What Can the Property Management Sector Learn From the World of FinTech?

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With over four decades of experience in Technology and Real Estate, I have mastered the art of Digital Transformation, and it is a great accomplishment for me and my team at i4T Global to have recently launched our newer version of i4T Global 3.0 as a precursor to our global expansion. We poured our hearts and souls into creating a new image that perfectly reflects who we are as a team.

We have seen how PropTech is massively disrupting the Real Estate Industry over the last few years. The concept brings new realia to the market, making Property Managers’ lives easier while also assisting Real Estate Investors to make smart decisions.

Have you ever wondered what the future holds for the FinTech-PropTech mix? In this article, I’ll be covering the majority of the frequently asked questions about what can the Property Management Sector learn from the world of FinTech.

The Property Management Sector is evolving, and it’s not only because of PropTech or the COVID-19 Pandemic. The rise of FinTech has altered the way people construct, buy, sell, and rent real estate. Property owners can now use online tools to evaluate their properties before putting them on the market. Simultaneously, thanks to the availability of reliable data analysis software, sellers can advertise more accurately.

Digital Transformation in the Property Management Sector has been fueled by several trends, including digital disruption, a shift toward millennials home buyers, and a lack of trust in traditional banks following the 2008 financial crisis.

Related article: “New Year – New Approach” In Relation To Digital Transformation and PropTech

Redefining the Property Market with FinTech

What is FinTech?

Financial Technology (FinTech) refers to new technologies that focus on improving and automating the delivery and use of financial services. Similar to PropTech, FinTech utilises specialised software and algorithms to assist businesses, entrepreneurs, and consumers in better managing their financial operations, processes, and lives. 

Property Management FinTech solutions include digital-only mortgages that automate the necessary steps to speed up the process, as well as assist the Property Investors to use the fractional-ownership business model for usage rights, income sharing, priority access, and risk management. Some Real Estate Companies are digitising traditional models such as rent-to-own, while others are creating digital marketplaces where both first-time investors and global asset managers can invest in properties.

The Role of FinTech in the Sharing Economy

There are now over 26,000 FinTech companies operating globally, employing approximately 500,000 people. Approximately 30% of all banking customers use at least one financial service provided by a non-traditional provider.

The Role of FinTech in the Sharing Economy

In the world of banking, FinTech is on everyone's lips. It has transformed several business models, strategic practices, and infrastructure in the financial sector, ranging from payments to consulting services.

Growth in Global FinTech has been explosive and shows no signs of slowing, where the industry is expected to grow at a compound annual growth rate (CAGR) of 23.41% from 2021 to reach a market value of $324 billion in 2026.

How FinTech Could Be a Game-Changer in the Property Management Industry

Property FinTech enables Real Estate Investors to eliminate unnecessary intermediaries in Real Estate Transactions. Throughout the property evaluation and purchase process, FinTech helps to reduce costs and friction, and increase investment opportunities. 

I’m going to share some of the most latest trends and innovations that are disrupting the Real Estate Industry while fueling the FinTech revolution.

Related article: The Value In Time Within Property Management & How PropTech Can Make Lives Easier

Use Case 1: Blockchain Technology

The Real Estate Industry is putting Blockchain Technology to the test for a variety of reasons including;

  • Disintermediation (eliminating middlemen)
  • Improved Data Management Capabilities.
  • Fee Reduction
  • Automation
  • Security and Transparency

The technology has the potential to optimize property rights by reducing fraud in Real Estate transactions because it is highly secure, transparent, and decentralized. It also allows for faster repayment and lowers costs through disintermediation, allowing lower-income earners to get on the housing ladder sooner rather than later.

Distributed Ledger Technology (DLT) is increasingly represented as the infrastructure of the digital world. It is the technology that forms the basis of Bitcoin, Cryptocurrencies, and other Digital Cash, but it has a wide range of other applications too.

Blockchain technology's full potential has yet to be realized. Some ground-breaking developments in this field may emerge over the next few years.

Use Case 2: Contactless Payment

A). Neobanking and Mobile App Payments:

One of the most popular fintech services disrupting traditional banking is Neobanking. A neobank is a new type of bank that only operates online and is built with mobile-first design principles. Customers can open an account using a smartphone app instead of visiting a physical branch or filling out endless paperwork on paper. The same approach can be implemented in the Real Estate Industry with the usage of Mobile App Payments.

B). Smart Contracts:

Smart contracts can provide numerous benefits to the Property Management Sector, including increased security (e.g., by eliminating third parties), increased efficiency (with faster transactions and lower fees), improved transparency (increasing accountability), and reduced fees (eliminating overhead costs).

C). Virtual Cards and Automouse Finance 

Virtual cards, which are based on VISA or Mastercard, can be used in place of physical cards for online transactions. There is no plastic involved; only a sixteen-digit card number, CVV code, and expiration date are required.

Some virtual cards also allow users to store loyalty programs on them and use the same account for both fiat spending and cryptocurrency transactions, making it easier to manage funds by creating a single consolidated balance across all accounts. Virtual cards can also be used as a backup payment method if physical cards are declined or are not available.

Autonomous Finance is a system of machines and devices that can perform financial transactions automatically without the involvement of humans. This type of technology could be applied in the Real Estate Industry through automatic payments for property insurance or autonomous (self-directed) property investment via robo-advisers.

Use Case 3: Robotic Process Automation (RPA)

Many FinTech Companies use Robotic Process Automation in the form of digital robots or programs (for example, chatbots) to automate routine, repetitive tasks previously performed by humans. It is clearly different from artificial intelligence in that it is not required to have human-level intelligence. RPA technology has already been used by many businesses to free up resources and improve accuracy. It is used for simple tasks such as data entry and information processing.

RPA is an excellent system for PropTech businesses to reduce operating costs without sacrificing quality or productivity by automating workflow management and back-office functions in the organization, allowing people to focus on more innovative and value-added activities

Use Case 4: Artificial Intelligence (AI) and Machine Learning (ML)

There is a wealth of research and use-cases in the field of artificial intelligence in financial services. Risk Assessment, Forecasting, Data Management, Automation, and hundreds of other yet-to-be-discovered use-cases are among the applications.

One notable development is the rise of robo-advisors, which have become one of the most popular trends in FinTech. These online platforms can manage property investments independently and recommend a personalized portfolio based on individual preferences. They use cognitive computing technology as well as big data trends to determine the best investment strategy.

Machine learning is a subcategory of artificial intelligence that uses data to learn and evolve to solve complex problems. Fraud Detection, Compliance Analysis, and Algorithmic Trading are examples of machine learning in FinTech.

Use Case 5: Augmented Reality / Virtual Reality (AR/VR)

VR use cases in financial technology are slowly entering the market, with people using virtual reality to invest in stocks or trade currencies. It provides an immersive experience for tracking real-time property market movements and making quick real estate investment decisions. It’s a great example of how consumers can use fintech and modern technology to make smart investments.

Use Case 6: Biometrics Security

As identity verification becomes more common, Biometric Technology is playing an increasingly important role not only in Financial Technology Innovation but also in many others. Biometrics are being used to simplify account access, validate online transactions, and even replace passwords.

Authentication methods such as Facial Recognition Software, Voice Analysis, and Fingerprint Scanners will play a larger role in rental security in the future

Palm vein patterns, IRIS Recognition, and Retinal Scanning are examples of more advanced biometric technology. Property Management businesses can eliminate the need for passwords and PINs, which are often found to be unsafe, by implementing such novel security methods.

Use Case 7: Gamification

Gamification is being incorporated into financial institutions’ products and services. Gamification is a design-based solution that engages users in specific tasks by utilising game mechanics such as personal scorecards or badges. 

These games encourage customers to track their spending habits through the use of events or progress bars, while also providing positive feedback for making sound financial decisions. The same logic could be applied to the Property Management industry.

According to a recent study by Apis Partners, “Gamification is about customer centricity; it helps customers achieve their goals in an emotionally engaging way.”

Use Case 8: Quantum Computing

The application of quantum computing in the financial industry is not a pipe dream; it is a reality. Financial Technology companies use Quantum Computing to improve the efficiency with which digital signatures are issued and verified. Other applications of quantum computing include increased security and privacy, faster trading algorithms, and shorter transaction settlement times.

Quantum computing would exponentially increase the speed of transactions powered by algorithms in Property Management. It would give a significant advantage in areas such as Cybersecurity, Artificial Intelligence, Asset Management, Risk Analytics, Trading, and Predictive Capabilities, as well as help in scaling up at a much lower cost and with fewer resources.

Use Case 9: Regulatory Technology (RegTech)

The use of technology to track regulatory compliance is referred to as RegTech. To automate data monitoring and reporting, regulatory technology solutions use tools that can handle large datasets or unstructured data. These technologies are also intended to help financial institutions comply with changing regulations in different jurisdictions around the world.

As political governments change and governments try to promote more strictly enforced cybersecurity laws, the prominence of RegTech may help to preserve fintech security. These tools are designed to manage large data transfers to meet regulatory requirements.

What Does the Future Hold for the Fintech-Proptech Mix?

Disruptive change is expected to continue in almost every crack and crevice of legacy industries. The Property Management Sector is no exception. The adoption of financial technologies by Property Occupants will have a long-term impact on entire economic structures and consumer behavior.

Traditional methods could be transformed by the use of innovative tools and technologies such as blockchain. In the wrong hands, it also has the risking capability of oppressing entire nations and forming societies in which human privacy is not respected. Although blockchain slave chains are a low-probability worst-case scenario, the consequences of any technological advancement should be acknowledged for having the ability to do both benevolently good and tragically bad things, like a double-edged sword.

However, it remains to be seen whether such profound technological innovations are feasible due to their experimental nature in the face of growing concerns about uncertain days ahead. At the end of the day, only one thing is certain; the future is unknown. And it is the ability to stay resilient in the face of uncertainty that separates success from failure.

Related article: A Recap of the 2021 Property Management Market & Predictions for 2022

i4T Maintenance Software - The Most Disruptive PropTech

i4T Maintenance Is an All-in-One Revolutionised Software That Automates and Streamlines the Daily Property Maintenance Operations, Making It the Best Choice for Real Estate Agents Around the World.

With the launch of i4T Global Version 3.0, the i4T Maintenance product suite is now categorised into i4T Maintenance Real Estate and i4T Maintenance Strata. Our Platform is highly versatile and scalable to businesses of all sizes, with innovative capabilities that simplify compliance while effectively managing a variety of properties.

Related article: Unique Value Proposition and Competitive Edge of i4T Maintenance Property Management Software

Final Thoughts

FinTech is a rapidly evolving industry, with new trends emerging every year. Discovering the latest fintech trends can provide you with new insights and help your Property Management company stay ahead of the competition by making smart business decisions for your organization’s future growth. The future of PropTech looks bright with AI, Robotic Process Automation, Smart Contracts, DeFi, and Virtual Reality all on the rise.

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