Builders turn to FinTech to solve payment disputes

Australian construction industry contractors are turning to FinTech to settle payment disputes in an industry that, according to the Prime Minister, is “plagued by disputation”.

Major builders including Mirvac, Icon, Grocon and 2construct have started using the Progressclaim.com payment platform to avoid payment disputes and eliminate processing costs.

The cloud-enabled software platform allows developers, contractors, subcontractors and consultants to manage payment requests and approvals collaboratively.

Payment disputes have become a major issue for the construction industry. ABS data suggests that 44% of Australia’s lost work days in 2015 came from the construction industry, and construction industry payment disputes are estimated to cost the Australian economy around $7 billion annually.

This has led Prime Minister Malcolm Turnbull to label the Australian construction industry as “plagued by disputation” and “bad practices”, and to call for the revival of the Australian Building and Construction Commission.

The FinTech sector is itself undergoing significant changes, driven by growing adoption of blockchain, the technology underpinning crypto-currency Bitcoin.

New market research undertaken by Marketforce on behalf of business applications provider Pegasystems shows that 60% of global financial services retailers with some understanding of blockchain believe it will prove the most significant technological development for the sector since the internet.

More than half (53%) of these respondents believe that the technology will have a substantial disruptive impact in clearing and settlement markets, and 36% also expect to see significant disruption from blockchain on the checking accounts market.

Nearly half (45%) of respondents also agreed that the combination of blockchain wallets and peer-to-peer lending could even herald the end of banking as we know it.

“For many, the jury is still out on whether or not blockchain will be a force for good or not. However, we do know there’s no longer room to be complacent about such a potentially significant source of disruption,” Pegasystems Director and Industry Principal of Financial Services Graham Lloyd said.

“Banks and insurers must prepare themselves for the day when they might have to manage blockchain-stored customer data — whether it be their personal information, details of their assets or even real-time data from virtual currencies.”

Image courtesy of AIR FORCE ONE under CC