Technological innovation in the financial sector is a beautiful thing. In the commercial real estate sector, lenders, investors, and developers are making decisions at a faster pace, but innovation isn’t only about speeding up processes. Fintech is disrupting CRE lending dynamics using data, improving efficiency, and increasing competition.

New data, better decisions

Thanks to cloud-computing, artificial intelligence, and predictive analytics, CRE professionals have access to more actionable and reliable data. This makes lending more transparent and efficient. Armed with more real-time data on properties, lenders and investors can better justify and manage their risk. Data is a win-win for everyone, including underserved niches like the small and middle market lenders and investors. We can analyze demographics, tenant mix, net operating income, appreciation, run future projections, and more data points to inform our lending decisions.

Streamline the process

Receiving a commercial mortgage used to take weeks or months from start to finish. On the borrower’s side, assembling the documents could take days or weeks alone. Add to that the time spent submitting duplicate submission packages. No borrower wants to spend hours copying a hefty documentation stack only to provide the same data to multiple lenders. It’s an inefficient process.

Now, fintech service providers allow borrowers to submit a single set of documents accessible by multiple lenders. Best of all, borrowers receive financing offers within hours, not days or weeks. Borrowers receive the funding they need faster with fewer steps.

For lenders, the industry is becoming more competitive. The borrower has more power in selecting the lender offering the best terms. But fintech doesn’t exclusively favor the borrower; technology helps lenders, too. Using fintech providing access to a wider network of potential opportunities. Borrowers are discovering new lending sources they’d never consider before. Additionally, fintech matchmaking services weed out the deals that don’t meet the lender’s standards. Instead, lenders focus their time landing the most attractive investment opportunities, not sorting unqualified applications.

Great deals trump relationships

With numerous fintech companies servicing all levels of the capital stack, borrowers are exploring new lending sources. For generations, relationships were the only way to obtain the best loan terms. Now more sources equals more options, and in turn, better lending terms. Relationships will always play a role in the CRE industry, but when comes down to dollars and cents, borrowers will pick the best deal. More investors abandoning their long-time lending institutions by better terms. Who can blame them? A 0.8% difference in an interest rate seems insignificant, but over the life of a $1M loan, that’s an extra $8,000. Money speaks for itself.

Commercial real estate is a results-driven industry, and lending is no different. Borrowers want the capital to fund successful ventures, and those lenders want the investments to succeed, guaranteeing their returns. Fintech delivers positive outcomes for both sides of the equation. The technology saves money, minimizes lending risk and reduces transaction costs. Added together, fintech translates to more profit for lenders and investors alike.