel equally informed at each step.
Consider also, as my colleague Julie Muhn pointed out, that some of what is most exciting in the proptech world in 2017 is not necessarily fintech. One of the areas of almost unanimous prognostication was the prediction that technologies like virtual reality and augmented reality would become a larger part of proptech . The range of adoption of VR and augmented reality technologies in real estate and property technology is wide – from a cardboard shade wrapped around a VR-enabled Samsung smartphone to vertigo-inducing immersive environments produced by boutique design firms. This variation represents a real interest in the technology, however, and opens up an entirely new way for properties to be marketed to, and even built for, prospective buyers.
Taking a close look at VR in proptech, the main use case of the technology is to provide virtual walkthroughs of both existing and to-be-developed properties. In addition to offering a more engaging experience for prospective property consumers and investors, VR and augmented reality can save design, development, and construction costs via “virtual refits.” Other potential uses of VR and augmented reality include real estate advertising that is detectable by wearable technology or smartphones.
One company in this space is ArcMedia, a U.K.-based design firm that works with upscale property developers. Interviewed by proptech analyst James Dearsley, ArcMedia managing director, Ben Bancroft, discussed the connection between VR and proptech, saying:
Virtual reality is an excellent tool for property developers to demonstrate their product to prospective customers before a hole has even been dug in the ground. Visualizing unbuilt spaces is something ArcMedia has been doing for 14 years, and the advent of this new generation of VR hardware means we can display those spaces in a more immersive and engaging way than ever before.
Bancroft is optimistic about the role VR will play in proptech, suggesting that both the technology and the “output quality” are at a good level. He is hopeful that while the technology may appear to be a high-end “indulgence,” that it will eventually enter the “everyday psyche” of the average property buyer. “What starts at the luxury end of the market usually creates demand in the mass market,” he said, “and businesses will respond when there is consumer expectation for the product.”
- Virtual Reality: How Tech is Changing the Way You Buy and Sell a Home – NerdWallet
- Virtual Reality in Real Estate – James Dearsley.com
- Here Are Four Ways Mixed Reality Will Impact CRE Going Forward – Bisnow
- What will PropTech look like in 2017? Hear from the industry’s pioneers – LendInvest Blog
Big Brains and Big Data
The use of big data and big data analytics in proptech is more ubiquitous than virtual and augmented reality technology. Using big data, geolocation, mapping, and machine learning to present prospective property consumers and investors with the most relevant and attractive offerings is a fundamental way big data technologies are making the process more efficient. Big data is also linked strongly to artificial intelligence – increasingly vital in analyzing mass and/or unstructured data – and machine learning – a chief consumer of big data. And all three are playing a greater role in everything from asset value analysis and trend forecasting to due diligence and contract review.
Almost anyone who has looked to buy or invest in property in the past year or two has likely taken advantage of proptech’s embrace of big data. Examples range from searching for a new home via the Zillow’s and Trulia’s of the world to comparing financing options with a solution like Blend (FS16) or on a platform like Sindeo (FF16), to the more sophisticated applications of companies like Envestnet | Yodlee (FE17) and its Mortgage Asset Verification solution, and Experian (FF16) and its mortgage affordability platform.
Other interesting companies in this area are firms like Geophy, which bills itself as “real estate meets big data.” Geophy aims to improve transparency in the property market by developing a global platform of objective, independent real estate information. Urban Intelligence provides property planning information including search and mapping for U.K. property developers.
- Big Data in Real Estate – JamesDearsley.com
- Househunting and Proptech – VMI Studio
- PropTech: Big Data (and Blockchain) – Cameron Most, Glenny LLP
Proptech and the Blockchain
By the end of the 21st century, everything will better with a little Blockchain in it. But between now and then, there remain skeptical voices uncertain of the degree to which blockchain technology will disrupt any given industry – and proptech is no exception.
Compared to virtual reality and big data analytics, the role of blockchain technology in proptech is much more controversial. While some suggest that any significant use of the blockchain in real estate technology is several years away, others see opportunities to improve loan origination and execution, increase ownership transparency, and enhance transaction security and integrity via the smart contracts and distributed ledgers of blockchain technology. Writing about blockchain technology and mortgages, Pamela Johnston and Tim Davis of PwC note origination, fulfillment, settlement flows, servicing, and the secondary market as the areas where the technology holds the most promise. “We think blockchain could be relevant at every stage,” the two write.
Much of the interesting innovation around blockchain and real estate is happening at the level of government partnering with financial institutions, institutional technology organizations, or fintechs. The Eastern European republic of Georgia announced at the beginning of the year that it was introducing a blockchain-based platform to better store real estate documents. The nation is working with bitcoin mining company, Bitfury. Sweden also announced a similar blockchain-oriented land registry system that will begin testing this month. Sweden is working with blockchain startup ChromaWay. Also recently we learned that the Bank of China (Hong Kong) and HSBC are working together to build a blockchain for sharing mortgage valuation information.
One interesting event to keep an eye on is the Blockchain Accelerator for Mortgage Lending launched by consulting firm, Synechron, last September. The program is one of six the consulting and technology services provider is sponsoring, all designed to “leverage Synechron’s deep domain expertise in financial services and high-end software engineering to dramatically speed time-to-market for blockchain initiatives.”
- What might blockchain mean for the mortgage industry? – PwC Financial Services Q&A
- How blockchain is simplifying the US mortgage market – International Business Times
- Mortgage Industry Eyes ‘Blockchain’ Technology – Mortgage Bankers Association
- Banks adopt blockchain for mortgage valuation system – Financial Times
- Blockchain for Mortgages: Compelling But Premature? – CoinDesk
- Major Hong Kong Lenders Plot Blockchain Mortgage System Launch – CoinDesk