PropTech’s Potential is in the Hands of its People
Human Capital: The Value of People in the Property Industry, Defined.
by: Ian T. Staley, MSM. (VP of Business Development, Ubitquity LLC).
Originally published on UNISSU® themes. Read it here.
“Human Capital”, per Investopedia, is defined as an intangible asset or quality not listed on a company’s balance sheet. It can be classified as the economic value of a worker’s experience and skills. This includes assets like education, training, intelligence, skills, health, and other things that employers value such as loyalty and punctuality. Human capital is this critical underlying asset that is the driving force behind the adoption of certain technologies and the rejection of certain technologies in any industry. The property industry is no exception to this rule.
The power of PropTech is in the hands of its people. This sentence offers insight into a fundamental truth, in that it describes the modus operandi, that innovation and adoption of that innovation is fueled by human capital.
According to the Journal of Applied Economics, an increase in human capital may induce a rise in the number of innovative entrepreneurs and products, thus indirectly spurring economic development through the channel of innovation. In fact, the crucial role of innovation for economic development and growth has been underlined by a large literature in this area. So, it is well studied and documented that the people lead the charge in the development of technology that is leveraged for economic growth. We can confirm this today in the property industry from the prominent rise in the development of applications that involve artificial intelligence and machine learning, blockchain, geospatial, internet of things, sensors, virtual and augmented reality, and many others. In order for this strong innovation to gain long term traction, it needs to be applied as value-adds to organizations by, to put it simply, solving problems.
Property Technology that is built under this ruleset of providing a solution to a market need will survive, and others that look to capitalize on the hype to make a quick buck will be left in the past, like yesterday.
Per the Property Journal, “Property Technology,” more commonly called PropTech, is defined by RICS (Royal Institution of Chartered Surveyors) as a term that refers to all aspects of innovation and how this affects the built environment. This includes software, hardware, materials, or manufacturing. Property Technology that is built under this ruleset of providing a solution to a market need will survive, and others that look to capitalize on the hype to make a quick buck will be left in the past, like yesterday.
The Emergence of COVID-19 and its Effect on the Adoption of PropTech by its People.
Today, we see a golden opportunity for the acceleration of mass adoption of property technology, as PropTech solves the problem of running a property-based business during COVID-19. Per Mihir Shah, Co-CEO at JLL Technologies, many companies providing tech-enabled real estate services are well-positioned during this pandemic period. JLL continues to service clients using the JLL Tenant Experience platform to immerse tenants in 3D virtual tours and build 3D space plans. LandTech, a U.K. startup, has seen increased demand from investors looking to source and assess property development opportunities remotely. Unforeseen circumstances like this one that we currently find ourselves in open many doors, but it is up to the people to walk through them. Adaptability, flexibility, and the grit-level of a PropTech firm’s people determine whether they can capitalize on the pandemic’s positive impact, in terms of acceleration of opportunity for adoption, on the real estate industry.
Rainier Title, a title insurance, and escrow service provider based out of Seattle, Washington in the USA, recently took hold of such an opportunity by partnering with Ubitquity to integrate a blockchain-based solution to its closing workflow. Enhanced cryptographic security to combat the increase of cybercrime during COVID-19, automation of escrow closings by leveraging smart contracts, and leveraging its data for future-proofing its client offerings and cutting operational costs overtime were just some of the many reasons why Rainier Title, a Washington State-based title, and escrow firm chose to adopt Blockchain-as-a-Service (BaaS) during the pandemic as its newest PropTech solution. Above all, this deal was made possible by connections via business relationships based on trust, which allowed the two entities to meet on the level and strike a deal that was mutually beneficial for each party today and into the future.
Beyond emerging PropTech partnerships like Rainier Title and Ubitquity being propelled forward during COVID-19, one major trend due to the pandemic’s impact on closing operations that have prompted adoption on a massive scale in the USA is Remote Online Notarization (RON). According to The Housing Wire, together, the Mortgage Bankers Association, the National Association of REALTORS, and the American Land Title Association drafted a model emergency notarization act calling for the uniformity and legal certainty of remote notarizations. The National Notary Association, stated that each state’s guidelines for remote notarizations vary from permanent RON laws to temporary emergency remote authorizations. However, the combined association’s Model Emergency Notarization Act intends to perform as uniform legislation across the U.S., according to ALTA. Due to COVID-19, there was a sudden rush for the adoption of this previously moderately adopted technology of digital notary. The people in the closing industry chose to swim, rather than sink, so they adopted RON solutions via white-labeling existing products, integration with the top RON providers in the industry, and by good old fashioned hard work in developing their own RON platforms for digital closings.
Currently, the market has caught up to speed with most of the major players in the closing process have found a RON solution for its workflow to offer its clients. This sets the market up to be a level playing field, and now the competitive differentiators will be a main focus for firms in the industry to set their RON solution apart from the rest. Blockchain-based digital notary support comes to mind as a competitive differentiator for this space. The benefits of leveraging blockchain technology for notary public services, as noted by Forbes, stated that five notable benefits include: enhanced security of stored documents and deeds, private key access to the documents, secured storage on the blocks with appropriate timestamps, seamless transfer of document ownership through the network, open transactions on the network for the verification process. PropTech firms like Ubitquity intend on leveraging its innovative people to launch its newest product offering, NotaryBlock™ — which improves security, transparency, and trust in digital notary workflow. One Block At A Time®.
Of course, this pandemic will only help push forward the adoption of PropTech by the industry so far. Therefore I would like to go over four key areas that PropTech’s people can focus on to drive adoption, during COVID-19 and post-COVID-19.
Four Key Areas that the People of PropTech Should Focus on to Spur Mass Adoption.
- Leaderinnovators need to consistently immerse themselves in current information regarding emerging property technologies’ value offering to the industry. Leaderinnovators need to go through a baptism by fire type of experience by researching and learning the ins and outs of the technologies that are making/can make an impact on the property industry. Learning is necessary to understand the tech and quell the fear of the unknown that humans have naturally. Once these leader-innovators become enlightened through their research then they can spread the PropTech gospel to others, as they now have a strong understanding of its useful application in the marketplace.
- Leaderinnovators need to spread the good word of PropTech. Educating people on PropTech about its use cases and how it is a benefit to remedying workflow inefficiencies and the like, is crucial. Businesses, since the dawn of time, want to know how they can be more cost-effective, drive more revenue, and be more agile in the marketplace. If leader-innovators in the PropTech industry can get this point across clearly then it is a win for them and for PropTech.
From the other angle, property industry experts, from the front lines to the c-suite, need to educate product developers on the parameters for development to create better-equipped products that solve market needs today and into the future. The better the descriptions of the rule sets to meet real-world application, the more successful the product will be.
Overall, education is necessary to expand understanding from the esoteric to the exoteric. Bridge the gap, be an API (Application Programming Interface) of sorts, and translate the value narrative from those who know to those who do not know.
- Breaking bread with other connections is absolutely necessary. Connect with likeminded people through business relationships. Openness to partnerships is fundamental. Find common ground in solving problems together, like workflow inefficiencies, communication inefficiencies, security inefficiencies, and other value-adds by leveraging PropTech as a tool/resource to solve market problems.
Getting involved with business leagues and industry associations that bring decision makers from the private and public sector together is essential. Per the United Nations, the main objective of the Public-Private Partnerships (PPPs) area is to increase the expertise of governments to identify, negotiate, manage and implement successful PPPs projects. If regulators are educated on the value of PropTech then more and more legal infrastructure will be introduced and passed — which would solidify PropTech’s value in the market. People coming together from different sectors to find a solution for the whole of humanity is excellent for PropTech’s chances for long term adoption.
- Invest not only in capital, but time and effort live and breathe your passion. As Robert Kiyosaki stated, “Passion pushes you to learn more, create more, and to create better. Best of all, it’s contagious.” This is the fuel that is needed to drive the PropTech machine.
Overall, PropTech was created by the people and for the people — this is no different than any other technologies that were developed to provide market value and are disrupting other industries. For any technology, tool, or resource to be adopted by a marketplace, it must be first adopted by the industry’s people.
The market need for the PropTech is clear, and it has become more apparent due to the pandemic’s recent impact on the industry, globally. It is also apparent that due to global growth projections, PropTech is one of many tools that will need to be leveraged to aid humanity in the future.
The Said Business School at the University of Oxford reported that by 2050 the world’s population is expected to double, with 90% of that growth predicted in Africa and Asia. For the first time in our history over 50% of the world’s population is living in urban areas, and this figure is predicted to increase to 68% by 2050. This poses many questions of shelter, needs provision, resource consumption, and equality. The PropTech industry has a salient part to play as a contributor to human welfare.
So, to the startups and visionaries offering PropTech solutions to the market — I salute you. Let us continue to innovate, develop, learn, educate, connect, and invest in PropTech so that we may offer humanity a brighter future.