The slightly opinionated guide to BridgeTech
By Hannah Duncan -
Technology has come a long way since the droning squeal of dial-up connections, and fiddly little online banking calculators.
Over the past decade, and especially throughout 2020, humanity has made record-breaking strides in creating epic financial technology (FinTech).
FinTech has been steadily expanding and specialising into new areas, including (drum roll please) bridging finance.
So here it is! Your complete and only slightly opinionated guide to bridging finance technology, BridgeTech.
To help me put this guide together, I spoke to:
- CCO and Co-founder of Native Finance, Prasanna Kannan
- Co-founder and CEO of Lendlord, Aviram Shahar
- Commercial Director of United Trust Bank, Buster Tolfree
What is BridgeTech?
BridgeTech is simply technology for bridging finance and bridging loan services.
Of course, in theory, BridgeTech is nothing new. Bridging lenders log into databases, check credit scores and transfer funds online every day. They have done for years.
What is new however, is the rapid and revolutionary pace of digital transformation in the space today.
I quizzed Kannan, to give us a more technical updated definition. And he didn’t disappoint! According to Kannan, BridgeTech is: “Technology that optimises and streamlines the process of accessing bridging finance”. Nicely said!
He adds, “Tech in property finance is unique in that it straddles the established FinTech sector as well as the much newer PropTech [property technology] sector in the UK” … More on that later!
How did BridgeTech begin?
FinTech emerged as a sort of rebellion against traditional financial services in 2008. Customers were willing to put their trust elsewhere, and techy people were happy to build them products.
Advancements become tailored to specific financial sectors, and sub-categories of FinTech developed. For example, payments technology (PayTech) and lending technology (LendTech). As a sub-category of LendTech, we have BridgeTech.
As Kannan explains, “Bridging finance has evolved from a nascent sector that emerged after the GFC [Great Financial Crisis] to a highly competitive one with new lenders appearing by the day”.
Technology continues to develop and cater for services at breakneck speed. And we’re now on the cusp of a vastly improved digital era in BridgeTech today.
Who uses BridgeTech?
BridgeTech is widely used by bridging lenders and their consumers.
It’s often developed by specialist white-label and third-party tech firms. Native Finance is one such company, they build smart tools to make the journey seamless. “Our primary customer is the finance broker”, Kannan explains.
How is BridgeTech used?
BridgeTech can be used in so many different ways – it’s impossible to list them all! Remember, everything from the website to the data-base is technically BridgeTech.
Here’s a quick run-down of some of the main ways that BridgeTech is used today:
To do more with data
Data, data, data! First it was the new oil, now it’s the new air… data is EVERYTHING!
SPOILER ALERT: Shahar told me all about how Lendlord uses data collection and verifications to underwrite clients in just three minutes … More on that below.
Native Finance also leverage data to help customers quickly, “Compare and access over 360 lenders (many of them bridging lenders) for their deals”.
And as Kannan explains, “Through our Track tool [finance brokers] are able to use real-time public data to map over 1.5 million property loans and look at all historic bridging activity in the U.K”
One area of BridgeTech that everyone agrees on is that it accelerates the process to previously impossible speeds.
Lendlord, underwrites loans for it’s users in a mere three minutes. And yep, before you ask, this does include all the best-suited terms and interest rates. What’s more, the speedy tech transfers the loan within just five days. “One of the most important things with bridging is the speed”, Shahar explains, “Technology can dramatically streamline the process”.
Even if you do not have a fully digital offering, BridgeTech can still cut admin time right down. This is the case with United Trust Bank, “We have also leveraged [BridgeTech] to allow us to introduce faster internal processes”, Tolfree elaborates. “And integrated with AVM (Automated Valuation Model) providers to give a slicker and faster decision journey”.
Leverage open finance
BridgeTech also opens the door for a world of open finance (also known as ‘open banking’) potential. Mortgages and open finance are a match made in heaven! They give banks the data they need to underwrite and make it super convenient for customers.
What’s more, open finance helps Lenders expand their services. Just think of that! For example, bridging lenders could integrate with accounting platforms, investment hubs, savings accounts, insurance, pensions and more for a seamless customer experience.
Improve user experiences
BridgeTech is used to enhance the interface journey. Tolfree explains, “We have introduced a broker facing application portal, which allows us to engage quicker and earlier with our introducers”.
Nearly all lenders use BridgeTech to reduce frictions and improve the onboarding journey. They’re not alone! In 2021, Algorithmia found that 76% of enterprises are prioritising artificial intelligence and machine learning, mainly for improving the customer experience.
How do online bridging loan providers work?
Lendlord took BridgeTech to a whole new level. The ultimate blend of bridging finance and technology … It’s surely the most BridgeTech-tastic lender on the market.
So, who better to answer this question than the co-founder and CEO himself?
For Shahar and the team at Lendlord, technology is used to streamline processes in three important ways:
- Firstly, through an online terms generator, “Our technology collects the relevant data to generate indicative terms in a few minutes”, Shahar explains.
- Secondly, with the online applications, “Our technology allows the customer to submit online applications and track the entire process online from any device”, he elaborates.
- And thirdly, with underwriting, “Our technology helps the underwriter to make a fast decision”, Shahar concludes.
Are online bridging loan providers part of a wider eco-system?
Online bridging lenders like Lendlord may be thin on the ground now, but they are growing up alongside a range of sparkling new and exciting services.
One which caught my eye is a start-up lender called Fronted. Fronted helps renters with their deposits, and customers pay them back in instalments. Like Lendlord, they’re quick and 100% online. The industry is clearly interested as they’ve already enjoyed investment from the likes of Monzo and Wise.
Over the pond, Manzil is a PropTech with a difference – it caters to Islamic customers. This online disruptor is now branching out from PropTech to LendTech as it offers payment plans on essentials like cars or phones too.
All over the world, innovative disruptors are popping up like daisies. LendTech, PropTech, BridgeTech… you can feel the beginning of an evolution in the air.
Can BridgeTech replace humans?
BridgeTech is great for transforming mundane admin tasks into super speedy processes. But it cannot replace a human lender.
Humans and robots have wildly different, but equally vital skill-sets. As Tolfree explains, BridgeTech “is all about creating efficiencies so that the system does the admin, and the humans do the value-add”!
Human lenders are very-much needed, both on the front and the back end of the process.
On the front end: Many customers still prefer personal interactions
In 2018, a study by PWC showed that 59% of consumers still preferred to apply for a loan in person. COVID-19 may have brought that number down, but there does seem to be an underlying preference for people over robots hardwired into our psychology.
Kannan explains more, “The main disadvantage is that the property world is ultimately a people-driven industry with a lot of personalisation”.
For Kannan, it’s clear that the most successful lenders will be those that embrace a hybrid model. “It is important that new tech platforms aim to enhance the existing system as opposed to reinventing the wheel”, he explains.
On the back end: Many specialist cases require human intervention
Collecting and using data effectively is one of the main strengths of BridgeTech.
But not even online lender Lendlord, can do everything with a robot. “The underwriting process can be supported with technology”, explains Shahar. “But some parts still need to be done manually, for instance property valuations on high LTV cases”. Clearly, there will always be a need for some human checks and intervention -especially for unique or complex cases.
What’s the future of BridgeTech?
The million-dollar question! Nobody could have ever predicted clunky, fixed-landline telephones would evolve into something that could fit in our pockets. Or that these smart phones would become so intricately woven into every fibre of our daily lives.
So, how could we possibly know where BridgeTech is going? It’s just in it’s infancy.
Nevertheless, good ol’ Kannan gave it a stab. As an expert and co-founder in the field, he has a better insight than most. “I fully believe in a much more tech-based future for bridging finance and the property finance sector as a whole”, he begins. “But I also believe that this will happen through a series of incremental changes that will lead to the industry rapidly changing over the coming decade”.
So, Kannan predicts it will be a slow burn. Bit by bit, we will see a whole new world of BridgeTech developing, like a tiny seedling growing into a great tree.
For my part, I think we’re about to see a whirlwind of new BridgeTech apps and disruptors emerge from the debris of the COVID-19 pandemic.
In 2008, people lost trust in banks which set the stage for the emergence of FinTech. In 2020, businesses couldn’t access loans, and many people struggled to get mortgages.
This set the scene for …? Who knows! I’m going to bet LendTech, BridgeTech and PropTech.
Get ready Lenders. Brace yourselves Borrowers. A new dawn is rising.