Australia’s online property exchange PEXA has processed its first full property settlement in partnership with the Commonwealth Bank.
The PEXA platform, which entered development in 2011, has been rolled out gradually since December 2013 under an initiative lead by the Government-backed National Electronic Conveyancing Development Limited (NECDL).
The platform - developed by Accenture and hosted by Telstra - uses elements of Victoria’s existing electronic conveyancing system, ECV. It runs on Java sitting atop a Linux stack and Oracle database.
PEXA’s initial functionality, deployed to Victoria after the state's land and title body signed up, meant banks could perform standalone mortgages, discharges and refinances online.
In the year since, the NECDL has convinced the four major banks and a number of tier 2 providers to sign up to the platform.
PEXA is now in the process of extending full functionality - meaning it will support new mortgages, discharges, refinances, notices, caveats and transfers - across the country on a state-based approach.
The new functionality was rolled out first to NSW in late October, with Victoria following soon after. PEXA is eventually expected to reach around 200 mortgage providers and 5000 lawyers and conveyancers.
The Commonwealth Bank was an early adopter of the platform, and seized this latest opportunity to be the first to process a full home purchase settlement in NSW - helped by its position as the banking provider for both the buyer and the seller involved.
Currently, solicitors representing the buyer and seller as well as the mortgage provider and mortgagee are required to meet up and exchange sets of printed information before a property is able to settle.
It’s a process that has been in place for the past 150 years and is in sore need of digitising, CommBank head of digital property settlement Steve Braithwaite told iTnews.
“It’s pretty much been the same way since the Torrens Title system came out, so there’s all this interaction between solicitors and banks to team up, swap documents and bank cheques and so forth, and there’s a lot of things that can go wrong,” he said.
“You could be missing a name or the share totals don’t add up, so there’s potential for the settlement to fail.
“[With PEXA], the information is pre-populated in the system and verified against the land registry system, so it reduces error and gives certainty that the purchase will settle.”
While the system won’t make much difference to those buying and selling properties at face value, PEXA will bring a lot more efficiency and security to the processing of such transactions, Braithwaite said.
It also has the potential to pave the way for new features from the consumer perspective, including digital applications for mortgages.
“It’s not something that’s specifically part of the PEXA platform, but at CBA we are investigating whether we can take this industry and streamline and digitise that process,” Braithwaite said.
“There are some aspects where we need support from legislative change and so forth, and we’re working with other participants in the industry to drive some of these legislative and regulatory reforms.
“The aim here is to digitise and streamline the entire process, and PEXA is a critical element in that. This is a massive industry shift in the same way as share trading in the late 90s went from paper share certificates to online, and that revolutionised the industry.”
The NECDL is rolling out PEXA to a limited number of selected practitioners in Sydney and Melbourne to familiarise them with the platform, and plans to broaden it to the wider Victorian and NSW markets from February 2015.
PEXA will become available for Queensland practitioners from April next year, WA practitioners in May, and those in South Australia, Tasmania and the Northern Territory are scheduled to be invited onto the platform from the last half of 2015.
The NECDL expects electronic conveyancing to generate $240 million in annual efficiency gains, and $120 million specifically for banks.