FinTech Solutions for Growing Multifamily
A group of friends goes out for the night, but one of them forgets their wallet. One good soul in the group decides to pick up their expenses for the evening, trusting the friend to pay it back in a timely manner.
It’s a scenario that’s played out countless times over the decades, but it’s handled differently in modern times. Through apps like Venmo, repayment can be delivered instantaneously. The lending friend no longer must wait until the next time they see each other.
There is no reason rental payments shouldn’t be the same way. And essentially every other transactional facet of multifamily, as well.
Technology has made it possible for instantaneous rent payments, business-to-business transactions and even overseas B2B transactions that immediately adjust to the currency scale. Apartment operators that shy from these “smarter not harder” FinTech solutions are leaving something on the table, according to panelists at the 2022 Entrata Summit session FinTech Solutions for Growing Multifamily.“
Anything that you can automate and take away from the manual back-office work just frees you up to spend more time on the more important things in your business,” said Keri Millstein, Head of Platform Sales for Stripe. “And when these types of transactions are in the cloud, you’re able to get real-time learnings. You’re able to see what’s driving your revenue and what’s not.”
FinTech essentially consists of layering traditional bank processes into software solutions to create an accurate and more efficient process. As a result, New York-to-London transactions can be done immediately at scale, residents can have a wider variety of options to pay rent or receive deposit refunds and vendor payments can be quick and less bureaucratic.
“It’s just going to continue to grow as more vendors sign on,” said Rebecca Anthony, VP of Payment Program Management for Entrata. “The pandemic really made businesses want to figure out a better way, and the system is becoming so sophisticated with digitalization and automation that the B2B network alone processed 5.3 million ACH payments last year. I guarantee this year is going to be even higher.”
Millstein alluded to the idea that companies can “as a service” anything, and FinTech is the amalgamation of software as a service and banking as a service. She said the first phase of FinTech is getting the software live and processing recurring payments. Step two is adding all the “as a service” elements residents will want.
“The third phase is determining exactly what will drive the user experience to make sure they come back and that they stay,” Millstein said. “It’s everything from contactless payments to what you do with the data you collect to personalize the experience for them. There are more advanced things you can do, but it can be as simple as pre-populating the fields when they go to pay.”
While the concept remains largely ambiguous to some, cryptocurrency factors into the multifamily FinTech landscape, as well. Although residents aren’t yet making rent payments through crypto, select B2B and investor transactions have been done through this medium.
“For our intents and purposes, we’ll think of crytpo as currency no different than the pound or the Euro,” said Peter Singer, Deputy COO and BSA AML Officer for Fireblocks. “If you wanted to get started with it in your industry, you would partner with a company like Stripe. Your end user would pay you in USDC, then Stripe would send it to a company like Fireblocks, which would convert it from USDC into USD, and we’d push it to a bank account and wire the funds.”
Admittedly a complex scenario, Singer said the idea with crypto is to let experts and providers handle its nuances while keeping things easy and streamlined at the site level. But whether simple (digital rent payments) or complicated (cryptocurrency), there is no denying that FinTech is rapidly becoming a key facet of the multifamily industry.