Connecting the World in 2021 Through (Fin)Tech
- Jan 06, 2021
Uncertainty breeds innovation, and fintech is a perfect example of this. Prior to the pandemic fintech was somewhat taken for granted, but now the technology is one of the main enablers of social distancing measures. The industry emerged from the chaos caused by the 2007-2008 global financial crisis, and COVID-19 has increased the prioritization of fintech across industries.
Businesses rely on technology for payment processing, e-commerce transactions and accounting, and features such as contactless payments are the norm. In the interview below with Kosta Ligris, co-founder of Stavvy, we look at the future of technology in the real estate industry as it pertains to fintech.
You co-founded fintech startup Stavvy in mid-2019, when you stepped down from your role as CEO of Ligris, a company you launched in 2004. Tell us more about your entrepreneurial career.
Ligris: It’s a journey; every day is an opportunity to learn, ask questions and continue to grow. Before starting Stavvy, I founded Ligris Cos., a collection of professional services, real estate and consulting firms with offices in Boston, Newton and Wellesley, Mass., and ACES Title Agency—a title and settlement firm with operations in New England, New York and Florida. I now serve Ligris as chairman and continue to advise startups and founders, particularly in fintech and proptech verticals, both as an active angel investor and as an entrepreneur in residence at the Martin Trust Center for MIT Entrepreneurship.
Entrepreneurship seems to have become a buzzword as of late, but the reality for me has been that it’s about being in control of my own destiny and building organizations with people that teach me, challenge me and contribute to me being a misfit.
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How has Stavvy performed this year, in the shadow of the pandemic?
Ligris: The pandemic has certainly been an accelerant for Stavvy and the tools we build, as it has highlighted the vulnerability, fragmentation and inefficiencies that exist in lending transactions. We are fortunate to say that during this time of great uncertainty and upheaval our revenue and pipeline have grown substantially, as has our team.
The pandemic has resulted in significant layoffs, particularly within the tech industry. However, as part of the Boston tech community, we have been able to identify and hire some of the awesome talent that was searching for new jobs. Building a great team while helping members of our community has been one of our major successes.
What are the main challenges in the regulatory approach to fintech and digital financial services?
Ligris: The main challenge in the regulatory approach is that innovation in highly regulated verticals requires discipline, understanding and appreciation of the regulatory framework. It is critical for entrepreneurs and their teams to really understand both the purpose and the impact of this framework so that they can design and deploy it accordingly. Ultimately, the regulatory framework translates to an increased cost of customer acquisition and lengthy procurement periods impacted by the requisite due diligence.
Tell us about the main trends in fintech going into 2021.
Ligris: Some main trends I recognize are mobile-first and more mobile-optimized experiences; remote transaction tools; the use of machine learning and artificial intelligence to provide efficiencies and security in financial services and take on audit roles and regulatory oversight; cryptocurrency adoption; and robust payment platforms.
Technology has played an instrumental role in keeping many businesses running while applying safety measures. How do you see things unfolding in the year ahead?
Ligris: I think that industries that have traditionally not looked at technology as core to their business now recognize that it is a must-have. Look at payments and online ordering for restaurants. How many more restaurants could have survived the pandemic if they had a robust, scalable and integrated contactless order and payment system?
The real estate industry is not very quick in adopting new practices. What are the main changes the pandemic has brought on so far and how do you see the industry overcoming them?
Ligris: The industry is full of fragmentation, much of which has been fueled by incumbents, seeing certain tools, artifacts and data sets as competitive moats. As the development of software and platforms has become faster, scalable and less capital-extensive, we will see more API-forward platforms emerge that will and should democratize some of these artifacts.
Real estate brokers are increasingly utilizing video showings and virtual floorplans—this trend will likely continue and ultimately become the norm, along with virtual home appraisals and closings. Hybrid transactions are the first and most likely an incremental step toward a fully digital experience—essentially, 90 percent of the signatures required for transactions have moved to e-signing platforms. Fully digital experiences will require greater adoption of e-notes and nationally recognized digital/remote notarization or other innovation that provides adequate identity proofing.
Large lenders, investors and servicers are the greatest influence and need to partner with fintech companies or create robust innovation or transformation initiatives.
Brokers and appraisers are among the real estate professionals who benefited the most from technology in 2020 as they could perform their roles via communication technology. Will this trend become the norm going forward or is this temporary?
Ligris: In my opinion, yes for brokerage, and no for appraisers. Brokerage is a core personal and local relationship, and network, technology and platforms will continue to create efficiencies in communications, marketing and transaction management. Appraisers have not adopted some of the most innovative tools and, in many instances, have actively resisted them. Big data, LIDAR, drone, ML and AI, and other technologies can contribute to more accurate, faster and detailed valuations.
There is a lot of talk about the hybrid workplace. What are your thoughts on this model and how do you envision technology keeping up with the new requirements?
Ligris: The pandemic has exposed the threats and weaknesses with respect to remote work, but has also highlighted all of the opportunities. There are countless examples of employees and roles that have moved to fully remote and efficiency/work production has not been impacted.
This is great news for companies that can decrease real estate capex and exposure. For employees, it means that they can live where they want, save commuting time and costs and buy or rent “more home.” It can impact their quality of life, costs of living and proximity to family and others.
Technology is what makes all this possible. A decade ago, this could not happen, and frankly, back then, this pandemic would have been even more devastating. Imagine what 10 more years of innovation will do—the future is very bright and software is eating the world.
What are your thoughts on the housing industry following the health crisis? What will the future apartment look like?
Ligris: Developers must now consider how this pandemic has impacted safety and comfort. Although I hope I am wrong, this is unlikely to be the last pandemic/epidemic to cause concern and disruption. As such, look for direct impact on common areas, density, traffic and the ability to limit exposure outside of apartments.
The value and allure of large, common-work, entertainment and recreational areas has faded. Expect to see a redesign of common areas, especially amenity floors. I also expect to see multiple or redesigned lobbies that limit or control traffic. As we learn more about airborne and surface transmission, expect to see more thought and innovation around HVAC, filtering and surfaces.
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Will developers make room for home office space in apartments or will this feature be reserved to single-family homes?
Ligris: I think developers need to consider and factor in space for work at home when designing floorplans. I don’t see this going away anytime soon and I don’t believe that this is limited to just homes. In fact, single-family homes generally tend to have more options and flexibility for a home office. I believe that this is more relevant for apartments and condominiums going forward.