What is a PropTech? Differences with Fintech


ProPtech, Fintech, FemTech, EdTech… The wide world of technology has given rise to a new generation of unstoppable neologisms that arise to baptize emerging projects from different sectors. Today we are going to explain what the acronyms PropTech and Fintech consist of, as well as their main differences and examples of startups in these fields.


What is a PropTech and what is it for?

As you know, technology is transforming the world, and the real estate sector was not going to be less. As a result of this evolution, the concept of PropTech arises, which is the acronym for Property (property) + Technology (technology), also known as Real Estate Technology.

In other words, startups that offer all kinds of technological solutions in the real estate sector, from marketplaces and software development for housing construction to investment in tokenized real estate and augmented reality applications for virtual tours of real estate. In short, PropTech is any company that uses technology to improve or innovate services within the real estate sector.

The Internet of Things (IoT), Artificial Intelligence (AI), Virtual Reality (VR), Big Data (BD) and Blockchain Technology, among others, are responsible for this revolution.

Characteristics of PropTech companies

Next, we have compiled the main characteristics of technology companies in the real estate sector, take note!

  • Uses technology to improve or reinvent services in the sector.
  • It combines online analysis tools that motivate the sector to investigate new challenges and develop new solutions for the sector.
  • It democratizes the real estate sector for clients, since it allows for everything from virtual tours of a home to investing in tokenized properties or providing detailed information on some establishments.

The PropTech market is very broad, so different categories are often used to divide the new companies in the sector:

  1. Home automation and Internet of Things (IoT). Home automation, connectivity, etc.
  2. Collective real estate investment platforms. Access to small investors, short-term benefits, independence of assets and reduction of bureaucratic procedures, among others.
  3. Property Management (PMS). It allows hotels or other establishments to manage different tasks, such as reception, reservations, check-ins and check-outs, etc.
  4. Real estate portals. They carry out the same activity as traditional agencies, but using electronic means.
  5. Blockchain (chain of blocks). Real estate tokenization is gaining popularity.
  6. Real estate Big Data. It allows the analysis of trends in the market, as well as the management of geolocation data.
  7. Virtual reality. It is widely used to carry out virtual tours when buying or selling a home, especially during the COVID pandemic, where there are greater restrictions on safety distance and travel.

However, the term PropTech can cause confusion when differentiating itself from the FinTech sector. So much so, that their relationship has given rise to the concept of Real Estate Fintech or technology-based platforms that facilitate the trading of real estate assets.


3 differences between PropTech and Fintech

Neither PropTech is a subset of FinTech, nor is FinTech a part of PropTech. We have compiled the main differences between both concepts so that you have them on hand whenever you need them:

  • Definition

While PropTech are all the companies that offer technological solutions to improve some aspect of the real estate sector, FinTech are the projects or startups that transform financial and banking services thanks to the technological disruption in the digital environment.

  • Neologism

On the one hand, PropTech is an acronym made up of the English words 'property' and technology. On the other hand, FinTech is the acronym for the terms 'financial' (financial) and technology (technology).

  • Origin

FinTech 1.0 marked the first era of this sector, between 1886 and 1967. It was not until the 2000s that the term FinTech 2.0 took shape, led by financial institutions, and 3.0 from 2008.

Although it is true that the PropTech sector began to take its first steps in the 2000s, with initiatives for online real estate portals and specialized web pages, it was not until 2014 that its true technological revolution began.

Remember that both concepts can be merged into one to offer disruptive solutions in the real estate sector. When they come together, Real Estate Crowdfunding or FinTech arises. Thus, real estate investment platforms are being seen that connect investors with attractive real estate opportunities.


PropTech and Fintech examples

Now that you know what these paradigms consist of and what their differences are, we are going to show some outstanding examples throughout their evolution:

  • PropTech companies

Idealista, Airbnb and Homeway (now Vrbo) have been some of the first references in the sector in Spain. However, the growing competition between companies in the sector and the increase in technological investment have accelerated proposals for improvement with startups such as: HauxT (tokenization of real estate), Kasaz (purchase and sale of flats in Madrid and Barcelona), Badi (rental of P2P rooms) and Housfy (online real estate agency), among many other initiatives.

  • FinTech companies

The first FinTech signs were given more than a century ago with the electronic funds transfer system in the US Federal Reserve Banks. Currently, there are thousands of initiatives developed in the finance and technology sector, such as: Adyen (multi-channel payment services), AvantCredit (personalized personal loans), Captio (business expense management), Arboribus (crowdlending platform) and Etoro (investment social network), among other revolutionary proposals.


Final reflection on technology in real estate

In short, there have been many technological advances that have significantly improved the capabilities of the real estate sector in order to buy, rent or sell properties. The enormous number of services offered in this sector means that the opportunities for reinvention and transformation in the digital field are endless.

The real estate sector has already risen to the digital transformation. Now, technology is changing the configuration of the industry's value chain for a very simple reason: it can save the brick.

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