Blockchain may be the panacea you need
Simon Farthing argues of the benefits of collective adoption of blockchain for firms
If I had to identify the most important factor in improving the conveyancing process from my time in practice, I would say it was communication. Buying and selling a home is an extremely emotive activity which impacts people in a personal way. It can be incredibly stressful and involves a community of interconnected people, generally who have little or no prior relationship, coming together to make some big life decisions. Often those decisions and the requirements of those involved, conflict and have significant financial and personal consequences.
Of course, the conveyancing sector often receives bad press, some of it can be fair. There are some poor providers and poor behaviours in the market, but there’s also exceptional talent and some caring individuals who want to provide an outstanding service.
Many conveyancers have worked hard to overcome the problems and there are some good success stories where firms have adopted automation technology to become more competitive, financially as well as from a service delivery standpoint.
The challenge though, is these few great firms do not translate into industry-wide efficiency, quality of service and superior client experience. Why? Because firms across the sector are at varying stages of digitisation and digitalisation. For instance, typically, many conveyancing law firms have some digitalised processes because they’ve deployed some form of case management system. They’re also conducting searches online, undertaking registrations through a portal, verifying clients’ identity digitally and so on – but at the same time there are many providers still heavily dependent on paper-based procedures.
Many parts of the transaction process still require physical signatures on documents that are sent and received by post. There’s also much time spent updating parties via email or on the telephone, which can lead to significant delays on account of awaiting for responses.
Hence, especially from a lawyer’s standpoint, the problems pertaining to cross-party collaboration remain unsolved even if their own firm is a forward-thinking, adopter of modern technology. This impacts the quality of service they are able to provide to their clients.
An individual conveyancer may adopt the leading-edge technology and automation in their own firm, but when they start interacting with the wider market – conveyancers, lenders, estate agents, public authorities, sellers, property developers, buyers and such – often the benefits of speed, efficiency, consistency, transparency and communication are significantly reduced. Due to digitisation, everything is disparate – i.e. money is in a bank account, contracts are in a Word document exchanged via email, the titles are at the Land Registry and such.
All the components are in separate, disconnected digital worlds – and so the information exists in siloed systems that don’t have common standards. As a result, the entire conveyancing process remains friction-ridden and lengthy.
The blockchain solution
This is where enterprise blockchain technology genuinely offers promise. It can help establish a modern market infrastructure for conveyancing, much like that of Visa and Mastercard in the financial world. Also, noteworthy is the blockchain I’m referring to here isn’t the technology that sits behind cryptocurrencies, but the capital markets-grade version banks and financial institutions use for settlement and user identity verification.
In the conveyancing world, the same technology can be applied to facilitate easy exchange of property data; aid sharing of documentation; enable use of digital identities, titles and funds; and expedite communication across parties – which happens to be the number one bug bear for all involved in the conveyancing process, especially clients.
Here’s a scenario lawyers will recognise: a client meets an estate agent, with all the necessary documentation to establish proof of identity – passport, utility bills, driver’s licence and such. The estate agent, however, requests the individual to undertake the onboarding process via the firm’s app. Fair enough, they are moving with the times, adopting technology. However, the client has to repeat a similar process, providing all the essential information related to the transaction individually to the solicitor, mortgage lender and any other parties who may be involved. Why? Because every party involved in the conveyancing process has their own way of doing things. Is it necessary? Absolutely not. The outcome is that possibly all parties are frustrated by the process, with the biggest impact being on the client, which in turn contributes to a poor customer experience.
Lawyers will also recognise the ‘exchange date’ drama that frequently unfolds in the conveyancing process. The stars must align, all the parties need to be informed, agree and have the necessary documentation ready to complete the task. Simple enough in principle, but how many times have you called or emailed another party in a chain waiting to hear they are ready to exchange and to offer a date – only to be met with no response, or been hit with another late enquiry just when you were ready to agree that date your client wanted?
How often have you been told by an agent the searches are back and then found out they haven’t even been submitted, having already shared the apparently good news with your client? Having been on the receiving end of this, as a lawyer and a client, I share that pain. It is incredibly frustrating the time you could spend advising your clients and practicing law is spent chasing what is effectively no more than data. Data that is held across multiple sources and which could be instantly accessed. The effect of this inefficiency? High costs, poorer client experience, less profit and much lengthier transactions.
Blockchain to the rescue
An industry-wide blockchain platform can help to resolve many of these friction points. If all parties plug themselves into a single network, connecting together their systems, the entire sector could adopt standard behaviours to eliminate inefficiencies, repetition and inconsistencies, benefitting everyone but especially clients. Firms will no longer need to maintain multiple integrations with the numerous regulatory bodies, portals and technology systems. Therefore, there are cost benefits as well in terms of reduced burden of IT and cost is based on blockchain network usage.
Firms won’t need a special relationship with the organisations on the blockchain network. They’ll be able to simply connect to the network, find who they want to work with and then communicate in standard terms, regardless of what system they are using internally. They’ll always retain their own processes and ways of working. This is an important point – a blockchain network is not prescriptive. Blockchain allows large number of parties – who potentially don’t know or trust each other – to yet work with each other in a secure and consistent way.
Technically, blockchain isn’t complicated to adopt. It does require law firms’ current system vendors to build some new APIs, but that’s easily done and the better your system, the more you can leverage to make your firm successful.
Collective adoption is key
Enterprise blockchain technology is secure, proven and well-entrenched in the financial sector. Likewise, for the technology’s full potential to be realised in the property sector, it does require the whole industry to embrace the technology. At that point, the sector transformation will be phenomenal for all parties.
The prognosis for the technology is similar to the Internet. It’s impossible to fathom a world without it today. It’s likely to be the same for blockchain in the property sector.
Of course, the alternative is far from ideal. Given how complex and broken some of the processes are today, the only other option would be for the government to centralise the way in which property transactions are executed. Potentially, the Land Registry could run the process end-to-end, with lawyers simply acting as notaries and playing a minimal role. As we know, there are many other approaches run around the world.
It’s time for the industry to act as a collective. The digital property market is here and for the taking, the UK leads the world in legal services; it’s time to lead the world with the approach we take to delivering them.
Simon Farthing is commercial director at LexisNexis Enterprise Solutions lexisnexis-es.co.uk