Will 2023 be the year of the Froptech?

Financial institutions are increasingly waking up to the service they could offer with access to data on home ownership, that alongside the insights they already have into finances and investments provides a holistic overview of a customer’s overall financial wellbeing and offers ample new ways to engage deeper and much more frequently with customers. This can be achieved by partnering with established proptechs that deliver insights for mortgage banks, brokers, estate agents and others in the property industry. Are we finally seeing the rise of ‘froptech’ as fintech and proptech become increasingly interrelated for an enhanced customer experience? Proptechs are not a new invention. They emerged around the mid-2000s with the beginning of the real estate industry’s digital transformation, particularly around property search functionality. The UK market was key to the emergence of proptech and remains at the centre of this industry. The situation is similar in the fintech sector, where the UK regularly tops the rankings for levels of funding and deal sizes. Property is often the largest and most emotional investment For financial institutions, it has become increasingly clear that clients expect more than innovative financial solutions and products, particularly in the current economic climate. The focus has shifted towards highly customer centric, data-powered products and services that deliver on transparency and help make informed financial choices - much like the FCA’s consumer duty paper outlines. Take property for example – which for most is the largest and most emotional investment – and should be monitored in the same way that one would their other investments. This means regularly and with access to how good an investment the property remains as they navigate different life events which can increase or diminish financial pressures or how well it matches one’s life stage. As an individual's property situation evolves over time both financially and emotionally, institutions need to account, report and engage with this. Customers will understand the contribution their property makes to their overall financial health and institutions can use property data to maintain longer relationships with their customers and provide lifelong advice. Data that can be accessed today goes far beyond just current valuations but can show how financial wellbeing could be impacted by building an extension or installing solar panels as well as data on the prospects of the local area. It can also help in understanding a property’s liquidity profile and provide insights into finding better suited alternatives. When considering how customers now engage with banking and investment applications, it is becoming an expectation that property assets have the same level of real-time data insights and personalised content, as savings, investments and pension products. This reflects the fact that they are not separate decisions, but interlinked, for example savings accounts can be matched with real property listings, buy-to-let property assets calibrated with alternative investment decisions etc. Real-time data insights and personalised content is the key to success One way of integrating property data is creating a comprehensive customer portal or application, that presents and gamifies personalised customer journeys including property. This enables institutions to engage with their customers at all points throughout their lives. This could take the form of linking monthly savings goals to affordable and desirable properties or gamifying a customer’s property aspirations. Not only do these concepts provide a best-in-class client experience and much more frequent and meaningful customer-advisor engagement opportunities, but they also give property leaders an opportunity to meet strategic goals. A continuous theme is how best to cross-sell services to customers or how to extend services offered by your financial provider into the – now frequently termed – “home eco-system”. For example, how to convert banking and wealth clients into mortgage customers, and visa-versa or how to connect homeowners with a provider of advanced, energy efficient heating system and pair him/her up with a home matching equity line of credit. Therefore, the discussion on adoption of these new technologies encompasses both customer experience and business objectives. Looking ahead In a year of economic recession and rising interest rates, financial institutions that embrace proptech solutions to drive customer acquisition and retention strategies may well be the ones to succeed in a fiercely competitive market. Therefore, is it possible that 2023 will be the year of the froptech? Byline:Stefan Heitmann, chairman and founder of PriceHubble

Will 2023 be the year of the Froptech?

Proptechs and fintechs have each separately and successfully established themselves as innovative drivers of digital transformation. However, despite the continuous rise of fintech, the financial services industry is only beginning to embrace the power of proptech.

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