My inspiration for this story came from a recent experience buying a home that was so horrible I felt compelled to write about it. (Lenda is not yet licensed in my home state, so I had to go through an internet lender that I’m sure you’ve heard of, but will remain unnamed.)
It fueled and validated my vision for Lenda and why we need a much better home buying experience so that everyone gets the “insider deal.”
Insider deal, exposed
Have you ever gotten “the bro deal” or skipped a long line at a club because you happened to know someone? It dawned on me the concept of getting this privilege also translates to the financial industry.
During the purchase of my home, I was shopping for homeowners insurance and received quotes that varied between $1,300 and $2,700 a year. That’s a big difference and warranted further digging on my part.
I decided to call a tech founder colleague of mine whose company specializes in homeowners insurance. I felt nervous calling him, but luckily he was happy to help and said it was the exact reason he started his company. I was quickly whisked away to his colleague who assured me I’d get the insider deal.
The final price for my homeowners insurance was $1,200, a full $100 below the lowest so-called best price I was quoted.
The gatekeepers of your financial future
This “insider deal” doesn’t quite translate to the world of traditional finance, where there are middlemen with all sorts of titles: advisor, broker, or banker. But the title doesn't matter because they are all the gatekeepers to your financial future, as their fees and commissions get you access and can oftentimes make or break your financial situation. It can mean the difference between being able to lead a mediocre or comfortable lifestyle. I know that sounds drastic, but it’s true. A home is probably going to be the most expensive purchase you make in your lifetime, and the fees, commissions and interest racked up over the lifetime of the loan is huge.
How technology helps
My intention is to show how technology will remove the type of financial access that is typically saved for "the haves" and rarely given to "the have nots."
Consumers hate fees, and in the near future, fees and commissions will be a dying breed thanks to technology. Here’s the deal: banks incur large fixed expenses like branch networks, and massive salaries and commissions paid to their workforce. Subsequently, in order to make a profit, they charge fees and commissions to borrowers to pay for it all.
Consumer demand has changed with technology (i.e. 24/7 internet access) and branches (and the jobs that go with them) are quickly becoming a thing of the past.
In order to stay profitable, banks often lay off a ton of people. It would make sense for banks to invest heavily into technology in order to keep up with the industry and make their model work.
Simply put, days are numbered for banks unless they can reform their business models to compete.
A lending utopia that’s fair with less fees
Lenda saves consumers an average of $45,000 between fees and interest when compared to traditional banks. Lenda isn’t alone in our conviction and mission to bring transparency to consumers.
Tech companies are springing up in other related realms of home buying and also want to deliver better customer experience, cut-out the middlemen and do it online. Some worthy examples include tech companies that focus on property inspections, homeowners insurance, and title insurance. These types of companies can save consumers thousands in fees.
Let’s not forget optional fees like real estate agent commissions, inspections, and various insurance such as fire, flood, and mortgage insurance.
A recent example of real estate technology’s continued growth includes the July 2017 IPO of Redfin, a Seattle-based company that uses artificial intelligence and machine learning to help consumers save money by reducing listing and selling fees. Their IPO proves that removing fees and commissions from real estate transactions is a trend that’s here to stay.
In the near future, we will integrate with those that share Lenda's vision for an honest, fast, and completely online experience within every facet of homeownership.
It’s trillions at stake
When you add all of this up, financial technology, when combined with all other real estate-related tech, has a potential impact of $50,000-$100,000 in savings over a customer’s life.
Since there are 100 million homeowners in America, this means there is quite literally $5-10 TRILLION dollars at stake. It's no wonder Chase Bank’s CEO Jamie Dimon, announced several years ago that "Silicon Valley is Coming." He's right, and we're coming in droves.