Proptech has been determining the reality of the real estate industry for several years. Digital transformation of all sectors has also fully penetrated real estate thanks to Proptech, reinventing and transforming not only the distribution aspects but even the product itself.
From the expansion of home automation and smart buildings to online housing portals, the use of technology and the tools of digitisation applied to the real estate industry have established the widespread use of the Proptech term.
The Proptech concept
Proptech, consisting of the words “Property” and “Technology” is the term that includes all those companies, businesses and organisations that use technology to refine, optimise, reinvent or scan any aspect within the real estate industry.
Proptech originated in the United Kingdom around 2014. However, we can see how certain initiatives that today we would categorise Proptech were born since 2000, such as online real estate portals or specialised websites in the sector.
The term has been used not only to categorise the companies involved but also to define the digital changes that the real estate sector has undergone around the different market players, their dynamics and new types of product. In the same direction, it includes all subareas, from leasing, sale, design, construction, mortgages or investments.
Just as the real estate and financial sectors are closely linked, so are the concepts Proptech and Fintech. The second one, which has monopolised the focus of the specialised press in recent years and with a little more experience, merges with Proptech to offer disruptive solutions in the real estate sector.
Check out here the Top25 2020 Fintech CEOs.
Redefining the real estate industry
The real estate sector has been shaping and developing from its own perspective, generating distinct areas that meet the specific needs of the sector. Likewise, Proptech has been taking shape in relation to the new disruptive proposal it makes for the real estate area.
Beyond reinventing processes, Proptech has restructured the industry, including areas from construction to maintenance, asset management or real estate digitisation. Given the complexity and breadth of the real estate sector, we can understand the Proptech ecosystem from different perspectives.
The digital-focused perspective parts Proptech into a series of categories that reveal new forms and dynamics of the real estate sector:
- Portals and marketplaces: Also defined as market platforms or classifieds, this category groups those companies and startups that have focused his work in the real estate sector around the sale and communication of the product, assuming a great impact for traditional real estate agencies.
- Peer to Peer: Sometimes confused and blurred with the previous category, it groups together providers, generally, startups, that offer online rental and sale services between individuals without commissions. It is estimated that they are around 17% of the all purely Proptech initiatives.
- Real estate investment: They are platforms dedicated to innovation in the real estate financial product, from the mortgage and investment area, crowdfunding-style collective investment or accelerators to supply aggregators and iBuyers.
- Real estate management and software providers: It includes technology companies that develop digital solutions for the real estate sector. Creation of new Property Management Softwares (PMS), CRM platforms or, also, the development of professional solutions such as virtual reality or advances in visualisation for projects and digital tools for construction and architecture professionals highlight in this area.
- B2B and B2C services portals: From websites to find services associated with the sector such as carpenters, plumbers or electricians to B2B platforms to create synergies between the main players in the industry.
- Big data: It is the subarea that includes all the software providers that base their operations on the data management of the real estate sector. We find here the appraisal and valuation tools, geolocation tools, asset analysis and rating.
- Product innovation: It brings together companies dedicated to technological innovation in real estate products. Home automation or IoT (Internet of Things) areas stand out here. We can also find in this category coworking spaces or blockchain applied to the real estate sector.
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On many occasions, these categories are intermingled, since a part of the components associated with each category begins to offer services framed in another once it has grown and consolidated its position in the area. This is the case, for example, of many Peer to Peer companies who begin to offer mortgage and investment services associated with their main activity.
Digital identification in the PropTech sector
As well as in the financial sector, operations in real estate are sensitive and subject to relevant laws and regulatory standards. Proptech, which has led to the birth of new dynamics and has transformed the operation of the sector, has made possible activities previously unthinkable.
For this reason, and taking into account that around 70% of Proptech activities are carried out through the online channel, identity verification has become the major pillar so that Proptech can operate with confidence and without assuming unnecessary risks on the internet.
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Customer identification KYC (Know Your Customer) process, widely known within the financial sector, has also become a must when usual real estate activities and operations moved to the online sphere. The result of this is the eKYC (electronic Know Your Customer) process.
Thanks to video identification, Proptech companies, especially those in the Peer to Peer, portals, marketplaces, investment and B2B and B2C services categories, can now offer their services remotely and online with technical and legal guarantees.
Just as Fintech, the area that Proptech draws from, a series of requirements must be met in order to operate on the internet. Complying with the most demanding regulations regarding AML controls and Fraud Prevention and Risk Management, Due Diligence, KYB (Know Your Business) and KYC ensures that the Regtech aspect is not neglected, which considers the relevant compliance guidelines in terms of digital operations.
AML5, which sets the AML standards for the real estate, banking and financial sectors, and eIDAS, which regulates the electronic signature standards for online operations at any area, sets the regulatory standards and represents the opportunity for Proptech to operate online and remotely in a safe way and under the support of legislation.
Request here our complete guide on AML5 (Fifth Money Laundering Directive) and eIDAS (electronic IDentification, Authentication and trust Services).
eID, digitisation for all industries
Electronic IDentification, with extensive experience within the Fintech sector, has been accompanying various industries, including real estate, in their growth and digitisation, facilitating KYC, acquisition and customer onboarding processes and all related operations to user relationships that a Proptech company may have.
Our services and disruptive solutions serve companies and businesses in the real estate and Proptech areas to boost their digitisation processes, optimise their online client relationships and globalise their business.
Contact eID through this form and request a demonstration of our real state-adapted Proptech solutions.