Some of the world’s largest banks and law firms have come together to take part in a global blockchain trial to dramatically speed up property transactions.
Ashurst, Baker McKenzie, Barclays, Clifford Chance, Search Acumen, AXA XL, Even, Royal Bank of Scotland, Raiffeisen Bank International and SwissRe were among 40 organisations collaborating to test the ledger-based property marketplace.
The trial was set up and completed by Instant Property Network in partnership with enterprise blockchain firm R3. The pair ran end-to-end transactions through a distributed ledger and simulated property sales over a five-day period.
During the trial, the organisations demonstrated 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 $160bn.
As well as speed, IPN said its platform will have additional benefits:
- Fraud reduction: as the ledger is immutable and viewable by all parties to a transaction on a ‘need to know’ basis in real time, all information related to the property can be verified instantly
- Transparency: all relevant parties can see the progress of a transaction. For consumers this will include viewing the progress of other parties in their chain, significantly reducing uncertainty
- Risk reduction: by increasing speed and enabling improved communication between parties by making the whole process more transparent, the risk of deals falling through will reduce dramatically
This sorts of fast and secure contract will, IPN explained, be of particular benefit to:
- Consumers: decrease the time taken to buy or sell a property from months to weeks, greater visibility and transparency of the end to end process, and protect consumers
- Estate agents: almost a third of sales fall through, the length of time it takes to complete being a significant factor. By reducing lead time, it should increase the number of successful sales
- Legal firms: reduced costs, increase revenues and reduce exposure to fraud. Greater level of certainty leading to an improved client experience
- Mortgage and insurance providers: reduced operating costs associated with approvals in principle and full mortgage offers. Improved speed of completing property due diligence and finalising mortgage offers
- Regulators and tax: automated regulation and tax compliance natively within smart contracts. Proactive marketplace insights which enables greater protection to the consumer
- Land registration: reduce cost of confirming and validating requests to change the register. Increase the speed of register updates with reduced risk of fraud.
IPN has worked with HM Land Registry’s Digital Street project, where it 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.
John Reynolds, founder and chief executive of London-based 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.”
Matt Taylor, head of UK proptech at law firm 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 see real potential for blockchain to transform the process…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 started as a thinktank in 2017 and now has partner offices in New York, Singapore, Pune and Mumbai, working with its London headquarters. Last year, IPN became an expert advisor to the UK Government Blockchain All Party Parliamentary Group.