Due to the rapid digitization of the business world, organizations are competing for the same market in key regions. It becomes challenging to maintain superiority when the products and services are almost alike, especially in the real estate industry. In such circumstances, the customer journey becomes the deciding factor. Historically, real estate did not associate much with digital transformation. However, the current market requirements demand businesses to rethink their strategy and provide a better customer experience. Besides this, real estate is prone to fraud and money laundering activities. Implementing technology, such as digital document verification, can mitigate these risks while improving the customer experience. This post discusses how digital document verification safeguards property transactions and introduces digitization in the real estate industry.
Traditional Approach to Document Authentication
Traditionally, the document attestation process involves the following drawbacks:
- The most obvious and hectic one is the requirement of physical presence. Since the verifier checks the physical documents, the candidate or client must bring the files physically. Such a process is time-consuming for both parties and introduces needless friction.
- Secondly, the involvement of manual work introduces errors and fraud in the system. Experts indicate that fraud could increase 20-25% over the next few years. Thus resulting in losses for the business and the overall real estate industry.
- Besides the initial cost of traditional identity document verification, processing can also take a long time. Typically, real estate dealers contact external organizations to cross-verify the identities of their clients. However, this process can even take days, thus adding unnecessary delays.
Understanding Digital Document Verification
Improvements in technology, especially AI and machine learning, have paved the way for online document verification services. The primary difference between the traditional method and digital document verification is that the latter eliminates the need for physical presence. Therefore, customers first capture the photos of the documents and then upload them to the system. For this purpose, a document verification solution typically provides an application programming interface (API) that connects with the client app or website. It also means that such a solution does not add friction or complexity to the onboarding process. Modern providers understand the importance of customer experience, therefore, real estate firms can expect better customer retention.
Benefits of Digital Document Verification in Real Estate
As mentioned above, digital document verification eliminates the need for human intervention in document authentication. Once the document photos are uploaded, the system uses AI and machine learning techniques to extract data. After extraction, the document and data undergo initial checks, such as reconciliation and validation. Then, customer data is cross-verified against established databases to check for people involved in illicit activities. If there are any matches, the customer is flagged, and their transactions are stopped. Moreover, the firm can report these findings to regulatory authorities that check AML policies. Digital document verification provides numerous benefits, some of which are discussed below:
Data Accuracy and Consistency
Historically, real estate firms preferred paper transactions and physical document verification. However, most firms now understand the drawbacks of such processes. Firstly, manual data collection is prone to errors, and its storage requires more resources. Similarly, manual processes lack the refined standardization of methods which can introduce an inconsistency in the collected data. On the other hand, document verification uses a uniform approach to collect customer data. Automated data entry also reduces the burden on the staff, apart from increasing data accuracy.
Most states now make it compulsory for homeowners and landlords to screen their tenants. It can unnecessarily delay the process and can even lead to lost customers. On the other hand, digital document verification plays a crucial role in tenant screening by offering a secure and efficient way to verify tenants’ identities and credentials. It enables landlords and property managers to authenticate documents such as identification cards, proof of income, and rental history digitally, ensuring accuracy and reducing the risk of fraudulent information. This streamlined process saves time and resources, allowing for thorough screening and enabling confident decision-making in selecting reliable tenants.
Property Purchase or Rental Agreements
Renting property to a tenant is one thing, but selling it or leasing it to a business is a different story. Politically exposed persons (PEPs) and money launderers can use it as a gateway for illicit activities and to launder money. Therefore, it becomes imperative for owners to implement a robust solution for digital document verification. It will protect the real estate firm and owners from legal repercussions and regulatory violations.
Real estate is a high-value industry that remains at constant risk of fraud and money laundering. To curb these activities, real estate firms should utilize digital document verification. Such solutions replace the need for human intervention and improve the accuracy of the process. Automated digital document verification also reduces processing time, thus increasing business margins.