PropTech: FinTech’s Greatest Test
I have written before about the symbiotic relationship between PropTech and FinTech, about how both industries rely mutually on each other’s success. But upon closer examination, the relationship is even more intricate than I first appreciated. Whilst aspects of PropTech may need FinTech in order to succeed, FinTech will continue to thrive without any involvement in property.
FinTech, however, is a technology of trust, and with property being one of the most valuable asset classes in the world, it represents the biggest test that financial technology has ever, and possibly will ever, see.
Why property needs FinTech
This is the simple part; property needs finance innovation to thrive because property is based on a foundation of financial transactions. As the pace of daily business increases and property becomes increasingly digitised, it is only thanks to advancements in FinTech that we are able to keep up.
Transaction security, efficiency and speed; property needs all of them, and only through FinTech can they be delivered.
Why FinTech needs property
As I say, yes, FinTech would no doubt survive without any involvement in property; there are plenty of other industries that would help it thrive. But, by the very nature of capitalism, FinTech has no choice but to work its way into the property industry, one of the most valuable asset classes in the world; turning its back on all of that potential revenue would be a cardinal sin.
However, FinTech is currently a technology of trust. That is to say, in order to succeed, it relies entirely on the trust of its users. For example, since the introduction of contactless (or “tap-and-go”) payments, banks barely even glance at outgoings of under £30, and we, the consumers, are comfortable with the potential security issues that arise with the death of chip and pin. Because both sides of the deal trust contactless payment, there has been no kickback against it. If consumers didn’t trust the tech, uptake, and therefore industry growth, would have been slower.
But tapping away thirty quid in the pub or supermarket is very different, both literally and emotionally, to the vast amounts of money that are passed around in property. If FinTech is to continue its disruption of our industry, or indeed its own, it is going to have to ensure that its users trust the technology, trust the methodology and trust the people who are looking after, and giving safe passage to, their money.
That’s why FinTech shares symbiosis with property, not because it would sink without it, but because we have the potential to be the most profitable partner it ever has.
Gaining property’s trust
How does FinTech gain and maintain the trust of the property industry? Well, it might actually turn out to be effortless. Property is, famously, always a little behind the times, even today. But sometimes that’s a good thing. In this case, it means that we can sit back and observe as FinTech takes effect on other industries, see what works and what doesn’t. By the time it arrives at our doorstep, financial innovation usually has proof of concept.
Blockchain, for example, was around long before property took an interest. We were able to watch and learn how it works; we took note as it revolutionised mortgages and banking. Psychologically, we are ready for its arrival in the property world because we’d already been shown that it worked smoothly, efficiently and securely.
Giving in order to receive
FinTech may be the elder brother of property, but that doesn’t mean that we should blindly trust it and jump in. However, as it’s a more established industry, I would argue that its regulatory backbone and governance is far more advanced than ours. The EU Directive, for example, which forces banks to open their vast data sets; is completely unimaginable, at the moment, in property. We have had the luxury of sitting back and observing what happens. But now, I think it’s time to stop looking and start partaking.
Yet property is still a closed book, not completely trusting of technology and, in areas, suspicious of what open data and innovation will lead to. We still work from a traditional business model, one which is rapidly becoming outdated. We are holding onto many of our core practices because they have served us so well up to now; but, as they say, if you love something, set it free. We don’t want to relinquish control on property’s future, but maybe we have to let it fly the nest in order to be all that it can be. That’s where we’re at right now, a point in time where we have to give up some control on what we have, because what we take is only ever equal to what we make.