The real estate industry is a popular target for FinTech innovators, particularly when it comes to new services and products that target renters and homeowners.
Developers are increasingly exploring how to address some of the biggest B2C payment friction points in the market, most notably the pain of renters making monthly payments to landlords, often via paper check or clunky, fee-heavy online payment portals.
But technology firms have also stepped in to address industry-specific friction points, with Airbnb largely kicking off the innovation trend by enabling homeowners to turn their homes into revenue generators. Companies like Zillow and rival ZeroDown are exploring FinTech innovations to support consumers' home search and mortgage payment needs, while Cadre emerged to allow consumers to invest in commercial property transactions.
The opportunities of real estate FinTech are vast, and innovation is far from slowing down, according to Ian M. Marlow, CEO of real estate technology firm FitechGelb.
"The banking and payment services on the front end of real estate platforms [have] expanded greatly in these past two years, and end users continue to clamor for more access," he recently told PYMNTS, adding that progress made in the broader financial services market through initiatives like open banking and faster payment are "greatly affecting the tenant experience for the industry across the board."
That's all well and good – but there is, of course, a whole other side of real estate the tenant or homeowner does not see.
The technology space has begun to explore opportunities in the back office, too, with companies like WeWork stepping into the real estate technology market to allow for on-demand office rental, while traditionally consumer-facing firms like Airbnb have also taken measures to expand into the B2B side of the market in areas like business travel.
And on the FinTech side of things, firms like Yardi, Nexus and Visa have also debuted solutions to address friction in B2B payments, accounts payable and accounts receivable in the real estate space, which is notorious for delayed and late supplier payments and complex supply chains.
FitechGelb is also among the real estate technology firms that are enhancing access to FinTech, having recently announced a partnership with TreasuryXpress to connect clients to industry-specific treasury management services.
But tackling friction in back-office financial management for this vertical is a major challenge, according to Marlow, who mentioned that one of the biggest drivers of complexity for the industry's accounting and financial management needs is "the fact that real estate literally looks at each building as its own individual company or entity."
"Additionally," he said, "you have owners, third-party managers and construction. All types of real estate sectors have different accounting and financial needs."
With a growing number of FinTech platforms now in place for consumers, as well as an emerging population of back-office financial management solutions, the real estate sector faces a new challenge: ensuring that all of these tools integrate and work together.
Making a Difficult Challenge Even Harder
As Marlow explained, one of the largest challenges with real estate companies adopting technology has everything to do with time: time to review and assess a solution, evaluate its effectiveness, implement it and validate its ROI. Unless time is dedicated to these initiatives, a technology adoption initiative will fail, he said.
But that's only part of the adoption hurdle – real estate companies then have to ensure that these new technologies can integrate with each other.
The enterprise resource planning (ERP) platform can be a valuable common denominator for the growing number of FinTech solutions and platforms available for the real estate market, said Marlow. However, businesses in the sector often fail to take full advantage of an ERP's integration capacity.
"Most clients only use a fraction of the power of their ERP platform," he noted. "in most cases, clients use between five and 12 various systems or modules that make up their ERP systems. There is huge potential to provide value in terms of automation and accountability if you have systems set up correctly and have global adoption."
The Data Opportunity
Data, of course, is the key to this integration capability – and if integration can be achieved, real estate firms have the opportunity to obtain valuable information into their operations.
Interestingly, this is not only true of organizations' embrace of back-end solutions: According to Marlow, the real estate industry's adoption of consumer (tenant)-facing services – and the ability of those tools to connect to the back office – can also support access to data that drives valuable insights and business intelligence.
In this way, consumer-facing real estate FinTech is having a real B2B impact – one example would be analyzing the impact of construction or improvements in a tenant space, or the process of establishing rent.
Meanwhile, however, industry-specific treasury management and other financial management operations will continue to present an opportunity for FinTech innovators, as well as service providers that can support the cross-platform integration of these tools.
"Real estate has typically been nearly a decade behind other industries in terms of automation in corporate offices, as well as the building level," Marlow said of the innovation opportunity in both the B2B and B2C arenas.