Financial technology, or fintech for short, is a burgeoning area, as evidenced by funding, media coverage, and the entrée of large companies into the space. It is an exciting time to simultaneously question the existing structures and processes in finance and to enhance, augment, replace, and disrupt the prevailing order.
Recent analyses have shown that intelligent investors are pouring tens of billions of dollars into this area. Of these, two specific areas are of real interest: AssetTech and proptech.
While all sub-categories of fintech are interesting, these two areas have garnered interest and focus over the last two years. The reasons for this are clear: the property industry is one of the largest in the world (residential real estate is the largest asset class in the world and asset managers today manage over $100 trillion in the US alone.) Large numbers are the natural breeding grounds for technology innovations; as such, AssetTech and proptech are the “new black.”
AssetTech is largely bound up in the world of data. Asset Managers manage trillions of dollars on behalf of clients and treasuries. Their goal is to optimize return while managing risk and being compliant. That said, Asset Management – especially for illiquid assets and securities – “is operationally broken,” according to Pulak Sinha, CEO of Pepper.
Data silos prevail and even those data streams that are delivered in actionable time-frames are error-prone. With advances in data integration, the speed and scale of cloud-native solutions, and the emergence of AI coupled with intuitive front-end systems, AssetTech can emerge as a silver-bullet of sorts to this incredibly important and tectonic industry.
Proptech, too, is largely about data. Take housing for instance. In any given market, something as simple as the valuation of a single house is determined by the interplay of hundreds of variables. Now, even in just the US market, there are 103 million residential plots, with an aggregate value of approximately $35 trillion.
Being “good enough” is not acceptable in a market of this size; enter proptech and AI-powered data streams that simultaneously offer a breadth of coverage and precision – for valuations and analytics.
“Proptech’s promise is manifold – precision, transparency, democratization, and disruption of opaque and archaic practices,” according to Malcolm Cannon, COO of Quantarium.
In both areas, entrepreneurs and innovators in concert with technologists, data scientists and industry experts are staking claims and creating a new reality. Certainly, both areas are fraught with hyperbole and overclaims but on the whole, the progress is exciting and worthy of note.
This column does not necessarily reflect the opinion of FinLedger’s editorial department and its owners.
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