How One Online Finance Player Wants To Transform The UK Lending Landscape

Ever since Everline and Ezbob joined forces in February to form what’s currently the biggest e-lending platform in the UK, it’s experienced a rapid growth rate. And while the alt-lending space is still at its infancy in the region, the landscape is changing, and the company aims to be at the forefront of that significant shift. MPD CEO Karen Webster sat down with Russell Gould, Chief Operating Officer at Everline and Ezbob to get the scoop on how they are making that happen and what makes their products and services unique from others in the space.

KW: Everline and Ezbob is an online financing company that focuses on providing capital to small and medium enterprises. There are a lot of such entities in the space – what makes you guys different?

RG: First of all, we are the biggest business e-lender in the UK at the present time, and we’re growing by over 100 percent each year since we started in 2012. We’re also different because we’re 100 percent automated, which is different from all of our competitors.

KW: It’s an interesting way to provide to capital to businesses that are looking for it. What kinds of businesses do you serve – is there a particular sector that seeks you out, or that you seek out?

RG: Not necessarily. We basically take all small businesses that have been operating for 12 months, as we use their historic, real-time data to make decisions. In the UK, there are really three types of businesses: limited companies, limited liability partnerships, and sole traders. We support all three of those.

KW: So you mentioned that one of the things that makes you different is your entirely automated process. Obviously, that eliminates friction on the part of the business that’s looking to get easy access to capital and a quick answer. What did you have to do on the backend of the business to make that possible?

RG: The best way to start is the traditional providers here require businesses to fill in an application, which would take the businesses about a week to get materials together and submit it. Then, it would take their underwriters and credit department another two weeks to make a decision, and then they’d be told what it will cost and what the offer is.

What we did is we took a different approach, and looked at all the data that was available. We connected to the eCommerce sites like Amazon, eBay, and Alibaba, and we connected to cloud-based accounting solutions in the UK, and then we connected to the banks’ transactional data. We’re using that as well as typical credit agency data to inform ourselves on the businesses performing, and make a real-time instant decision, which is almost self-learning.

KW: If I look at this type of business in the US, there are a number of interesting things starting to happen. There are a lot of partnerships between banks and the online lending players who are starting to find ways to work together and complement the capabilities that the lenders provide with distribution that traditional financial services companies provide. Is that a trend you see happening in the UK market? 

RG: Absolutely. We’ve structured our business in a way that there are three parts to it – one is the core lending part that’s all about supporting SMEs, one is about the platform and technology itself, and one is about the data we get from the businesses that we use to help them.

On the platform side, we’ve built a structure, process and integration that allows us to make effective, lost-cost decisions. In the banking world, it would take around £2,500 to underwrite the loan, and we’re able to do that for a fraction of the cost. From a lender perspective, we are attractive because we’d allow them to underwrite at a lower cost and make those loans that are currently unprofitable, profitable.

KW: I noticed that your company was founded in 2011. A lot of the players that have come into the space have done so because of the financial crisis and the inability for SMEs to get access to capital. Was that a driver for you as well?

RG: I think there are a number of factors – the financial crisis was possibly one of the leading drivers. But I think in general, the traditional lending market uses archaic systems and processes, and we all recognized the huge opportunity to disrupt there. Their processes take anywhere from 4-8 weeks, and we’re now doing it in less than 60 minutes. And we still think that’s too slow, so the opportunity is still there.

KW: How is the regulatory environment in the UK around this particular type of disruption and innovation?

RG: There are two parts to the way this is regulated. One is, for the sole traders, their regulation regime is tough because it almost treats their business as an individual. We’ve got to comply with all of the individual-based lending guidelines and rules.

For limited companies and limited liability partnerships, it’s a lot less relaxed in that the people running those businesses are making informed decisions about their business on a day-to-day basis. You’d expect them to understand financial propositions and loans and such, but we try to operate across the regulator framework with everything we do.

KW: What has the demand been like on the part of SMEs when it comes to seeking you out? How has that changed over the last couple of years, in terms of demand and type of businesses that are looking for you as a source of capital? Are these companies that didn’t ever go to a bank because they knew they wouldn’t get funding, or are they companies that have previously gotten financing from a bank but find your platform more attractive and easier to access?

RG: Possibly both, but definitely more the latter. We don’t operate in the subprime market – we’re very mainstream. All of the businesses we lend to have or can get funding from banks, they just choose use because they’re more convenient. And if there are maybe 2-5 directors in a small business, and one or two of them have to spend a week preparing documentation, that’s a lot compared to what it takes with us – a matter of minutes. That amount of savings is worth a lot to an SME.

As far as growth goes, in the UK in particular, there are five banks that provide 90 percent of the business funding. The alternative sector is very much at its infancy, and I think as more small businesses become aware of the products and services we offer, the more people will switch.

KW: So you mentioned the three components of your platform – core lending, technology and business intelligence data. If you look at the rest of 2015 and into 2016, what’s your roadmap? Where do you see the business evolving?

RG: Everline and Ezbob joined in February, so our primary goal at the moment is to merge those two businesses together so we have one operating platform and one structure. The next two or three months will be about getting the foundations right, and creating that strong base we can work off of. Then, it will be very much about growth, amplifying what we do and reaching more SMEs. Naturally, we’ll also talking to a lot of traditional providers about our platform and how we could support them. We’ve also done a deal with Alibaba where we provide trade finance to UK-based small businesses buying a product through the Alibaba website. And we’re talking to a number of providers about those type of arrangements, which we think will be very exciting for us going forward.

To listen to the full podcast, click here.