How to Make Your Rental Deposit Work for You: FinTech and PropTech Solution

Imagine a rental process where cumbersome deposit accounts at traditional banks are a thing of the past. In Switzerland, where most of our real estate clients reside, tenants are required to lock away up to three months’ worth of rent in an escrow account—funds that sit idle, uninvested, and come with hefty fees.

This amount can range from 500 to 7,000 Swiss francs, depending on the rent and the size of the accommodation. For instance, the average rent for a 100-square-meter apartment in Geneva is around 1,970 Swiss francs per month, which means the deposit could be as high as 5,910 Swiss francs (CHF).

Currently, rental deposit accounts are typically offered by traditional retail banks. These accounts are usually not digitized, meaning they lack the convenience and efficiency of modern digital solutions. Additionally, the funds in these accounts are usually not invested but rather kept in a savings account, which means they do not generate any returns for the tenant. Opening and maintaining these accounts can also be expensive due to bank fees and minimum balance requirements.

The combination of high upfront costs and the lack of investment opportunities for rental deposits can be a burden for tenants. The process of opening and managing these accounts is cumbersome and does not provide any financial benefits to the tenant during the rental period. This can be particularly challenging for new tenants, especially those moving from abroad, who may not have a financial history in Switzerland.

The requirement to pay three months’ rent as a security deposit can be a significant financial burden for many people, especially those struggling to cover their monthly expenses. This deposit is meant to cover potential damages or unpaid rent. Still, it can be difficult for renters to come up with such a large sum upfront, even with the average salary in Switzerland around 6,665 Swiss Francs (CHF) per month gross.

But what if there was a way to make this process seamless, digital, and even profitable?

Given all these challenges, there is a significant opportunity for a digital solution that can streamline the rental deposit process and offer investment options for tenants. A fully digital solution could provide tenants with a more convenient and cost-effective way to manage their rental deposits, while also allowing their funds to be invested in low-risk ETFs, generating returns during the rental period. Instead of letting the deposit sit idle in a bank account, it could grow over time, offering financial benefits to the tenant. This innovative approach transforms what is traditionally a financial burden into a growth opportunity.

However, you should consider the security and risk factors. To ensure the security and professional management of the deposits, the funds would be held at a trusted partner bank. While the bank takes care of the financial management, the digital platform would focus on providing a seamless and user-friendly experience for tenants and property managers.

User Groups and Their Journeys

A software product is only successful when it caters to the specific needs of its users. The rental deposit affects two categories of users: tenants (whose money goes towards the deposit) and property managers (who should have access to the finances in case something goes wrong.)

Each category has a unique journey and requirements that the platform should address seamlessly. Let’s take a look in more detail of what it might look like.

Tenants Mobile App

A mobile app for tenants with a simple and intuitive interface could allow tenants to easily onboard by verifying their identity, opening an account, choosing their desired investment option, and tracking their investment performance. Everything should be designed to be straightforward and accessible.

Tenants are individuals who need to open and manage their rental deposit accounts. We’ve considered the details of what such a solution might include. Here’s a closer look at their user journey:

• Onboarding (KYC & Identification):
  • KYC (Know Your Customer) Process: The onboarding process begins with a streamlined KYC process where tenants verify their identity. This step is crucial for security and regulatory compliance.
  • User-Friendly Interface: The mobile app should have a simple, intuitive interface to guide tenants through the identification process with ease.
• Account Opening:
  • Seamless Account Setup: Once identity verification is complete, tenants should be able to open their rental deposit account quickly and without hassle.
  • Secure Digital Platform: The platform should ensure all sensitive information is securely handled and stored.
• Product Selection:
  • Investment Options: Tenants should have the option to choose between a basic deposit or one of three low-risk investment portfolios (ETFs), allowing their funds to grow over time.
  • Informed Decision-Making: The app should provide detailed information about each investment option, helping tenants make informed choices.
• Performance Tracking:
  • Real-Time Updates: Tenants should easily track the performance of their deposit or investment through the app, with real-time updates and detailed analytics.
  • Transparent Information: The app should ensure transparency, offering insights into how their funds are managed and performing.

Development requirements:

• Simple Interface: The app should feature an intuitive design that guides tenants through the onboarding process, including KYC (Know Your Customer) and identification verification. Users should be able to open an account effortlessly, select their desired deposit product (basic deposit or one of three investment portfolios), and track the performance of their investments.
• Target Tech Stack:
  • React Native: A cross-platform framework that allows for the development of iOS and Android apps using a single codebase, ensuring a consistent user experience across devices. We prefer to use React Native for our mobile apps because it simplifies the development, especially when you don’t need specific hardware integration.

Property Managers Web App

A web app for property managers could streamline the management of deposit accounts. Property managers could sign contracts, view all deposit accounts managed through the platform, make necessary modifications, and initiate move-outs (closing accounts). This comprehensive tool would simplify their workflow and enhance efficiency.

Why a web app instead of a mobile one? Property managers usually have a lot more than a couple of properties to manage, therefore it would be much more convenient to do it from a computer. At the same time, a web app would be available on mobile phones as well, in case you need to check out something.

Property managers oversee the management of multiple rental deposit accounts. Here’s an overview of their user journey:

• Signing Contracts:
  • Digital Contract Management: Property managers can sign deposit account contracts digitally through the web app, streamlining the initial setup.
  • Efficient Workflow: This reduces the administrative burden and speeds up the onboarding process for new tenants.
• Overview and Management of Deposit Accounts:
  • Centralized Dashboard: Property managers have access to a centralized dashboard that provides an overview of all deposit accounts managed through the platform.
  • Real-Time Monitoring: They can monitor account statuses, track deposits, and view performance metrics in real-time.
• Contract Modifications:
  • Easy Adjustments: The platform allows property managers to modify contracts as needed, such as updating tenant information or changing investment options.
  • Compliance and Security: All modifications are securely documented to ensure compliance with regulatory requirements.
• Move-Outs and Account Closures:
  • Streamlined Move-Out Process: When a tenant moves out, property managers can initiate the move-out process and close accounts directly through the web app.
  • Automated Settlements: The platform facilitates automated settlements and refund processing, ensuring a smooth transition for both tenants and property managers.

Development Requirements

• Interface Features: The web app should include functionalities for property managers to sign deposit account contracts, get an overview of all deposit accounts managed through the platform, make necessary contract modifications, and trigger move-outs (account closures). The interface should provide real-time updates and a centralized dashboard for easy management.
• Target Tech Stack:
  • React: A powerful library for building user interfaces, especially for single-page applications where data changes dynamically. React ensures a responsive and seamless user experience, making it ideal for the web app.

By focusing on these development requirements, we can build a robust and user-friendly digital rental deposit solution that meets the needs of both tenants and property managers, ensuring a secure and efficient process.

Choosing the Right Partner

To successfully bring this innovative digital rental deposit solution to life, it’s crucial to partner with an agency that meets specific criteria. Here’s what the startup is looking for in a partnering agency:

• Expertise and Experience: Choose a partner that has experience in FinTech and PropTech (or whatever else niche your product is going to take.) If the partner has the expertise already, this will minimize the time spent on research and more time will be devoted to actual work. (Not to brag, but HUSPI has both FinTech and PropTech expertise, especially in the Swiss market.)
• Timely Output of Market-Ready Solutions: The ideal partner should have a proven track record of delivering high-quality, market-ready solutions on time. This ensures that the startup can quickly introduce its disruptive product to the market and stay ahead of the competition. At the same time, we recommend beginning with an MVP to test the product before investing more money into features that might not be necessary while missing important ones.
• Close Interaction and Integration: Collaboration is key. The partnering agency should work closely with the startup, integrating seamlessly into their development process. This includes frequent communication, regular updates, and incorporating feedback from key stakeholders such as Felix Graule. A tight-knit working relationship ensures that the final product aligns perfectly with the startup’s vision and goals.
• High Code Quality: The quality of the code is non-negotiable. The agency must adhere to best-in-class structuring, documentation, testing, and DevOps practices. This guarantees that the solution is robust, scalable, and maintainable, minimizing the risk of bugs and technical debt.
• Fair Pricing: While quality and speed are critical, the cost is also a significant factor. The startup is looking for an agency that offers fair and transparent pricing. The right partner should provide excellent value for money, ensuring that the project stays within budget without compromising on quality or timelines.

Conclusion

This solution seeks to transform the rental deposit market by providing a digital solution that simplifies the deposit process and allows tenants to invest their deposits in low-risk ETFs.

In simple words, it helps “mere mortal” people benefit from their rental deposits while providing resources for banks as well as to use for investment purposes.

By partnering with a trusted bank and creating easy-to-use digital channels for both tenants and property managers, this solution tackles issues like high upfront costs and the lack of investment options. The potential market impact is considerable, creating a more efficient and beneficial system for everyone involved.

For startups or businesses looking to develop similar digital solutions, this project serves as an example of how technology can transform traditional processes and create new value for users. Whether you’re aiming to innovate in the fintech, proptech, or other sectors, the right digital tools and a dedicated development partner can make all the difference.

We invite you to contact HUSPI for further discussions and potential collaborations. Let’s explore how we can help you bring your vision to life and achieve your business goals with cutting-edge digital solutions.