Three Proptech Megatrends To Watch For
Things are going from bad to worse in the world at the moment. I’ve been in total lockdown for nearly two weeks, and it looks like you’re all about to join me, if you haven’t done so already! I don’t know about you, but, I’m sick to death of talking about the coronavirus. In a recent investor call, economists at Goldman Sachs said that there currently is no systemic market risk and therefore COVID-19 will not have the same repercussions as the 2008 financial crisis. With that in mind, this column will endeavour to look past the current emergency and think ahead to the positive outcomes that we will see in real estate and proptech in months and years to come.
A few weeks ago, we looked at Allegion Ventures’ investment into Openpath. When I spoke with Allegion chief innovation and design officer (and Allegion Ventures president) Rob Martens about the deal, he shared his work on megatrends in real estate and technology which is so fascinating it merits an entire article in its own right.
Alongside his other roles, Martens also serves as Allegion’s futurist. His job in that capacity is to create a narrative around emergent trends, so as to give the company visibility into what disruption could be like in an established market, or insight into a new market that it could potentially expand into. Allegion is a global leader in life safety products and is particularly interested in what Martens calls “the geography around the door” and access control.
When looking at megatrends and the tech that could emerge from them, the question Martens always asks is “how can we effectively allow people to have a better experience over time whilst protecting their data?” He then seeks technological solutions that fit in with what he calls the ‘three S’ model:
The ‘three S’ model
A secure experience. Tech needs to guarantee its users security both from a physical and digital perspective. Data needs to be safely stored, but the hardware (eg. locks) needs to also be sturdy and stand the test of time and attempts to physically hack it.
Scalability. Hardware and software must both be scalable. So, not only must the mechanical elements of a system stand the test of time (eg. how many times can a door be opened before the hinges break) but the digital elements need to be configured so that they can works seamlessly even when their use increases exponentially. If not, they become subject to what is known as memory leak, where small flaws become huge problems when the product is used at a large scale.
Simplicity. The user interface must be simple. This implies both a seamless physical integration with the surrounding ‘geography’ and an intuitive digital interaction of the user with the device.
Within this framework, Martens shared three megatrends that he is excited for within Allegion’s field of interest.
Edge computing is something that consumers don’t normally think of. In essence, it means that active processing is happening locally rather than in the cloud. This may seem trivial, but in fact it can make the difference between a good and bad customer experience, as well as data security. In an access control system, for example, if more of the active processing around identifying who is trying to open a door is done locally rather than data being sent to the cloud and back, the response can occur in real-time. Additionally, it is harder and less rewarding to try and hack individual locks for the small amount of data that is stored there, when compared with an entire cloud data repository. In sum, edge computing is a trend, with a narrative around data privacy and user experience. Allegion’s investment into Openpath was made with the goal of exploring the potential around edge computing.
Voice recognition technology
Martens sees a lot of technology growth occurring in ‘waves’ which typically start in the single-family home environment and then make their way to multifamily and commercial asset classes, evolving all along to meet expectations on scalability. One example is voice recognition technology, such as with Amazon’s Alexa, that is targeted at single-family homes and apartment dwellers but is not appropriate or scalable for a business environment. Allegion tried to incorporate Alexa’s voice control on locks and learned that there were huge limitations in its ability to discern individual voices, making that solution not viable. Martens therefore decided to invest in Pindrop, a startup that develops voice recognition technology used to allow contact centres to determine exactly who is on the line when calling about credit cards and other sensitive information. The goal is to improve voice control on locks so that the IoT is smart enough to recognize the user with 99.9% accuracy.
Artificial intelligence and data privacy
AI has been a buzzword in proptech for years, as it has incredible potential to improve the tenant, owner and manager experience in real estate. However, it is paramount that those implementing it have a firm grasp of regulatory and compliance issues associated with privacy. As Martens puts it, if you’re going to implement tech into your access control systems and collect data from people entering buildings and even their homes, you need to know what the local requirements are for the collection and disposal of data. These change from state to state, country to country. A digital and regulatory compliance mechanism must be implemented to ensure data is disposed of as each client wants.
These are only three of the megatrends that Martens tracks on a daily basis. It is fascinating to see how, upon investigation, a seemingly siloed niche in real estate has ramifications far beyond locks, doors, and how to open them. I am excited to see how the megatrends develop, and what cutting edge proptech solutions emerge from them!