Graceland, the mansion purchased in 1957 by a 22-year-old Elvis Presley at the start of his career, became a popular tourist destination for fans of the King of Rock and Roll following his death. In the 20 years that Presley lived in the home, he constantly updated the estate based on the changing times and his personal taste. The estate, which is visited by roughly 650K people each year, is essentially a time capsule of late 1970s styles and ostentatiousness, remaining untouched since the last time Presley left his home — right down to a room laden in army green shag carpeting, a bright yellow game room, and a carpeted kitchen.A visit to Graceland is a walk back in time and a reminder of how drastically decoration styles and housing designs have changed over the past 50 years. Real estate trends are constantly evolving, and not just styles and designs. As technology advancements such as artificial intelligence (AI) influence and alter virtually every business sector, real estate is no different. PropTech (short for Property Technologies) is rapidly altering the way that real estate is marketed and sold. In fact, it’s causing some of the banking industry’s bigger players to not only sit up and take notice, but also to invest in some of the new technologies. Defining PropTechPropTech is basically the marrying of real estate and technology, encompassing multiple technology advancements that have altered and are continuing to change the way that real estate is marketed, sold, and even managed. Well-known examples of PropTech include online real estate platforms like Zillow and Airbnb, as well as digital property management platforms such as Appfolio and Buildium. By shifting the search for properties from relying solely on in-person visits to offering virtual tours, technology radically enhanced the efficiency and specificity of real estate searches. Technology has also significantly cut back on the amount of legwork required of realtors to help clients identify potential properties to purchase. The Capabilities of PropTechBeyond tailored search functions, the AI capabilities behind PropTech allow for enhanced data extraction and industry analysis of the real estate sector and specific segments. Given the ability to digest and analyze extensive quantities of industry data, AI-backed algorithms can craft precise property valuations and assist realtors in pricing properties according to market conditions and buyer sentiment. PropTech can even predict which properties will sell fastest. According to research from Deloitte, 52% of corporate real estate developers have confidence in AI for determining accurate property valuations. PropTech is also being utilized by real estate management companies for property management. Some PropTech software may help cut costs by helping extend the lifespan of property assets by proactively monitoring systems and equipment and predicting issues before they require costly emergency repairs. Buildium found that 48% of property managers believe PropTech offerings can help boost revenue by identifying areas where money-saving efficiencies can be implemented. PropTech is also being used to assist with green building initiatives, as smart decarbonization strategies and technologies can help with energy optimization and reduce the costs of maintenance within such projects by an average of 20%, according to data from McKinsey. It was also found that due to climate-related issues and difficulties decarbonizing existing structures, roughly $7.5T of property value is at risk. PropTech’s Value to Financial Institutions
- PropTech’s impact on commercial real estate transactions. PropTech is transforming how community financial institutions manage commercial real estate transactions by improving risk assessment, enhancing decision-making, and streamlining processes.
- Smarter risk management. With predictive analytics, PropTech analyzes factors like market trends, economic indicators, and regional property data to identify risks and opportunities. For example, these tools can alert managers to potential property depreciation in areas with shifting business demographics, allowing lenders to proactively adjust loan terms.
- Precision in lending decisions. Real-time data monitoring enables financial institutions to respond quickly to changes in market conditions or regulations. This ensures loans are accurately priced based on evolving factors like geographic market volatility, reducing risks and improving loan performance.
- Streamlined lending processes. PropTech accelerates underwriting by leveraging large datasets, such as comparable property valuations and historical sales. Platforms with secure document-sharing and distributed ledger technology connect key stakeholders, speeding up transactions and cutting costs. Systems like Europe’s Coadjute demonstrate how these innovations create more transparent and efficient lending workflows.
- Staying competitive. By adopting PropTech solutions, community financial institutions can deliver faster, more accurate services while staying ahead of industry changes. These technologies empower managers to boost efficiency, mitigate risks, and elevate customer satisfaction, all while ensuring their institution adapts to a rapidly evolving real estate landscape.
While PropTech is still relatively new and continues to evolve, the changes it is spurring within the real estate sector are something financial institutions should keep a close eye on. Lower transaction costs and streamlined processes are appealing to all parties involved and financial institutions may even want to consider partnerships with some of these platforms and investigate the possibility of being included as possible lenders within the automated information provided to users.
