The Scorpion and the Frog
March 16, 2017
Daniel D. Mennenoh ITP, NTP
There’s plenty of buzz in the financial and tech world about all the potential blockchain technology. This technology, which underpins the bitcoin “currency,” is being developed for use in an array of financial transactions, including potentially the recording of property records. Will this new technology change the way we record real estate transactions or will it make the process more cost efficient?
McKinsey & Company in January presented on blockchain during the Federal Advisory Committee on Insurance meeting. The main takeaway was that while investment in the technology is growing, most insiders believe that it’s at least five years for most of these new uses to become commercialized. That is if they pan out at all. McKinsey sees real potential for blockchain in trade financing, cross border payments, securities/derivatives and customer identity proofing. Closer to home, McKinsey believes the most potential in the insurance world rests with using smart contracts for payments and claims administration.
While blockchain could be simply over-hyped and unnecessary, it’s potential raises eyebrows. If not blockchain, some other financial technology could emerge and drive substantial change to the real estate transaction. FinTech can be thought of as programs and other technology used to support or enable banking and financial services. In our industry, FinTech are technology vendors, including our title production solutions, or startups that are new market competitors looking to alter the process.
Remember the fable about the scorpion and the frog? In the tale, a scorpion asks a frog to carry it across a river. Afraid of being stung, the frog hesitates, The scorpion argues that if it did so, they would both drown. Considering this, the frog agrees, but midway across the river the scorpion stings the frog. When the frog asks the scorpion why, the scorpion replies that it was in its nature to do so.
Don’t be intimidated by the rapid change innovation and change bring. People in the industry and the innovators looking to disrupt current business models need to realize they have particular strengths and assets to improve the consumer experience. We are customers of FinTech companies and we must work with these vendors and help influence outcomes. We need to identify conflicts and figure out where FinTech companies can be allies against inefficiency. As an example, we should work with technology companies to ensure portals that exchange data between lenders and title agents not only work—but work efficiently.
ALTA recently formed a FinTech working group to help understand how all of this affects its members. During our initial call, fellow ALTA Board member Steve Day stated that impediments to improving the consumer experience will not be accepted. He’s exactly right. Think about how potential partnerships with FinTech companies could elevate your services. To succeed in today’s marketplace, you need to be a customer champion.
Daniel D. Mennenoh ITP, NTP is the 2016-17 ALTA president.
Contact ALTA at 202-296-3671 or [email protected].