Shares in ASX-listed digital property exchange PEXA could rise on the back of improvements to its in-house tech capabilities via strategic fintech partnerships.

PEXA may also possess a ‘monopoly moat’ advantage enabling it to account for over 80% of Australian property transaction processing in the second half of 2021.

PEXA invests in AI start-up Elula

On 27 May, PEXA announced that it is acquiring up to a 25% stake in Australian artificial intelligence (AI) company Elula for an undisclosed sum.

Elula was founded in 2017 by two former Commonwealth Bank executives. It has developed proprietary AI and machine learning technology for driving customer acquisition and retention.

PEXA said that the investment will let it provide ‘a more holistic view of critical lending and refinance consumer behaviour, further amplifying PEXA’s capabilities for financial institutions’.

PEXA also claimed that its partnership with Elula will enable it to leverage synergies by overlapping institutional clients in the Australian banking sector. Elula already provides its AI products to banks, credit unions and mutual funds that are also PEXA customers.

Landchecker partnership improves info offerings

Elula is PEXA’s second strategic investment to date, following PEXA’s acquisition of a 38% stake in Australian prop-tech firm Landchecker back in February.

Founded in 2015, Landchecker is a comprehensive provider of property information to both professional members of the sector as well as consumers. The company says that this improves their ability to make relocation and investment decisions.

PEXA said at the time that the joint investment with RACV would serve to enhance the property data that it provides to the industry, and provide the basis for new products and services.

PEXA readies payments scheme for UK expansion

PEXA also has plans to expand in the UK housing market with the launch of a remortgage platform in autumn, which it contends will save on time and expenses via process streamlining.

To drive the success of the platform, in April PEXA announced the development of an entirely new payment scheme – PEXA Pay. The Bank of England will serve as the settlement agent for the scheme following successful testing with a cohort of seven mortgage lenders.

PEXA also announced that it had entered a partnership with ClearBank – the UK’s biggest next-generation clearing and embedded banking platform, to broaden access to the remortgage platform.

Fund manager says PEXA has monopoly moat

The effectiveness of PEXA’s fully digitised property settlement process has driven rapid growth in its home market of Australia. According to PEXA it helps over 20,000 families settle their homes each week.

In a recent interview, Leon de Wet of Elston Asset Management identified PEXA as a ‘monopoly moat’ company–a company with a protective ‘moat’ that its competitors will find challenging to surmount.

De Wet said that PEXA is ‘estimated to have handled more than 80% of the property transactions in Australia for the six months to December 2021’. This suggests that the platform achieved a position of market dominance just after its listing in June of that year.

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Marc Howe | Financial Writer
22 July 2022