Removing Friction in Proptech with the Power of Embedded Finance

Team Bond
Date Published
January 27, 2022
Read Time

Proptech, or property technology, is revolutionizing the real estate industry. By leveraging innovative technologies, proptech companies are changing the way we find, buy, and rent properties. From streamlining the search process to improving communication between buyers, sellers, and service providers, proptech is removing friction that has plagued the real estate industry for decades.

However, when it comes to payments, many proptech companies are still relying on traditional methods that are both time-consuming and error-prone. This includes manual processes, separate flows for different users, and inaccuracies in financial transactions. These inefficiencies create friction in the user experience and can impact the bottom line for both buyers and sellers.

So, what's the solution? The answer lies in embedded finance.

Embedded finance refers to the integration of financial services within non-financial companies, allowing them to offer financial products to their customers directly. In the context of proptech, embedded finance can be used to streamline payment processes, reduce the risk of financial inaccuracies, and improve the overall user experience.

One of the biggest benefits of embedded finance for proptech companies is the ability to offer a seamless, all-in-one experience. With embedded finance, proptech companies can integrate payment processes directly into their platforms, allowing buyers and sellers to complete transactions in a single, convenient location. This eliminates the need for manual processes, reduces the risk of errors, and improves the speed and efficiency of the transaction process.

Another key benefit of embedded finance for proptech companies is the ability to generate new revenue streams. By offering financial services such as mortgages, insurance, and other financial products, proptech companies can earn additional income from fees and commissions. This can help to diversify their revenue streams and increase their overall profitability.

Embedded finance also has the potential to improve the security of financial transactions in proptech. By integrating financial services directly into the platform, proptech companies can ensure that all financial information is stored in a secure and compliant manner. This can reduce the risk of fraud, hacking, and other security breaches, providing peace of mind for both buyers and sellers.

In addition, embedded finance can help proptech companies to gain a competitive advantage. By offering financial services in addition to traditional proptech offerings, companies can differentiate themselves from their competitors and provide customers with a more comprehensive set of services. This can make them more attractive to customers and help them to build a more loyal customer base.

Finally, embedded finance can help proptech companies to better understand their customers and their financial needs. By providing financial services, companies can gain insight into their customers' spending patterns, borrowing behavior, and other financial data. This information can be used to develop new products and services, improve existing offerings, and better target marketing efforts.

One of the most useful and easiest to implement forms of embedded finance that property technology companies can deploy is launching their own credit card. These cards can be commercial cards for those in the B2B space or credit builder cards designed for individual consumers. 

As an example, property managers can launch a branded credit builder card for their tenants that offers rewards if they use it to pay their rent, associated fees and even repairs. In addition to access to rewards, these cards can also help tenants build their credit while avoiding the dangers of debt. On the other side the property manager gets a new source of revenue through interchange as well as valuable spend data and a branded, integrated customer experience.

Property technology companies that work with other businesses can offer a commercial credit card to their business customers to help them consolidate and manage their related expenses on one card. These high volume transactions promise to deliver significant interchange revenue as well as the other benefits mentioned before.

In conclusion, embedded finance has the potential to bring numerous benefits to proptech companies. From improving the customer experience and generating new revenue streams to enhancing security and gaining a competitive advantage, embedded finance can help proptech companies to grow and succeed in the long term. If you're a proptech company looking to remove the last bit of friction in your platform, it's time to consider incorporating embedded finance into your offerings.