Changes in the industry and how they will impact you

Mr Kirkwood reveals all — including commercial changes, tech advances, why the new Auction Pay platform will reshape the industry.  

You will also find out:

• Why resisting tech change is a HUGE mistake
• What the real estate space will look like as it evolves
• Why mobile payment platforms are the way of the future

Tune in now to hear all this and much, much more in this episode of Secrets of the Top 100 Agents!

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Full transcript

Speaker 1: The top 100 agents and the best of the best. Listing and selling more than any other agent in Australia. These are the practises, actions and beliefs of the most successful agents in Australian real estate. Raw, honest and completely uncut.

Tim Neary: Well g'day everyone, it's Tim Neary here. I am editor of Real Estate Business, and host of the Secrets of the Top 100 Agents Podcast. Thanks for tuning in.

            Got an interesting show today. We have Macquarie bank's Innes Kirkwood in the studio. Innes is the National Head of Residential and Commercial Real Estate at Macquarie, and responsible for conducting Macquarie's benchmarking projects for the residential real estate industry.

            Hello, Innes. Welcome to the show.

Innes Kirkwood: Thanks, Tim. It's great to be here.

Tim Neary: Good to have you here today. Now, benchmarking projects, what are these and why are they important for real estate agents?

Innes Kirkwood: It's a good question, Tim. Benchmarking is something that we've been doing with our real estate and other business banking clients for a number of years, about 10 years in fact. The reason why we prefer to do that, we felt that clients really didn't have an understanding of how they performed versus their peers, and so conducting these surveys allowed us to ask a lot of questions really around the performance of their business and trends and themes in the industry, and then deliver them that information back in the form of data and also a report and insights.

            Over time it's evolved into something where we've actually been able to show trends over time and really help industries improve and focus on the things that they need to do to improve their profitability, their performance, their culture, and just sort of stay abreast of changes and key things in the industry.

Tim Neary: Now, Innes, your most recent report highlighted the emergence of the so-called proptech in the industry and how it's reshaping the industry. What did you find here?

Innes Kirkwood: Some of the questions that we asked were really around the future and current themes, and we asked around, I guess, the impact, or what people felt were impacting them most right now and what they were worried about in the future. One of those things were the emergence of new competitors, the platform type competitors. I guess the self-serve type platforms like your Purplebricks, the hybrid type platforms, and Airbnb as well in terms of new models of renting short-term letting space.

            Really, I guess, that highlighted that proptech was already starting to have an impact on the current landscape, and that when we asked them about how much they were spending in terms of investment in technology, that number was really quite small. In fact, 90% were spending less than $50,000 investing in technology moving forward.

            When you compare that with the overall proptech spend where in the last four to five years, a content report by KPMG, they've seen investment in proptech go from 200 million to 2.6 billion and they expect the trend to continue to 20 billion by 2020 and current businesses are looking at just spending 50,000 to 100,000, it really does ask a question about whether they get what's coming. So it's definitely been a very consistent theme in the real estate sector.

Tim Neary: In terms of understanding what's coming, have you formulated any tangible thoughts here about what that space is going to look like as it evolves? We talk about disruption a lot in real estate, but nobody's really got a good handle of exactly what it's going to look like.

Innes Kirkwood: No, I mean, it's difficult. You can look at where the technology in investment is focused right now, and what you can see is that they're looking at a traditional model, a traditional market that hasn't changed for a number of years really. The processes involved in real estate hasn't changed for 10, 15 years. The technology really hasn't moved on.

            What that means is that there's a lot of inefficient processes, there's a lot of poor client experiences there, and that means there's a lot of opportunity to improve on the client experience. What would I say it means is there's going to be a huge focus on improving the client experience through digitization, through automation and through new platforms and portals and technologies that will really just streamline things and make it a lot easier. A lot of clients do self-serve as well, so it does mean that there's going to need to be a response from the traditional business if they're going to compete with what's coming, we think.

Tim Neary: Now, we see that there's a bit of a clear divide in the industry between agents that are embracing this new technology and those that are resisting it. What would you advise to those agents?

Innes Kirkwood: To say agents are resisting it, I'm not sure if it's completely accurate. I think what's happening is that people can see this pace of change, this technological wave that's occurring, and they're not really sure how to respond. What we think is that the key is focusing on the current business models and chunking it down to try and think, well, what can I do now to start to change and just adopt change, so whether it's embracing smaller technological change or whether it's overhauling your entire system.

            I think the key is that you need to acknowledge you're going to have to change something in your business, otherwise before you know it it's going to be too late to respond.

Tim Neary: Innes, you're also in the process of producing a report and insights for commercial real estate. Can you tell us a little bit about that?

Innes Kirkwood: In terms of the commercial real estate segment, we specialise in banking as well as residential real estate and we recognise that these reports are just as valuable to that industry as well. We're going to launch the commercial real estate benchmark towards the end of this calendar year and hopefully be able to provide some really good insights and results in the new calendar year. We'll have, I guess, some findings to report on that then.

Tim Neary: Nice. We look forward to watching that space and seeing how it evolves. Talking about it evolving, Macquarie just recently launched the Auction Pay process just recently. Can you fill us in on that, please?

Innes Kirkwood: Yeah, absolutely. We're really excited about this. It's funny 'cause it probably doesn't sounded like the most exciting thing when I describe it to you, but Auction Pay is a new product or solution that we've developed which is essentially powered by our DEFT payments platform.

            For a long time, one of the pain points in the process, in the sales process, or buying process, is the need to go and get a bank check and whenever you're going to buy a property at auction, in fact the entire deposit collection process is quite challenging, because everybody's got internet banking limits and they can't actually transfer enough funds on the day. Everybody knows, especially at auction, it needs to be an unconditional sale and need to collect consideration for that sale on the day.

            What it's meant is people have gone away and spent $20, or whatever it is, on a bank check. They rock up to auction, they'll bid, they'll miss out on the property, they'll have to go away and put the bank check back in and then about three or four days worth of interest missed on money and all sorts of things, so it's not a great experience for the buyer.

            Also sometimes we find it could actually potentially stop them from bidding 'cause they're not sure if they've got enough capacity with the check that they've got in terms of meeting the 10% deposit requirement. So it's always been a bit of a pain point.

            From the agents' side of things it's also been a pain point, because they've had to bank these checks or often find other ways of meeting consideration for the sale if there wasn't a bank check available, and then what happens is they have to make multiple payments for the deposit because of these internet banking limits that apply to consumers, so the whole process has been really inefficient and clunky.

            We were able to design a mobile banking platform, a solution, which basically allows an agent to collect the payment at auction on the day through this device. All the buyer has to bring is basically some ID to prove who they are and their BSB and account number. So it's just simplified, automated the entire process.

Tim Neary: It sounds like it's particularly relevant for real estate agents and the real estate industry, because not only is it enhancing the process, but it's also just making the process a lot more seamless and reducing mistakes and enabling the transaction.

Innes Kirkwood: Yeah, that's right. I mean, in terms of making mistakes, what happens right now agents collect that check along with the contract and then they've got it for a couple of days until whenever, Monday, whenever it is they can bank the check and so checks can go missing and also sometimes it could be difficult to reconcile which check relates to which property, so for the trust account that's been quite a challenge as well.

            So you're right, it does make it quite a lot more seamless, it does make it more secure, less of the mistakes, and we think it's also quite a few pain points for different people. But it just seems like for everybody when we talk about it, it's something really obvious that banks have just ignored for a long time, so we're really happy we've been able to deliver a solution that actually solves quite a frustrating problem.

Tim Neary: It sounds like it's a good solution, and it's been in the market for a little while now. What kind of feedback have you had from the market? Has it shown a lot of interest?

Innes Kirkwood: I think it's fair to say we've been overwhelmed. We had about 20 clients in Melbourne and Sydney who were on the platform early and testing it and piloting it for around about six months just to make sure that it worked and it was secure and there was no obvious bumps or any issues, but that proved that the concept worked. They found it was a huge advantage in the market because it was something that nobody else had.

            We had an official launch two months ago and within two months we've had 200 of our clients and new clients put their hand up to sign up for this solution. We're about to start a buyer awareness campaign, so you'll see more marketing around it just to really make people aware that they don't have to come to auction with a check anymore because there is actually a solution which solves that pain point.

            So yeah, overwhelming. To onboard 200 clients onto this solution within three months, that's ahead of any other product launch that we've ever had, so we're really pleased so far.

Tim Neary: It sounds like a great initiative. Tell me, Innes, what else is on the drawing board from Macquarie? What have you got in the pipeline for real estate agents?

Innes Kirkwood: Well look, we think back to the comments I just made around, I guess, proptech and what's happening in the industry. We recognise a need for investment, a need to help our clients transition their businesses into, I guess, a more digitised automated model, so our big focus for us is in platforms, platforms that can allow our clients to do that.

            We've appointed a team, business banking. We did that about 12 months ago. We've got a platform team now. They're looking at various different investments, some of which I think are quite well known, or public information, and others that wouldn't be so well known. But really the goal for us is to deliver a platform, a marketplace of integrated solutions for our clients that can allow them to automate their business, improve the client experience and compete with the new competition, as we're calling it.

Tim Neary: It certainly makes a lot of sense, because that's the way that the industry seems to be going. We'd love to keep up to date with that and perhaps get you back in the studio in a couple of months time and talk about those developments as they're rolled out into the marketplace.

Innes Kirkwood: Absolutely. I'll be more than happy to.

Tim Neary: Fantastic.  

            Innes, it's been a real pleasure having you on the show today. Thanks very much for your time.

Innes Kirkwood: Thanks, Tim. My pleasure. Cheers.

Tim Neary: Remember to follow us on all of the social media stuff: Twitter, Facebook, LinkedIn. You can follow me too on Twitter, @timothyjneary, if you'd like to do that. If you've enjoyed today's show, leave us a five-star rating please on iTunes. It's the best way for new listeners to find us and for them to hear the great content that we are putting out. As always, realestatebusiness.com.au is where you'll find us. There's plenty of stories there on the business of real estate across the whole of Australia. Thanks again for tuning in. We'll see you next week. Goodbye.