DIGITAL XCHANGE

Obligo CTO Yiftah Barouch Talks Security Deposits, Open Banking And Integrations

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When it comes to the property management industry, the sector is filled with as many different services and products as the many types of people who rent. As proptech startups rise to tackle existing challenges, and create innovation in the segment, one solution gaining steam in the market focuses on eliminating the often painful process of deposits.

Obligo is an example of a company tackling this pain point. While the company has the long-term goal to make renting as easy as checking in to a hotel, it has started this endeavor with this early step in the rental process.

FinLedger’s Joe Burns spoke with YIFTAH BAROUCH, Chief Technology Officer (CTO) at Obligo, about how the company is working to eliminate security deposits and its next steps moving forward.

FINLEDGER: First off, can you just describe Obligo and the services you offer?

YIFTAH BAROUCH: At Obligo we have a mission to make the rental process like checking in and out of a hotel. The first thing that we’ve tackled was the deposit, which is a barrier for renters, but then it’s also a very annoying and demanding process for property managers. Basically we created a way for renters to move in without paying a cash deposit upfront.

FL: What really moved you to start the company, and why did you choose to start with the security deposit element?

YB: We think that the deposit is a crucial aspect to the process. The property manager wants to make sure that the renter is accountable and wants to make sure that they have money in their pocket. We also provide that with credit, but we saw that out of all the things that are unsolved around this area and around this process, deposits are definitely ones that not a lot of companies tried to solve and we went for it.

FL: What were and are the biggest challenges with getting that off the ground and building that product out?

YB: Definitely integrations, and working with property managers. It’s great for companies like us, because we can get a lot of units relatively quickly and can expand that way. But also, the bigger the companies, the more stakeholders are involved. Questions like, “Do you integrate with Yardi?” for example comes up like this, and is one of the first questions. So getting all the integrations in place was definitely very challenging when we started, and we are integrated with most of the biggest property management software companies like Yardi, MRI, Entrada, and we also have a Salesforce integration.

We actually are building kind of an app store within our platform so it’s very easy to create a new integration. It’s also very easy to activate it and customize it depending on the property managers use case. We also see that there’s a lot of customization because everybody has their own process. That’s definitely a challenge on top of of integrations.

Another challenge that we get is that the way we qualify renters for the deposit free option is with open banking. So we ask them to connect the payment method with Plaid, we pre-authorize that payment method and we also check their liquidity. A challenge that we had is, “How do we communicate this open banking?” That’s something that’s been happening in the last couple of years, but how do we make it a happy path for our user going through the flow? That was also challenging, but I can say that most renters are qualified by connecting their bank account.

FL: Can you go through that open banking aspect? What are the biggest factors you look at, is it just liquidity and cash-flow, or is there other aspects involved?

YB: We actually built a model with machine learning, and we let the computer decide what we should look at. But at the end of the day, it’s pretty classic. We’ll look at a couple of months back. We don’t look back five years ago. I want to look into the last six to 12 months and we’re looking mainly at balance, but also we look at income and expense. Definitely balance, and the history of balance over time, is the most crucial factor for that kind of risk.

FL: What would you say is the typical size as far as the number of units for your clients?

YB: We have a variety. We have property management companies that have 100 units or 200 units, and we also have property management landlords with 10,000 units in the field. It really, really varies. When we build the products, we try to generalize as much as possible. Anytime for example, we work on an integration, we make sure that as part of the app store, companies regardless of their size can activate it as well. That’s been our approach. We see a lot of companies with different sizes.

FL: Last year you raised a US$35 million Series B. How have been the biggest ways you’ve been using that to further Obligo’s goals?

YB: From my end, it’s something that we’ve been investing in since day one. I think one of the most important things in our business is our core technology. So growing our R&D, which is based in Tel Aviv, has been very, very big for us. The market here as well in the US is not easy, and so hiring is a challenge but that’s where we want to invest the money. Making sure that we grow our R&D, and also grow our sales. That’s the two main things that we’re investing in.

FL: As CTO, I know it can be hard to find talent. Where are you looking, what do you look for and how does that go?

YB: It’s definitely hard. We’re still a small team at Obligo, around 20 employees here and obviously growing. We have a couple networks here that we’re trying to leverage. We have people coming specifically from the [Israeli] army with experience in development, and then they have friends when they finished the army that we also recruit through that. We recruit with agencies and anything goes at this point. You need to be fast when you have someone that you like. You need to be very, very fast with the process because they’re getting a lot of offers simultaneously. You need to stand out, and so this is our view. We have surfboards, and this is kind of how we try to just hand out, but it’s not easy. It’s not easy at all.

FL: Are there any next steps, or products you’ve been working on moving forward?

YB: Thinking about integrations and what we want to do in that space is definitely something that we’ve been working on a lot. It’s very big for us with our API. We have in an open API that basically can empower property management companies that build their own user experience. We actually allow them to embed the Obligo deposit-free experience in their own product. It’s very, very seamless. for the renter when they go through the application when they need to pay a deposit. They’re asked, “Do you want to pay US$2,500, or do you want to pay the 990 and go deposit free and then they’re going through our flow. We call it an embedded experience. We really, really believe that to make a change, you need to create a great user experience. Our API is definitely a big one and we want more companies to use it when they build their own flows. Eventually we want property management software to adopt this as well. That’s the vision for us with this venture.

FL: What are your goals, in this year but also big things you want to tackle and accomplish looking forward?

YB: To be honest, right now we’re very, very high on expanding and just making sure we have more customers that adopt our product. But thinking about the future, lately what we have on our mind is taking the core technology that we built around qualification. So like I said we look at open banking and we know how to score bank accounts, and we do pretty well. Turning that into a product is definitely something that we’re thinking about. We also recently launch a product where we handle deposits end-to-end. We accept cash deposits at moving, and we also refund the deposit at the end. We learned that it’s a huge, huge operational efficiency. [Clients] are cutting checks, and the checks are getting mailed back. It’s a huge pain point. So making sure that our products are more realistic, I would say in its offering around deposits, is  something that we’re looking to solve.

FL: When it comes to open banking, what changes have you seen when it comes to consumer sentiment? Are they more open and accepting to it?

YB: We were actually surprised that even early on people were accepting. Obligo started in 2018, and we still see the same numbers around how many renters qualify by connecting their bank account. It’s around 80 per cent still.

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