Meet the Adelaide fintech startup that is revolutionizing how banks issue green mortgages

Homeowners can soon save money on loans and insurance by making their homes more energy efficient, while banks and insurance companies gain new insights into the sustainability of their housing portfolios, thanks to the Adelaide-based fintech startup ValAi.

ValAi’s core product, known as Greenhouse, is an app that lets homeowners see the home’s energy consumption and climate resilience in real time.

It includes advanced machine learning and artificial intelligence to provide practical tips that allow homeowners to save money and enhance the value of their property by making it more sustainable and energy efficient.

In the meantime, for banks and insurance companies, the platform will fill an important need by providing data on the sustainability of the properties in their housing portfolios at an individual asset level.

The platform could potentially enable banks to make energy efficiency a condition of the loans they issue.

The initiative is the idea of ​​co-founders Allys Todd, a STEM expert who was previously general manager of the Conservation Council of South Australia, and property appraiser Thomas Reid, who teaches valuation of commercial property as a supervisor at the University of South Australia.

The co-founders came up with the idea about 18 months ago, after noticing that the tools used by real estate agents, financial institutions and governments to assess the value of real estate do not tend to assess how sustainability and energy efficiency affect value.

“The friction point for us was that we found that when graduates go out into the industry and look at the built environment, especially residential properties, there is no training on how energy efficiency and climate impact actually affected the value of the property,” says Todd The Fifth Estate.

To provide financial institutions with the data they need

While developing the platform, Todd spoke with a number of financial services and insurance groups to find out what gaps they have for their mandatory reporting requirements.

Because there are so many properties where the sustainability data is not known, large financial services companies do not have the aggregated data they need to be able to assess the climate-related risks they carry on the loan portfolio.

In addition, many larger organizations now have scope three reporting requirements for their supply chains. For banks, this includes the individual assets on their loan books, including residential properties.

“In the past, there has been no need for anyone from a regulatory or mandatory reporting perspective to have to know the energy efficiency or carbon impact of a residential property,” says Todd.

“But now there is a mandatory requirement, called the Climate-Related Financial Disclosure Working Group (TCFD), which asks large companies, financial institutions to be able to report on individual residential properties at the asset level.”

Australia’s NatHERS rating system provides a systematic way for residential properties to be assessed. The problem, says Todd, is that around 78 per cent of the homes in a loan portfolio in Australia were built before 2011, before the NatHERS standard was introduced.

“So we are talking about millions of assets that exist in Australia today as there is little or no accurate climate – related or impact – related data on energy efficiency.

A huge market opportunity

The potential market opportunity for the platform is enormous. Over the next three years, an estimated $ 1.4 trillion will be spent globally on housing improvements.

Many of these renovations will be financed with bank loans, or will require the property to undergo an insurance assessment.

“When a person goes to their financier to be able to improve their property, we challenge the banks to ensure that any improvements that take place also include a sustainable and energy-efficient lens.

“If they do not make improvements that will reduce the risk to the asset in the face of climate change, we challenge banks to say that we would really love to see these energy-efficient measures incorporated into that process.”

In the meantime, the app provides an opportunity to use people-centered design principles to educate and inspire homeowners to make their properties more sustainable, says Todd.

“If you can give a homeowner the opportunity to increase energy efficiency, it saves them cash flow for their own household expenses on a weekly basis. It gives them the capacity to continue paying down on loans or other financial services they have.”

Preparation for launch and a large seed financing round

According to Todd, the start-up aims to release a minimum viable product that will be available later this year.

The platform was developed with support from Amazon Web Services and Adelaide’s Australian Institute for Machine Learning. Interns from the University of Adelaide and the University of South Australia helped with AI and machine learning.

The team has also participated in a number of prestigious incubator and accelerator programs. These programs include UBS’s Sustainable Finance Challenge, the Global Open Finance Challenge, the Big Lab incubator program at the University of Adelaide and AIG’s Firemark Ventures program in Singapore.

The start-up is currently in the middle of a seed financing round, with Todd promising some big announcements about venture capital and angel investments in the coming weeks.

“As a female founder, it has been fantastic. I have done many incubators, many networking events to find out more about raising capital, because it has certainly been outside my wheelhouse before I entered the start-up community, says Todd.