JPMorgan Chase recently piloted a platform for commercial real estate owners and managers that will automate invoicing and receiving online rent payments, CNBC reports.
Online payments are commonplace today to cover transactions in most industries, but monthly rent checks are still the exception in a lot of cases. This in part due to the market’s fragmentation, as many of the 12 million property owners across the U.S. operate smaller portfolios with less than 100 units. That has led to approximately 78 percent of rents still being paid with traditional checks and money orders, according to JPMorgan.
“The vast majority of rent payments are still done through checks,” JPMorgan Chase Chief Innovation Officer Sam Yen said in a recent interview. “If you talk to residents to this day, they often say ‘The only reason I have a checkbook still is to pay my rent.’ So, there are lots of opportunities to provide efficiencies there.”
Crafting a new Story
JPMorgan has been developing its own software, called Story, CNBC reports. The software is designed to eventually become a one-stop property management solution. The bank has strived to improve the rent collection process because it is the “most time-intensive process that exists today for a real estate owner-operator,” said Kurt Stuart, who runs JPMorgan’s commercial term lending for the Northeast region.
Embracing an online payment platform would help save landlords the time they spend collecting and depositing paper checks. They’ve also relied on older accounting software programs to run their businesses, according to Yen. Even though there are newer options that better serve the CRE industry, none have grabbed a big market share yet.
“(Story) will give (property owners and managers) much more visibility across their entire portfolio to see exactly what’s been paid and what hasn’t been paid,” Yen told CNBC.
The bank also hopes to appeal to users by offering valuable insights through data and analytics, along with convenient payment options. Potential insights include how to set rent, where to invest going forward and potentially help with tenant screening.
Yen also noted that landlords and tenants do not have to be JPMorgan customers to sign up for the platform, which is expected to have a wide release next year. Tenants can automate their rent payments, get notifications and see their payment history on the platform’s online dashboard. JPMorgan anticipates users will find it easier to monitor their transactions this way vs. mailing a paper check.
Rent payment convenience is just the beginning
JPMorgan developed this platform as a convenience measure for CRE owners and tenants, but the bank is also hopeful it will keep it competitive against financial technology (fintech) companies and enhance their client relationships. It also looks to expand beyond loaning money to CRE owners and eventually have “a significant portion” of the $500 billion in annual rent payments with its software, commercial banking CEO Doug Petno told analysts in May.
“We’ve been investing to build comprehensive payments and rent solutions capabilities specifically for our multifamily clients,” Petno said. “In doing this, we hope to create an entirely new and substantial revenue opportunity for our business.”