?? The Future of Property Transactions: Embracing the Embedded Service Model

Hello, Propertyverts! ??

Welcome to the Digital Bricks and Mortar Newsletter, your essential guide to navigating the tech-driven transformation of the UK property market. Whether you're a property professional, mortgage expert, software vendor, policymaker, regulator, or stakeholder, this newsletter is for you! ????

We cover the latest trends and innovations, from the current online property market's transition to a Digital Property Market, to the emerging AI-powered Intelligent Market and Immersive Propertyverse. ????

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Introduction ???

For businesses, the current online property market primarily revolves around their own portals or platforms, offering a sense of security, control, and ownership. However, these spaces may soon become secondary to the main property transaction hubs as the market evolves.

In this newsletter, I wanted to explore the probability that the property market will follow a similar digital maturity curve as other sectors, such as payments, with an increasing number of services becoming 'embedded' within primary platforms.

While many businesses, particularly those downstream of portals and estate agents, may feel threatened by the embedded service model, this concern is often unfounded. The shift towards embedded services presents an opportunity for growth and innovation, as demonstrated by the success of embedded finance models. ??

"In the future, competition will no longer be about products, it will be about ecosystems" - Geoffrey A. Moore

Transactions are Getting Progressively Slower ??

There is an increasing expectation among consumers and businesses for a full suite of services to be smoothly integrated into property transactions. From a consumer's standpoint, the entire process of buying or selling property should ideally take place on a single platform, offering easy access to services provided by conveyancers, brokers, surveyors, lenders, and others, all working together seamlessly. ??

Over the last two decades, technological advancements have made transactions in every other market that I can think of more efficient and seamless yet in the property market transactions have got slower and less efficient.

Embedded Services Outperforming Standalone Model??

The property market is currently undergoing a transformation that focuses on what customers truly want: a seamless integration of all necessary services in a property transaction. The outdated practice of customers having to navigate between multiple disconnect portals and platforms is becoming obsolete. Modern consumers are gravitating towards a unified experience where every required service is directly integrated into their transaction journey, eliminating the need for managing multiple logins and disjointed processes. ??

Today's customers are less willing to navigate through various separate portals. They prefer starting their journey in one place, with all the necessary services smoothly incorporated into their chosen digital environment. This preference highlights a growing gap between traditional 'standalone' service delivery methods and the streamlined, customer-centric approach now in demand.

For primary providers such as conveyancers, brokers and lenders and secondary service providers such as identity and data providers, adopting an embedded service model offers a strong economic rationale. By doing away with the inefficiencies and costs associated with fragmented customer journeys and instead creating an efficient, streamlined experience conveyancers, brokers, and other service providers can better align with customer expectations, reduce operational costs, and create a more engaging, efficient, and value-driven customer journey. ??

This shift represents not just a technological advancement but a fundamental change in conducting property transactions, emphasising convenience, efficiency, and a focus on the customer.

Embedded Services Strategy ??

Creating an embedded services strategy has five key stages:

Evaluate role within the market. Market participants must decide whether they aim to be the primary consumer platform, akin to portals and estate agents, or to position themselves as downstream players, seamlessly integrating their services into offerings provided by upstream providers. ?? This decision will have a profound impact on their overall strategy and the nature of their interactions within the market.

Understand Customer Journey: Next, market participants must identify the starting point of the customer journey. This requires a deep understanding of customer behaviour and preferences, as well as a keen eye for identifying the optimal point to integrate their services. ?? By pinpointing where to intercept the customer journey, businesses can ensure a seamless experience that meets their needs and expectations.

Clarity on Value Proposition: Equally important is the evaluation of one's value proposition. This involves a critical analysis of the value offered to both customers and upstream distribution partners.

Evaluate Digital Maturity: The success of an embedding strategy hinges on a business's digital maturity. It is essential to conduct a thorough self-assessment of one's digital readiness, ensuring that the necessary APIs and software are in place to integrate services seamlessly into partners' platforms. ???

Building Brand Loyalty: Building brand affinity and customer loyalty is another crucial aspect of an effective embedded services strategy. Even if a business is not the primary brand at the distribution point, there are still ample opportunities to foster brand loyalty. ?? This can be achieved by consistently delivering exceptional service throughout the customer lifecycle and by improving transaction flow for upstream partners through enhanced service speed and quality.

By carefully evaluating these various aspects, market participants can develop an embedding strategy that not only meets current market demands but also remains adaptable to future changes. The key lies in focusing on service integration and creating cohesive customer journeys that improve the overall value proposition and strengthen one's digital market presence. ?? This marks a significant shift from competing based on individual standalone service to a more collaborative, integrated model that prioritises customer experience and operational efficiency.

To thrive in the digital property market, businesses must shift away from traditional thinking that focuses on being the primary customer touchpoint. Instead, they should consider how they can enhance customer experiences through embedded services that complement and augment the offerings of their partners.

To achieve this, market participants must be willing to collaborate and share data in ways that may have been uncommon in the past. This requires a shift in mindset from a siloed, competitive approach to a more open, cooperative one. ??

By working together to create a unified customer journey, businesses can unlock new opportunities for growth and innovation. Of course, this transition is not without its challenges. Integrating services and sharing data raises concerns about security, privacy, and data ownership. It is essential for market participants to address these issues proactively and develop robust frameworks for data governance and protection. ??

Moreover, the shift to an embedded services model may require significant investments in technology and infrastructure. Businesses must be prepared to invest in the necessary APIs, software, and platforms to enable seamless integration and data sharing. ??

Despite these challenges, the benefits of an embedded services strategy are clear. By providing a more integrated, efficient, and customer-centric experience, businesses can differentiate themselves in an increasingly competitive market and build lasting relationships with customers. ??

As the digital property market continues to evolve, embracing an embedded services strategy will be essential for brokers, conveyancers, lenders, surveyors, and other market participants to remain competitive and relevant.

Avoiding Service Customisation ??♂?

In discussions with businesses in the property market, a recurring apprehension is raised: the potential for service commoditisation from integrating their services within upstream channels.

Understanding the economic logic for embedded services requires recognising their multiple advantages, for example, direct collaboration with entities like estate agents allows conveyancers and estate agents to create more collective value and both share directly in that value without 3rd parties extracting outsized potions of value. ??

This collaboration leads to a smooth, digitally integrated customer journey, thus improving the overall service value. The crux of this approach is in simplifying and streamlining processes, thereby removing the complex layers that currently encumber property transactions.

Embedded services also create an environment where customer satisfaction and loyalty are crucial. Happy customers are more likely to return and recommend services, generating a positive cycle of business growth. ?? In this environment, conveyancers can use their superior service delivery as a competitive edge, attracting more customers and securing a stable revenue stream.

Conclusion ??

The property market is on the cusp of a significant transformation, driven by the need to improve efficiency and better serve customers. The current market comprises fragmented services and lengthy transaction times, and is ripe for transformation through embedded service models. ??

This new approach, which has proven successful in other sectors, offers a seamless and integrated customer journey by eliminating the complexities and fragmentation associated with existing standalone delivery models.

By adopting an embedded service strategy, businesses in the property market can unlock new value, reduce operational costs, and create more engaging, efficient, and value-driven customer experiences. ?? This shift represents a fundamental change in conducting property transactions, emphasising convenience, efficiency, and a focus on the customer.

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