Has there ever been a more exciting time to be involved in the UK technology sector? In the new Chancellor’s recent ‘Autumn Statement’, promises were made for major investment in tech businesses, including a £400 million fund to be made available to start-ups and small businesses through venture capital funds. The £400m will be invested by the UK Business Bank and is meant to unlock £1 billion of new investment in innovative firms planning to scale up – the premise is that this will encourage these businesses to stay, develop and grow in Britain.
It was interesting to see that the Department for International Trade will also be providing £500,000 a year specifically for financial technology (fintech) specialists. Fintech – a merging of tech and financial – is challenging and redefining a very traditional financial services sector and has been a real success story for British businesses in particular. London, the heart of the fintech movement, has all the ingredients in place – its role as a financial capital of course, a strong entrepreneurial vibe and also access to hundreds of thousands of knowledge workers in and around the city. Now we can add Government support and funding to this growing list. But just as we are getting used to bathing in the glow of Britain’s role at the forefront of fintech, we are now seeing the emergence of other hot technology sectors trying to emulate its success, such as cleantech, edtech and medtech.
But there is one other new sector – ‘proptech’ – that is going all out to challenge fintech for the innovation crown, with dozens of start-ups aiming to bring the success of fintech to the property sector.
Much like the ultra-conservative banking industry, the property sector has long been seen as outdated and irrelevant to the modern house buyer and seller and technology developments in this space have been minimal. The basics of buying and selling a house and getting a mortgage to pay for it, have changed very little over the years. To a large extent we are still forced to stick to ‘tried and trusted’ methods that are more often than not plagued by delays, frustrations and rising costs, propped up by an industry that offers little or no transparency in the way it works, and is ripe for reinvention.
But things are about to change and hopefully for the better.
Dinner party conversation
It’s fair to say that in this country we are obsessed with property and no self-respecting dinner party would be complete without discussing the merits of location, location, location and the ups and downs of property prices. Now with Brexit in motion, property discussions have gone into overdrive and a growing band of businesses is emerging to tackle our pain points when it comes to buying and selling houses.
To be fair, proptech is not brand new. The first generation of proptech companies have sown the seeds of innovation, led by the likes of Zoopla and Rightmove, online property portals designed to connect buyers and sellers and offer an alternative approach to the traditional high street/shop window model. Portals have certainly helped pave the way to greater transparency for both buyers and sellers, and undoubtedly made it easier and more efficient to search for properties and compare prices. But the technology and platforms were not especially unique or even property specific and could be applied to any number of sectors. Until now there has only been surface level technological innovation in the proptech sector, but we are starting to see newer disruptor companies appear in this space, helping improve the way we buy and sell homes and manage our properties.
But we are also seeing some really exciting developments that will enable people to invest in property as well, like Property Partner, LendInvest, Habito, Trussle, Bricklane and Landbay to name just a few. These new concepts – effectively merging the worlds of fintech and proptech – are helping the proptech sector to gain a momentum all of its own.
Take Property Partner, which as well as developing a crowdfunding platform, is also creating a property stock market so people can buy and sell shares in property investments. Unheard of just a few years ago, this demonstrates just how quickly the market is evolving today.
Proptech apps and services will take on ‘generation rent'
I think we will continue to see exciting developments in this space. In fact, the market is still in its infancy and has so much more to offer. We can expect to see a slew of developments in property services and apps aimed at the burgeoning rental market, dubbed ‘generation rent’. And what about mortgage lenders? Another frustrating aspect of the market that continues to operate in the dark ages. This is ripe for change and companies like Trussle are doing just that, using software and automation to search through thousands of mortgages to advise customers of the best available deals and manage the process for them Then there’s the fallout of the EU referendum on Brexit and the subsequent impact on property prices in the UK and a fall in demand for properties in the capital – leading to the lowest sales volumes ever.
These and other socio-economic developments may well see new technologies emerge to solve new problems that we haven’t even heard of yet. The appetite for investment is also growing in this sector. We have seen incubators and accelerators like Pi Labs based in London, the first ever property technology venture capital firm in Europe, and MOTIVE in the US, which are helping to attract investment and facilitate growth in the market. The question is not whether proptech can ever reach the heady heights of success that fintech has in the UK, but how far can it actually go?
As long as it is able to disrupt the status quo and challenge the old way of doing things, which let’s face it, is simply no longer fit for purpose, proptech has set an exciting path for growth and may just be on course to transform the property market.
Matt Robinson, co-founder and CEO, Nested
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