How proptech innovators can solve three common challenges

By Manpreet Bagga, Executive Director, Technology Banking Group, Wells Fargo

Few industries are as established as real estate. After all, humans have been buying, selling, and maintaining homes and public spaces for centuries. It’s no wonder many of the processes involved are still manual, paper-based, and cumbersome. 

Enter the proptech companies. 

These digital innovators are rapidly transforming the industry with sleek and efficient applications. They’re replacing disjointed systems, clunky user interfaces, and the need for in-person transactions with modern designs, time-saving applications, and new ideas.

• Shopping for a new apartment? Why not pay your security deposit as a subscription rather than a hefty one-time fee.
• Need a contractor? Proptech makes it easy to find the a qualified remodeler, electrician, or handyman. 
• Closing on a commercial property? Consider blockchain transactions for secure record-keeping.
• Ready to invest? Fractional shares let you buy real estate with less capital. 
• Managing amenities for high-end tenants? AI can predict lighting, climate, and even building maintenance needs. 

Proptech market continues to soar

These are just a few ways proptech solutions can enhance real estate. In 2024, analysts valued the global proptech space at more than $40 billion; they estimate the market will reach nearly $180 billion in the next 10 years.

Proptech innovations benefit audiences across the real estate spectrum. Advantages include:

• Digitizing and streamlining processes
• Improving sustainability
• Mitigating fraud and risk
• Enhancing the user experience

Yet making headway is not without its difficulties. Proptech companies need to overcome the same challenges as disruptors in other areas of the innovation economy, from securing adequate funding to hiring the right team to carving out a market niche. 

Proptech companies must also navigate the many regulated aspects of real estate, including mortgage lending, taxes, insurance, and other rules. 

One of their toughest challenges is more fluid: injecting technology into a sector long known for personal relationships and face-to-face transactions. Digital innovations must balance convenience and efficiency with security, reliability, and most importantly, trust. 

Pair up with a banking leader who knows your industry

Working with the right resources—including your commercial bank—will set proptech companies up for success. As you evaluate your connections, look for experts who can help you overcome these proptech challenges.

Challenge 1: Navigating complex sales cycles. Developing a digital tool is just the first step for proptech innovators. Finding the right buyers—especially when selling into enterprise customers—can take time. Behind the scenes, it’s essential to manage cash flow wisely to navigate sales cycles that can span months or even years. 

Challenge 2: Building your roadmap. Once your solution launches, it’s vital to identify the right features and path forward. Early-stage customer input is critical—but knowledge from others with experience in your market space can also provide value. Current market insights and fast feedback loops with customers are key. 

Challenge 3: Fueling sustainable growth. Building a scalable business model is a final hurdle for proptech companies. Knowing when to add staff, how to manage cash flow effectively, where to build out operations are just few necessary steps. Securing adequate funding is paramount. 

With all these challenges, a bank with deep roots in commercial real estate, mortgage, lending, and multi-family housing, as well as experience in technology and digital transformation, can be a strong resource. The right financial team will understand your situation, help facilitate introductions within the industry, and support your financial needs at all stage of the proptech lifecycle.  

Proptech continues to revolutionize real estate, pairing technology with relationships so all parties can thrive. Working with the right commercial banking resource can give you a competitive advantage in this exciting marketspace.