From Wall Street to Slow Street: Navigating the Differences and Embracing Positive Disruption

Posted on

March 21, 2023

For the last 20 or so years, I’ve lived and breathed Investment Banking. I’m used to an environment where the pace is relentless, there is always a sense of urgency and time is money.

So, transitioning from the fast-paced world of Capital Markets to the Property Industry over the last few months has been an eye-opener and I’ve realised just how different these two worlds truly are.

For example, in Capital Markets, the time between trading and ‘settlement’ (the settlement cycle) is just a few days, and there are moves to further reduce this to one, or even zero days. In the property industry, the pace is much slower. For example, and as many of us know, it can take three to six months to sell a property. And it is not just the pace, it’s also expensive. Often, multiple intermediaries are involved, which can drive up costs significantly. It’s very different from the streamlined processes I’ve been used to in Capital Markets.

However, with some analysis, I’ve found out that the housing market is being disrupted and it’s finally starting to see some real change.

Firstly, there is the emergence of iBuyers, which benefits sellers by creating greater liquidity in the market and reducing the time a house stays on the market iBuyers are also helping to enhance the valuations model, with a much greater vested interest in getting a property’s price right.

Secondly, schemes like MyIdentity are determined to streamline the onboarding process. Identity Verification, Know Your Client and Anti Money Laundering KYC/AML processes which can currently take days could be reduced to hours or minutes. This will remove the need for each service provider such as lenders, estate agents, and conveyancers to carry out separate checks, making the process more efficient. However, this means the traditional service providers lose a revenue stream, so they are not supporters.

Next, the lenders’ risk departments are changing their ‘blanket’ property risk evaluation models of properties. This could lead to personalised and targeted approach to lending which in turn should increase the number of loans approved.

Then, to reduce rising conveyancing fraud and payment diversion fraud, the Australian PropTech company PEXA have entered the UK market with their standardised and robust settlements process.

Lastly, messaging platforms such as Coadjute are disrupting the market and adding transparency to all stakeholders in the transaction.

As the property market continues to experience positive disruption and stakeholders receive timely information, we can anticipate a significant reduction in the time it takes to purchase a property. While I’m not suggesting were on the next day settle cycles like we see in Capital markets anytime soon, it’s worth remembering that not too long ago, that timeframe was 1 month, and securities were delivered physically by clerks in the city.

The continuous progress in technology and innovation certainly generates anticipation for what lies ahead in the real estate industry. This will, however, greatly impact the operating model and revenue streams of the established industry players. So, it will be interesting to see how they react to these new disruptors.

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