The 2008 federal takeover of Fannie Mae and Freddie Mac will for a long time echo through financial services and property lending markets as a warning of what happens when irresponsible lending practices are applied.
The near collapse of these two organisations was one of the focal points during the global financial crisis and led to the adoption of stricter lending criteria and regulations throughout the developed world.
As part of the response, major financial regulatory bodies developed a set of best-practice guidelines designed to ensure that lenders would receive qualified, independent valuations of the properties they were lending against. However, New Zealand was the only major developed nation not to immediately adopt these guidelines.
One of the principal recommendations included within these guidelines was that all valuations required by a lender should be ordered through an independent third-party clearinghouse.
And when the New Zealand regulators came around and decided to incorporate this as a prerequisite lending requirement, they found that their third-party options were limited to only one provider, Property IQ, which some industry commentators interpreted as a monopolised system.
And while most saw this as a major encumbrance, Data Insight saw an opportunity to introduce some competition into the property valuation market.
Data Insight has traditionally done exactly what it said on the label: provide data insights to a broad range of corporate clients in New Zealand and Australia. However, the company now saw the potential of turning these insights into a product that could meet the needs of all lending stakeholders in a market that is annually worth $42.1 billon in property sales.
Armed with extensive knowledge of the property market, Data Insight set out to develop a property information and valuation ordering system that would be specifically designed to meet the needs of all stakeholders (regulatory bodies, lenders, valuers and property buyers) in New Zealand.
This product became known as Valocity, a cloud-based interface that gave interested parties immediate access to all the information they needed.
“Organisations that need property data can now access the latest information in real-time for the first time,” said Data Insight founder and chief executive Carmen Vicelich at the time of the launch. “Our specialist team has worked for months to deliver what we believe is a beautiful solution for those who need it most.”
The beauty of the solution lies in its simplicity. Platform users can look up any property in New Zealand and gather a broad range of information about that property in real time. They can then order various reports, or order a full market valuation from a qualified valuer. These reports are then securely delivered back to the lender.
From the outset, Data Insight knew that it couldn’t take on the existing player head to head and therefore decided to create something unique—and the company did this by focusing on the user.
The existing system was clunky and designed only to meet the regulatory requirements. There was little consideration of user experience and this led to some resistance from customers.
So, in building Valocity, Data Insight designed a platform that seamlessly linked all the interested parties and enabled users to customise specifications to their unique case. “Valocity uses new cloud-based technology to deliver a flexible and tailored system so clients can create unique and branded views and reports,” explained Vicelich.
However, only part of the job was done at this stage. Data Insight still needed to convince banks, investors and the various city councils throughout the country that Valocity was a viable alternative to the existing model.
Fortunately, the Kiwi company was successful in each of these counts. Around 75 city councils came onboard, giving Data Insight access to the information it needed for the system. Private funding partners stepped in, and Callaghan Innovation also lent its support to the cause. And despite the fact that banks tend to be reluctant to change (especially in regard to lending frameworks), Data Insight garnered their support.
The Data Insight team put their reputation and money on the line to develop Valocity. However, by using high quality data analytics combined with deep market and customer insight, the organisation developed an initiative that has proved to be major success.
The first major trading bank came onboard three months before the launch and went live in parallel with the system completion.
Within ten months, Data Insight had its first client onboard and rolled out the platform nationwide. Valocity has since gone on to attract a significant share of the market, pulling in impressive revenue for Data Insight.
Other clients soon followed, and ordering volumes on Valocity exceeded the annual target within the first six months.
And those who adopted the system were so satisfied with its performance that Data Insight was able to cancel the outsourced call centre support contract within three months, because it simply wasn’t necessary.
In addition to winning two categories in these awards, the initiative also picked up a gold gong at the New Zealand Direct Marketing Awards and it continues to be applauded throughout the banking industry for providing such an effective solution.
And given that Valocity is still in its infancy, we can certainly expect more from the business as it matures and grows.