Ellis: EQ (previously Equiniti) is an international, technology-led services and payments company, which is perhaps best known for providing share registration and pension administration. The company was originally the share registration business of Lloyds TSB before it was spun out of the bank in 2007.
Since then, EQ, which listed in 2015, has grown and acquired a number of businesses, including three leading loan system and loan service providers: Nostrum Group; Pancredit; and Gateway to Finance. We brought these three businesses together to create EQ Credit Services (EQCS) over four years ago.
EQCS is now the leading technology provider of loan management systems to the UK loan market, which is the opportunity we saw and a big part of what we wanted to achieve. In addition, we are one of the largest standby servicers in the UK and have been providing these services since 2005.
Funders and lenders trust us to have the skilled people available if a standby is invoked, and also have the best-in-class technology platforms to run and service loans.
Is that opportunity as big and attractive today as it was then?
Ellis: Yes, it is. Amid so much economic uncertainty, funders and issuers are looking for protection of their assets. If you speak to most economists there are contrasting views as to how the economy will bounce back, but also differing views on consumers and businesses and their ability to pay back loans. This has meant funders and issuers are looking at their primary servicer of loans and thinking that they need a standby servicer in place, in case the unthinkable happens.
Who are some of the EQCS’ clients, and how is the business supporting them?
Ellis: We are the largest loan management platform provider in the UK market, and also provide the technology that runs the largest unsecured loan book in Europe. Our clients range across asset classes, from Telefonica in retail finance, and Aldermore/MotoNovo in car finance, to Hodge Bank in mortgage finance. In addition, we work with six of the 10 top bookrunners of European structured finance transactions as well smaller alternative funders, and peer-to-peer loan funds.
Standby servicing is a core, growth business. What’s EQCS’ proposition here, and what are the advantages of working with your business?
Ellis: EQCS has vast financial services industry experience and a very strong risk and compliance culture. Having a partner you can trust to step in at the right time brings peace of mind to our clients. EQCS’ standby servicing enables the loan books of both securitized and non-securitized credit portfolios to continue to be fully administered should the originating lender cease to trade, withdraw from the market or fail to meet the conditions of their funding agreement
One of key strengths is our ability to step in with speed if an invocation happens. Many of our competitors still have the concept of ‘Hot, Warm, Cold’ standby where in some cases a back-up servicer is not stepping in for 90 days. This is extremely detrimental to customers.
By comparison, our loan servicing offering ensures we can step into a business in the shortest time possible, often in less than a month, which can help ensure a secure, swift and safe return of investor funds.
We are also able to understand a business and a business’ processes, which gives confidence to issuers that we can seamlessly step into the role of primary servicer without any detrimental impact to them or the customer.
In addition, we not only have vast experience in deploying hundreds of people into an organisation in a matter of weeks – resource support that is important in invocations – but we also have the expertise to understand complex portfolios and deal with any potential remediation or complaints.
Lastly, due to our client coverage across so many industries and asset classes, we can capture valuable insights into the lending market. For instance, from the data we have access to, we can see risks in asset classes, which helps us plan for standby service and invocation scenarios. EQ also operate call centres across the UK, which means we are able to provide a primary service across asset classes.
In fact, we are not just another business process outsourcing operation, we are a digital first primary servicer. As a result of digitalised processes, our cost base can be lower than our competitors.