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Aviva backs blockchain mortgage company in $6.5m funding

residential mortgages

This week Aviva Ventures and UK financial adviser Sesame Bankhall Group (SBG) backed London-based blockchain company Acre Software in a £5 million ($6.5m) funding round. The startup came out of the Founders Factory accelerator and aims to streamline the UK mortgage, insurance and conveyancing process.

In the UK 74% of residential mortgages are made through intermediaries or brokers. While the hand-holding may be helpful for such a stressful transaction, working with brokers involves friction. For example, know your customer processes are often completed by brokers, lenders, insurers and lawyers independently.

The Acre system isn’t intended to remove the intermediary. Instead, it’s designed to make the process more collaborative and less repetitive.

“Buying a house is one of the biggest financial transactions a person can make, yet the process is slow, opaque and fragmented, which is increasingly out of step with consumer expectations,” said Justus Brown, CEO/founder of Acre Software. “We’re changing this – levelling the playing field for brokers using innovative tech, while putting an informed consumer at the centre of the mortgage process.”

The company says that it will use blockchain to “bring together all the components of the mortgage advice process into one unchangeable ‘record of the transaction’.”

In 2018 gross mortgages in the UK amounted to £275.5 billion according to the Bank of England. Of that 74% or £204 billion went via brokers, and SBG handled more than 20% of brokered mortgages at £42 billion. So it’s not a huge surprise that SBG and Acre have entered into an exclusive relationship.

In the announcement, SBG talked about the challenge of competition from direct-to-consumer strategies. And hence to retain the broker’s position, there’s a need to match the speed and consumer experience of these disruptors. However, the UK’s Intermediary Mortgage Lending Association predicts the proportion of broker transactions is rising and expects it to reach 76% by 2020.

“SBG serves over 10,000 financial advisers across the UK and facilitated £42 billion in mortgage completions last year,” said Martin Schultheiss, Group Managing Director, Sesame Bankhall Group. “These advisers are looking to us to help build the next generation of adviser services to ensure they stay competitive. The SBG and Acre relationship helps to enable this future vision for us.”

Aviva is the UK’s number two insurer. It’s involved in home insurance, and as part of its life insurance division, it offers equity release mortgages to older homeowners.

“Acre is a fantastic example of the kind of fintech business we want to help nurture,” said Ben Luckett, Managing Director, Aviva Ventures. “They have identified a market which could be improved through technology and they’ve gone for it by securing a very large distribution partner, which is often the missing ingredient for success.”