A computer popup box screen warning of a system being hacked, compromised software enviroment. 3D … [+]
The world is digitising at breakneck speed. We are ever more connected on a daily basis and share increasing amounts of data on ourselves as we go about our lives. When we looked at proptech megatrends in my last column, data privacy was rightly pinpointed as a primary concern for each trend examined. In today’s article, we will analyse what real estate and startups can both do to ensure data security for their customers. I sat down with Jake Fingert, general partner at proptech VC Camber Creek, to discuss how they address this concern from an investment perspective.
VCs are very concerned with security when assessing an investment. Fingert shared that Camber Creek break the topic down into two macro areas: one is data security and privacy, whilst the other covers IoT devices and hardware.
There are several facets to the first. In fact, real estate transactions worldwide involve significant amounts of personal and private information (such as social security numbers, bank account information, and more) which is stored digitally. Further, as sensors and apps are rolled out both in the residential and commercial sectors, information is gathered on users’ behaviour and preferences which many would prefer to remain private. It is therefore important for owners and occupiers to carefully consider the way the tech providers they partner with deal with security around personal information. As Fingert puts it, an office worker or a tenant will blame the company that owns or manages the building they are in if their platform gets hacked, not the startup that supplied it.
With regards to IoT devices and hardware, there are growing concerns around how these systems can be hacked and used maliciously. This ranges from the fear that Alexa home systems could be used to harvest personal data, to sprinkler systems in a building being hacked and activated by criminals planning to use them as a diversion to rob its residents. There are plenty of vulnerabilities in integrated tech systems, and these need to be looked at carefully by real estate owners and operators.
Further, it is essential that people are made aware of how their data is used and stored. According to Fingert, “building owners and operators need to proactively communicate with tenants about what personal data they are collecting, how that information is being used, and how their data is protected and stored. It is now more critical than ever for real estate firms to have strong internal programs and external partnerships in place to help them effectively manage cyber risks and data privacy concerns.”
So, what can real estate and proptech do, together, to ensure better cybersecurity for their clients? These are the best practises that Camber Creek recommends for real estate companies and the startups seeking to work with them.
What real estate can do
1. Make sure key staff are aware of security challenges and vulnerabilities within the company. Specific training must be provided, and outside experts should be involved when applicable.
2. Develop strong policies around data and cyber security. This includes having robust data destruction and backup policies.
3. Invest in audit and compliance. Many real estate groups are developing cybersecurity audits and compliance process. Whereas this practice was previously only implemented by the largest players, now most are ensuring strong controls are in place.
4. Find good partners in the space, such cybersecurity experts, and look at all different components of your tech value chain in a holistic manner.
5. Disclosures are also really important. Real estate owners and operators must make sure users are informed of what personal data they are taking and the security measures that are in place to safeguard it.
What proptech startups can do
1. Tech companies must be very hypothesis driven on how they want to use data. They should focus on pinpointing the analysis and insights they really need and what data they require for those. The overarching principle all proptech providers should stick to is that of only collecting the data they need for the problem they are solving.
2. Make sure your back end is strong and that you have good security in place with regards to data storage, whether this is done in-house or by partnering with data protection and storage companies. Fingert highly recommends that startups not waste resources by reinventing the wheel, as they can safely rely on experts to deliver optimal solutions.
3. The same recommendation given on disclosures to real estate companies holds for proptech startups. They need to be transparent with regard to the information they collect and retain, the reasons for which they are gathering it and how they intend to use it. This is essential in order to develop strong customer relationships.
In sum, it is essential that real estate companies and startups alike work to build a safe and transparent digital and physical tech ecosystem, which their customers can safely navigate whilst enjoying all the benefits that technology has to offer them.