Could Fintech Reinvent Housing?
Finance is now a driver for innovation, not a ‘back office’ function
About ten years ago a bunch of businesses’ decided that they’d get together and design a cashless society.
Cash is slow — people paying cash in front of you at the supermarket are an annoyance . Cash is dirty — it deteriorates, gathers germs and is unsafe to carry in quantity.
This isn’t our own opinion — but certainly echoes views espoused by Silicon Valley types.
It isn’t an entirely selfless worldview — there’s no money to be made on cash transactions. A digital transaction performed in a nano-second with a % surcharge for the speed and convenience — that’s a different matter.
Also — moving to digital gives business an unparalleled opportunity.
Accessing our payment data: what we buy, where we buy, when we buy.
It’s the best insight you can get into how people live their lives.
There are two threats/opportunities presented by FinTech for housing that we’ll briefly consider.
How could the rise of digital payments, open APIs and AI be used to increase skills and improve financial capability?
Whether we realise it or not — our behaviours are changing. We are bombarded now by the temptation to purchase 24/7 in a 1-Click world.
If housing sticks to inflexible rental models — it will find itself in serious trouble. In an era where you can buy pizza without leaving your chat app— someone else is going after your money.
If we don’t innovate — pay-day and doorstep lenders will.
Monzo are an exciting start up that are revolutionising the banking system. With a waiting list of over 12,000 people for their current account, they pride themselves on offering a fully mobile banking solution that harnesses instant payment technologies and social media platforms so customers can engage with them how they want, through which medium they want, when they want. It is also worth noting that they don’t have a support telephone line — all enquiries and support are delivered through web chat in their easy to use app. Given their customer base, they have also developed additional functionalities like ‘Drunk Mode’ — whereby a customer can tell the app their spending limit before a night out so it can help curb their behaviour.
So if Monzo were to do housing, we think it would look something like this:
* All services and support via an app, using technologies such as web chat, Skype, picture messaging, etc.
* Systems would collects meaningful data on behaviours and send fun, informative reports to customers to allow them to make lifestyle or behavioural changes (for example, it might look at their rent payment or repairs history)
* Collects meaningful data which is then used to inform service design
* Focus on problem solving, not creating new things they ‘think’ people would want
* Utilise a community of users to suggest new developments or service features, also asking for constant feedback
* Businesses will use small, agile teams to deploy the service offering, focus on stuff they are good at and outsource the rest
* Completely transparent (literally, everything would be out there for customers to access if they want it!)
Rentberry is a blockchain based home rental service and a price negotiation platform uniting tenants and landlords. It automates all the standard rental tasks from submitting your personal information, credit reports and custom offers, to e-signing rental agreements and online rental payments.
Controversially, potential tenants bid against one another to claim the lease — a move that has horrified affordable housing advocates. However we shouldn’t dismiss everything they do - especially their crowdsourced insurance network, which enables tenants to unfreeze up to 90% of their deposits through smart contract mechanisms.
How could Fintech be used alongside Property technology (PropTech) to present us with alternative business models?
Much is made of the potential of the blockchain — an incorruptible, indelible and decentralised ledger of transactions owned and monitored by everyone. The technology records transactions between two parties efficiently and in a verifiable and permanent way.
A housing association performs thousands of transactions on a daily basis — imagine if this was fully automated with a permanent record of the history enabling complete transparency, removing the need for any audit or approval.
How many more homes could we build— and how much lower could the rents on those homes could be?
However blockchain is a foundational technology and housing is riddled with legacy systems. It may take decades for blockchain to seep into our economic and social infrastructure, even though the process of adoption has begun.
A good place to start might be with smart contracts. These are self-executing contracts containing smart clauses that trigger processes according to the terms of the contract.
So, a landlord could remotely switch off the gas supply of a tenant who has refused access for a service. Conversely, AI could automatically stop a payment to a landlord who has failed to fulfill a repair obligation.
We aren’t proposing these as good idea’s — just outlining the world we are stepping into — with all the ethical dilemmas automation will bring.
Rather than being passive recipients of the future we have a huge opportunity to shape the use of transformative technology for social good
Our finance systems weren’t built around digital customer experience. They were built for the physical distribution of paper based authorisation in a network focused upon buildings and people. We are now in a world built upon the digital distribution of data across a globalised network.
It lends itself to completely different business models. It is a fundamental, not incremental, change.
Ultimately the rise of FinTech could usher in a new era of innovation for housing associations.
Or it could accelerate their demise.
Over to us.
This post was co-authored with Michelle Butler and is an edited version of a session on FinTech at #NHCInnovateNorth