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Changes in the real estate market – digital transformation of the banking and real estate industries

Contactless payments, cryptocurrencies, new solutions for cashless transactions – these are just a few examples of the development and digitalization of the financial market. A similar phenomenon can be observed at the intersection of the financial and real estate markets, where the importance of PropTech companies, which offer innovative technologies for the property industry, is growing [1]. In the course of the overall digital transformation, PropTech companies digitalize technological and business-related products and processes within the real estate industry. In a PhD thesis for the Collegium of Management and Finance at the Warsaw School of Economics, Maciej Merkel investigated the opportunities and the pressure on German banks’ boards of directors to innovate in the commercial real estate market industry [2].

Banking in Germany

Development and innovation are important drivers of growth in the German commercial real estate finance market as well. However, in recent years there has been a steady decrease in margins and an increase in competitors. The Covid-19 pandemic, as well as the emergence of new players in the market, including funds and insurance companies, are presenting banks with the challenge of developing new effective and scalable solutions [3].

Germany’s financial sector can be described as “over-banked”, with a total of 1,600 banking institutions and nearly 30,000 bank branches [2]. The size of this market, as well as the previous preference for using older, well-established technologies, raises the need to implement more advanced technologies, such as machine learning, big data and blockchain. A survey conducted among board members of leading banks, as part of a study by the School of Economics, showed that the need for transformation is vital in this industry. The respondents rated the degree of innovation of the market at only 3.5 on a scale of 1 (lowest) to 10 (highest), while believing that their own institutes rank significantly more innovative with an average of 6.8 points [3], which certainly indicates a potential discrepancy in the assessment of their own institutes, which is in some cases referred to as the Dunning–Kruger effect. [4].

According to the Central Real Estate Commission (Zentraler Immobilien Ausschuss), there are currently 700 PropTech companies in the German market offering a wide range of solutions, from simplifying and digitizing mortgage origination to touring apartments via VR goggles. As many as 70% of the institutions surveyed are discussing collaboration with these companies [3]. The biggest driver of this change may be the awareness that in the future, without innovation, banks will not stand a chance against growing competition [2].

The digital revolution of the commercial real estate market

According to Dr. Maciej Merkel, the reason for the slow speed at which innovations are implemented is often attributed to the nature of the market, where a complicated bureaucracy meets outdated views of market players and stakeholders [2]. Similar cases in other industries have left key players vulnerable to failure when new, innovative competitors entered the market, or when external factors pose sudden challenges – as happened during the Covid-19 pandemic. 

Is it certain that the digital revolution of the real estate market is coming soon? To some extent, it is inevitable. The technologies needed for the transformation are constantly being developed, new players in the market are also “hungry” for innovation, and some of the traditional solutions are no longer as effective as they once were. We may soon witness a digital transformation in the financial and real estate market, in Germany, as well as in Poland and Europe.


  1. “Czym jest ten proptech, czyli technologia na rynku nieruchomości”, ThinkCo,, accesed on: 7.12.2022
  2. “Die Finanzierer wissen, dass sie digitalen Nachholbedarf haben”, IZ 40-41/2021
  3. Vom Weißen Hai und deutschen Banken, immobilieenmanager,, accesed on: 7.12.2022
  4. Emotionale Intelligenz in Organisationen, S. 340, Gölzner, H., Meyer, P., Springer, 2018
dr Maciej Jakub Merkel

PhD in economics and works as a lecturer in Berlin. He has gained experience and industry knowledge as a co-founder and manager of several start-ups and as an advisor on commercial real estate transactions. His research focuses primarily on technological innovation in the commercial real estate market.

Joanna Rancew
Member of Coopernicus Team and Computer Science and Engineering Master's Student at Politecnico di Milano. Graduate of the Warsaw University of Technology in Biomedical Engineering with a specialization in Biomedical Informatics. You are welcome to read more our articles in Coopernicus Knowledge or on Joanna's Medium:
Written by:

Dr Maciej Jakub Merkel, Joanna Rancew

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