The emergence of ground-breaking financial technology (or fintech) has brought with them a revolution to the banking and business world. In the recent years, fintech has grown by leaps and bounds to cover a broad variety of technological innovations in retail banking, investment, financial education, and even crowdfunding. As a result, individuals and businesses are no longer dependent on banks and insurance companies as the sole financial service providers (and even get these banks and companies to rethink how they manage their own real estates!), and as most of you would have guessed by now, this would also inadvertently affect the way people do business in the real estate industry
But in what way?
In 2015 and 2016 alone, Malaysia has become the first SEA nation to come up with laws for crowdfunding and even had an association set up for fintech businesses in the country to regulate matters (check out this and this news article if you don’t believe us!). Not only that – it was also reported earlier this year in January that RE/MAX Malaysia , a real estate company led by Kellerhhof International Sdn Bhd, has successfully amassed RM322, 888 from its equity crowdfunding campaign (via crowdplus.asia), which will be used to operate and expand its business in Malaysia.
Equity crowdfunding, as mentioned by Alex Gomez, the Chairman of RE/MAX Malaysia, makes it possible for real estate companies to procure the capital they need to start rolling and expanding their business in the country even when property sales are slow. At the same time, this also provides everyone – us included – an alternative scheme to pitch our money in the real estate business (ironically, without having to buy any real estate!) in exchange for company shares and dividend payouts.
Impressive? The case study above is actually just the beginning of how the emergence of the fintech sector would change the way real estate companies, investors, landlords and even tenants deal with one another in the future, especially in terms of money transaction methods and other financial services such as insurance and loans.
Some other ways fintech will or could potentially affect the real estate industry in Malaysia:
– Changes in operating and legal costs as more financing and money transactions options without involving bank-related services and laws become available.
– Transportation and communication costs become more affordable.
– Availability of alternative credit decisions.
– Involvement of digital investment (robo-advisors) in real estate investment
– More demand for real estate as banks and other financial institutions expand their premises (as they reach out to collaborate with fintech startups or create their own fintech labs) in response to the increasing need for office space. And of course, fintech startups need office buildings too!
A simple but important conclusion:
Things are merely starting at the moment, but as a disruptive innovation, fintech will negatively impact businesses and agencies that refuse to adapt to it or fail to foresee how others would react to its emergence, risking market share loss or even becoming irrelevant altogether. Therefore, it is important for real estate investors to start familiarising themselves with the latent potential of fintech and the possibilities they could generate in order to stay competitive and relevant in the market.
Find out more about fintech below in this awesome TED talk:
