How fintech is reshaping the rental market 

By Aisling Finn on Monday 2 November 2020

FeaturesDigital Banking

AltFi caught up with Plaid, Canopy and Scraye to see how the rental market can use open banking to make renting easier for the 13 million Brits that rely on it. 

How fintech is reshaping the rental market 
Image source: Ethan Wilkinson/Unsplash

Renting is something that nearly all of us will have to do in our lifetimes, but the rental market is one of the least innovative when it comes to new technology. 

The housing market in general still heavily relies on paper processes and often, when renting a property, heaps of financial information that isn’t always necessary. 

Other areas of fintech have had their time in the sun, but proptech is yet to steal the limelight from more prominent sectors within fintech, such as insurtech or regtech. 

Proptech is starting to grab attention however, with big names in the sector, such as Fronted gaining support from big names in fintech like Passion Capital and grabbing a slice of the Future Fund too. 

When renting is something that we all will do at one point in time, it begs the question: Why is renting so slow to innovate? 

AltFi caught up with open banking heavyweight Plaid and two rental fintechs, Canopy and Scraye, to see how, slowly but surely, renting is being dragged into the 21st Century. 

Consumer trust 

Open banking is gaining traction among UK users, just last month it was revealed that in the past year alone, the number of people using open banking in the country had doubled to two million Despite the increasing popularity, there is still a level of distrust surrounding open banking, largely due to a lack of knowledge about the topic, Keith Grose, head of UK and Ireland and Plaid, told AltFi

“Trust is something that is built up slowly over time and broken very easily.”  

“I can understand why people are scared to share their financial data with companies, but the more people use open banking, for instance in a rental application, the more comfortable they’re going to be using those services with other fintechs and embedded finance applications in the future,” Grose added. 

A survey from ING recently found that, consumers are still suspicious of open banking and that there is a big difference between the knowledge gap between what consumers say they want and what they do.  

Grose likens the adoption of open banking to other pivotal innovations in financial history: “If someone came up to you in the 1950s and said here’s a credit card. You can swipe it somewhere and use it to pay for things, you would think it’s so weird. But now it’s one of the primary payment methods in the world.” 

Despite the hesitation of consumers to adopt open banking, fintechs are ploughing ahead and attempting to innovate an old and archaic market. 

Around the world in 80 rentals 

Canopy was born out of frustration at the rental market. 

CEO and founder Tahir Farooqui spent the best part of two decades working for big finance firms across the globe, in London, the Middle East, North America, Australia and New Zealand, and the one thing he found across all housing markets was the need to innovate. 

Farooqui told AltFi: “I wanted to leave the comforts of corporate life and live a more purposeful life and that’s how Canopy was born.” 

“The average renter in London spends 50 per cent of their income on rent and, guess what, you are not the customer, the landlord is,” Farooqui added, “It was this realisation that made me think; how do we build a company that actually helps renters live their best financial lives?” 

Canopy offers its users the chance to make their very own Rental Passport, which includes all the necessary financial data required to rent and leaves out everything that estate agents don’t need to see. 

Renters are more often than not required to provide their three most recent bank statements in order to prove they are receiving a salary and are not living beyond their means. 

Instead, through open banking, Canopy’s customers can isolate just their salary from their banking data. 

Users of the app can also show estate agents and landlords previous rent payments and other financial data that can help them prove that they will be a good tenant. 

“We wanted to give the 13 million renters in the UK the ability to hold their complete financial history in their pocket so that they don’t have to keep sharing everything every time they rent somewhere,” Farooqui told AltFi

Hey big spender 

As well as wanting to allow renters the freedom of having a ‘Rental Passport,’ Farooqui also wants to help renters make the most of their money.  

With Canopy’s Rental Passport, users can see how much they can afford to spend on rent based on their monthly outgoings and the fintech also offers ‘DepositFree Insurance.’ 

DepositFree Insurance from Canopy takes the place of traditional deposits, which can often be steep and can put a sizeable dent in a renter’s finances, to protect customers if they lost their job or become seriously ill so that they can live without the fear of losing their home.  

Farooqui laughs as he talks about how Canopy’s financial wellbeing products came about: “There was a period of time where I was spending nearly £6,500 on coffee. I was having five coffees a day and at £3.90 per coffee it starts to add up.” 

“This is what gets me out of bed in the morning. If we can help stupid people like me stop spending more than £6,000 on coffee and start saving more and being smarter with their money, then I’ll be happy!” 

I’m not sure that Canopy can promise to save every customer £6,000 on coffee, but it can certainly try to improve its users’ financial wellbeing.  

Nice and easy 

Scraye was founded in January of this year but its story starts a long time before then. 

Co-founders Yorick Duizendstraal and Robert Ojeda first met each other in school 15 years ago in the south of Spain, with the two fintech founders going their separate ways before finding a gap in the market they had an idea on how to fill. 

Duizendstraal’s family worked in the real estate market in Spain so he had some of the technical know-how needed to bring Scraye to life. 

He told AltFi: “We quickly came to the conclusion that the real estate market, in general, is super inefficient. It’s slow and expensive and it’s really opaque and just doesn’t work well for many people.” 

“Our big picture goal is to do something about it, staring with rentals. We want to use technology to make the whole process much more simple, faster and more cost-efficient,” Duizendstraal added. 

Scraye is building a platform for renters where they can search for their next home without the stress of having to sign onto every estate agency under the sun. 

The fintech is leveraging open banking to create faster affordability checks for its users, give them the ability to track and complete their payments online and allow them to review and sign contracts from anywhere in the world at any time.  

CTO Ojeda told AltFi: “Open banking from both the user experience point of view and the technical point of view allows us to automate the whole process as it’s currently one of the biggest friction points that renters experience in the current market.” 

“As a renter, you have to send a huge number of documents, work contracts and a deposit and open banking just really simplifies that and makes it so much more straightforward,” he added. 

So, despite renting being one of the biggest outgoings for most of us, the rental market is still slow to innovate. 

Fintechs like Canopy and Scraye are hoping to change that, but until there is a better understanding of how open banking works, we can’t be sure how long it will take just yet. 

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