Blockchain Trial Cuts Property Transaction Process Down Substantially
Proptech leaders across the globe have completed a trial which claims to cut the property transaction process to 3 weeks rather than 3 months using blockchain technology.
A successful pilot finalised by Instant Property Network (IPN) has demonstrated the potential to speed up property transactions by months by cutting the current average property process of 3 months to 3 weeks using a new distributed ledger-based system.
The global trial involved the collaboration of software developers, property law firms and banks which accumulated to 40 organisations in 23 countries across five continents to test the world’s first distributed ledger-based property marketplace.
Organisations included several UK businesses, such as Barclays, Clifford Chance, Ashurst, Baker Mackenzie, AXA XL, Royal Bank of Scotland, BBVA, Search Acumen, Shieldpay, and Swiss Re.
Search Acumen is pleased to announce it’s participation in the global trial as a digital search provider. Christian Woodhouse, Head of Data and Strategic Products at Search Acumen, said: “We’re excited to be the first land and property data provider taking part in the Instant Property Network’s (IPN) distributed ledger technology (DLT) trial.
“This has far reaching potential to turn the entire home buying and selling process on its head, forever. DLT has been an industry buzz word for some time now, and it’s great to be part of an international team of like-minded PropTech businesses who are putting that word into meaningful action.
“The results will help transform the current antiquated transaction process into one that’s modern and technology driven, where information is automatically verified and shared securely. The IPN trial has immense benefits for commercial property lawyers in particular, who want to be on the cutting edge of proptech for large corporate clients and developers”.
IPN said the new platform will cut commercial and residential buy/sell time by months, increase transparency, reduce risk and potentially save the property industry billions.
The trial, which was facilitated by enterprise blockchain software firm R3, ran end to end transactions using test data through a new distributed ledger to simulate property sales over a five day period.
It showcased how duplications and costly reconciliation processes could be removed from the buy/sell process, with the first transaction taking less than an hour to complete. As a result, it is estimated that, with the addition of off ledger business process and consumer decisions, the end to end buy/sell process could be reduced from over three months to less than three weeks. If these efficiencies were applied to the global property market it could equate to an annual saving of approximately $160 billion.
Currently, the property market is operating on an archaic paper and email-based foundation which, despite the use of technology in some aspects of the process, remains complex, slow, and inefficient. On average, eight parties plus the buyer and seller are involved in each property transaction, with information shared via dozens of documents, platforms, and databases. This leads to delays in transactions, errors, increased costs and uncertainty for all parties.
IPN has created a system where participants can join up their business processes and transact directly. Crucially, it doesn’t store data but has the ability to integrate with a company’s existing technology. This means that each party retains control over their own data – negating the risk of breaches and compliance issues and vastly reducing risk and the cost of continuous reconciliation of facts and data. The trial revealed that most companies will be able to deploy the platform in a matter of days – opening the door to widespread adoption throughout the property industry.
John Reynolds, Founder, and CEO of Instant Property Network said: “Increasing trust, speed, and efficiency is just the first step. The IPN network will allow organisations to build their own applications which should vastly improve the customer experience. Eventually, we believe it will enable the tokenisation of property which will fundamentally change how property works as an asset.”
John Danahy, Partner at Squire Patton Boggs, said: “The IPN is a potential game changer for the real estate industry globally. The IPN trial has shown significant industry demand for a platform that has the potential to transform the conveyancing process. For the first time, we are trialing a common platform that delivers unprecedented transparency, a unique smart property record and data immutability that only distributed ledger technology can provide. The trial has demonstrated a genuine use case for this revolutionary technology and will undoubtedly facilitate the development of entirely new products and services that will significantly improve the property buying and selling process for our clients across our global network.”
Tara Waters, Partner at Ashurst, said: “The IPN trial has demonstrated the efficiency of enabling multiple parties to work on a single property transaction using a shared technology platform. The addition of distributed ledger technology to residential conveyancing enhances transparency, trust and certainty in a process that for many can seem opaque, inefficient and outside of their control. We believe that the success of the IPN trial represents an important first step towards the digitalisation of the wider real estate sector. To have so many stakeholders participating is a testament to the transformative value that distributed ledger technology can bring to the sector and we look forward to being part of that transformation.”
Matt Taylor, Head of UK PropTech at Clifford Chance, said: “At Clifford Chance, we know that clients and stakeholders in the real estate industry want more collaboration and greater connectivity. The future of the industry is for all to operate across a common platform, and benefit from significant gains to efficiency and transparency. Instant Property Network not only offers the upsides of high connectivity with transaction participants, it also maintains tight control of data that is shared on the platform – a strong proposition in the industry”.
Dan Salmons, Director for Mortgage Innovation at RBS, said: “We are committed to making home buying as effortless as possible for our customers, and are at the forefront of innovations that enable us to do that. We see real potential for Blockchain to transform the process, and so have been delighted to take part in the innovative IPN trial. What has made a real difference here is that R3 has brought representatives of all the key parties involved in the process together, so as a result we can see the potential for a network of this kind to improve transparency and speed for customers, and reduce cost and complexity for all involved. IPN has given us our best view yet of what a future end-to-end journey could look like.”
Hannah Bernard, Head of Barclays Mortgages, said: “We are always looking for innovative ways that help to make our customer lives easier. We have been actively participating with the Instant Property Network and are excited with the possibility of significantly reducing the home buying process and removing much of the stress that comes with buying a new home.”
David E. Rutter, CEO of R3, said: “There has been plenty of talk about how distributed ledger technology could revolutionise the property industry, but little in the way of tangible results. This trial changes that. Not only has it shown that distributed applications work and the benefits are real and substantial, but it has also shown that there is a huge appetite in the market to evaluate it.”
IPN’s proposition is further strengthened by the team’s work with HM Land Registry’s Digital Street project, where they beat a number of large corporations to win a major R&D project to use distributed ledger technology to explore connecting a central land registry with businesses.
IPN is now onboarding dozens more private and public sector organisations to the next phase of the project and aims to release the next version of the platform in September 2019.
As a conveyancer, do you think using blockchain technology to lessen the property transaction process will work in practice?