Real estate is the single-largest purchase most Canadians will ever make.
But as money and data – and the secure transfer of both – becomes ever more digital, there is still much that is managed manually in the average real estate transaction.
Fintech.ca sat down with Dye & Durham’s Mark DiFilippo to discuss how that’s changing, and how it will impact financial processes, legal practices and payments.
DiFilippo is Vice President, Product, Financial Solutions and Government Solutions with Dye & Durham, overseeing product innovation in the company’s real estate, financial services and government verticals.
He is also an Acting Member of Payments Canada’s Stakeholder Advisor Council.
Much of a real estate transaction still remains highly manual. Why is that?
MD: Maybe surprisingly, there just hasn’t been effective and secure ways to connect all parties in a real estate transaction digitally to date.
Right now, for many legal professionals and financial institutions alike, the only method for moving data back and forth during a real estate transaction is either via a) fax, which is unsecure, b) email, which is unsecure or c) physical courier, which may or may not be secure – but will take a significant amount of time to get from A to B.
In a transaction that can have as many as 30 touchpoints between parties, that’s a lot of back and forth that’s still inefficient and unsecure.
Each of these are technology friction points that don’t allow for the legal professional or financial institution to process a real estate transaction effectively and securely. Removing those friction points is the problem we’re working to solve with Lender Centre.
What is Lender Centre?
MD: Lender Centre is a platform designed to better connect legal professionals digitally and directly with the financial institutions they need to work closely with on a transaction – everyone from major FIs like BMO and RBC to smaller credit unions like Prospera Credit Union and Coast Capital Savings.
The platform digitizes all of the data and interactions involved in a real estate transaction, meaning no more follow-up phone calls or faxes or giant courier packages. It moves all of the data that goes back and forth between parties during the transaction – things like mortgage instructions, payouts and discharges – digitally, securely, in near real-time and at the press of a button. That’s especially important on closing days, when delays in communication, information and payment can cause considerable stress on property buyers and the professionals that support them alike.
Effectively what we’re trying to do with Lender Centre is to build a better, faster, stronger and more secure bridge between lenders and legal professionals. It’s built from the ground up to make sure that all aspects of a transaction are completed accurately and securely at each stage, and to ensure a property buyer can get their keys at 8am on closing day – not 8pm.
Why was it launched in BC first? Was there a specific reason?
MD: There were a few, actually. For one, British Columbia was the foundation for Dye & Durham as a company – we have lots of history, great relationships and loyalty in and to that market. BC is also very unique in the prevalence and prominence of credit unions, which we have already established strong integrations with.
Lastly, given the findings of last year’s Cullen Commission report, we saw an immediate need in BC that we believe our Lender Centre platform is tailor-made to address. The report found that, by no fault of financial institutions or legal professionals, there had been significant and heightened instances of fraud in the real estate transaction ecosystem in BC, caused mainly by criminals taking advantage of the same friction points we’re trying to remove.
So, while we see lots of viability for Lender Centre beyond British Columbia, it just made sense to start in that province first.
How do payments play into all of this?
MD: The universal problem that impacts everyone in a real estate transaction – from lawyer to notary to financial institution – is the secure movement of funds. Large amounts of money need to go to the right place at the right time – every time. Much of the instruction of funds between the parties still happens manually – phone, fax or email – which can lead to miscommunications, delays and errors. Digitizing those processes to ensure the proper and secure transfer of funds is the crucial next step that every party needs.
Today’s there no national platform available that can complete that entire process digitally, but the foundation for it does exist. In Quebec we’ve integrated with the two largest real estate lenders – Desjardins and National Bank – and have deployed this type of platform which digitizes the entire real estate payment and approvals that allow the movement of funds through the entire chain – from the buyer’s lawyer to their notary, from that notary to the seller’s notary, and from there to the seller’s financial institution. And it does it in near-real time.
It’s already been adopted by 92% of legal professionals in the province after less than five years of availability. And now we’re focused on bringing that nationwide, using established capabilities and learnings from Quebec to truly revolutionize the process nationwide, and working with many of the most recognizable names in the payments space to make it a reality. We see the launch of Lender Centre in BC, which will eventually integrate directly into that system, as the first exciting step in bringing that to market.
Is real estate the only area of law today that is ripe for digital transformation?
MD: Real estate is a massive part of every law firm, but there’s plenty of other areas where modernization is still needed.
Many firms still run several solutions to complete their day-to-day responsibilities – one to help with client intake, another to track firm operations like billables, yet another to manage files and matters and another to handle accounting and invoicing. In many cases that means that similar information needs to be entered three, four or five times for the same client – often adding hours of billable work that needs to be paid for the client – or unbillable work that needs to be absorbed by the legal practice – and in each case increasing the potential for incorrect information to be entered.
What forward-thinking firms are doing is moving towards software that can offer complete practice management – everything from the moment that client first interacts with the firm to the very end of the relationship – all in one system. That type of integration across systems provides the opportunity for duplicate data to be auto populated throughout an entire client file, creates a single destination for information on a complete client relationship and helps to minimize inaccuracies, errors and risk. Those are huge benefits for any law firm.
Ultimately the legal profession is one that taps into so many aspects of our day-to-day life, and one where accuracy, security and efficiency is paramount. The more that the processes that underpin their roles – everything from practice management to payments and beyond – are modernized and digitized, the better for everyone from lawyer and client to the governments and financial institutions they engage with.