I recently spoke at the AsiaPac Property Leaders Summit 2017 in Singapore. This was a refreshing opportunity to venture into a forum that wasn’t focused exclusively on fintech. The timing was also serendipitous: building up to the event, discussions surrounding the potential applications of blockchain in real estate had gained steam. Given my past presentations on the topic, I was happy to participate.
The quality of a panel is always a factor of the participants. Ours did not disappoint with Robert Courteau, CEO of Altus Group, Philippa Allen, CEO of ComplianceAsia, and Bernie Devine, Asia Regional Director at Yardi Systems. Each brought expertise and in-depth market knowledge to the table. Finally, Paul Chen, Director at RealFoundations, was the straw stirring the drink with his moderating skills keeping the crowd engaged and the talk flowing, a arduous task given our post-lunch spot.
Our discussion was titled “FinTech, Robots and Real Estate”. Here are the highlights of the topics that I covered:
1 - What trends have you noticed with respect to technology in financial services?
My response was three pronged. I first referred to the maturation of blockchain. A few years ago, the technology was discussed solely in the context of bitcoin, a handicap given the veneer of uncertainty shrouded over the cryptocurrency. Blockchain however evolved beyond that shadow and gained attention as a means for increasing efficiencies and reducing banking costs.
As a result, financial institutions dedicated resources to exploring real-world uses. This took the form of partnerships with peers, membership in consortia or individual experimentation.
Finally, the joint projects were also extended to startups. These fledgling companies were invited into headquarters to develop their wares and comingle with senior bankers. At first blush, this could be a fair characterization of the proverbial fox in the henhouse: financial institutions inviting companies dedicated to upending their business models into their turf. As a counterpoint however, this also allows incumbents to stay close to future partners or buyout targets.
2 - What are the major concerns from regulators with respect to the development of fintech?
It is not unreasonable for a regulator, tasked with prudential responsibilities, to adopt a conservative view of untested and disruptive technologies. This has not been the case as many have taken a hands-off approach to avoid becoming an impediment to the growth of fintech. I tied this in with my theory of the ongoing competition between countries to become fintech hubs, as evidenced through numerous initiatives including regulatory sandboxes. As such, the fear isn’t the impact of new technologies, but rather of being qualified as laggard jurisdictions in terms of innovation.
3 – How can blockchain be applied to real estate?
Syndicated loans present a great use case. In these transactions, a group of lenders work together to finance the purchase of a large building. To mitigate risk exposure, each only funds a portion of the borrowed amount. An agent facilitates the servicing of the loan throughout the term by carrying out tasks on behalf of the group, including collecting and distributing interest payments. A smart contract loaded onto a blockchain can perform much of the agent’s work. This could reduce costs as well as settlement times which average almost three weeks.
As for more examples, countries such as Georgia and Ghana have focused on recording the ownership of land on blockchain. This facilitates subsequent transactions and further validates records. What’s more, the Dutch bank ABN Amro partnered with IBM for a pilot program to facilitate data sharing among the numerous parties involved in a deal. The city of Rotterdam worked with Deloitte and the Cambridge Innovation Center to record leases on a blockchain.
I thoroughly enjoyed the event and hope to participate again. Though real estate may be viewed as a conservative industry, I suspect next year’s discussion will have many more concrete examples on how technologies such as blockchain are modernizing the field.