Equiniti opens Cardiff centre to bring fintech focus to pension reform

Equiniti’s Guy Wakeley and Welsh minister Edwina Hart

Pensions and payments company Equiniti has opened a new fintech innovation centre in Cardiff, which will focus on bringing together fintech tools for employee share plans, online applications for investment platforms and web and mobile applications for pension products.

Created through a private equity purchase of Lloyds’ Registrar Services in 2007, Equiniti runs the share plans for around 50% of the companies on the FTSE 100 index. It also processes £90 billion of payments per year and manages pension administration services for eight million people, mostly in the NHS and the armed forces. The company has also runs a share dealing and custody platform.

Three years ago it acquired Cardiff-based front- to back-office investment system supplier Peterevans  Group and moved its processing onto the Peterevans platfom, now renamed T EQ Xanite. The software provides custody services for £18.7 billion of assets. Hazell Carr, the resourcing arm of Equiniti will also be located there, focusing on specialist interim resource to help firms manage remediation and rectification projects.

Equiniti’s partnership with Cardiff University is a key part of the plan, as the University has just announced a £300 million investment in four research centres, and many of Equiniti’s staff are Cardiff graduates.

According to Guy Wakeley, the presence of these graduates is critical. He estimates that the cost of employing someone in Cardiff is 55% of what it would be in London – “and you’ll get a better quality of person.” Wakeley estimates that 10 startups open up in Cardiff every year, as well-trained and skilled graduates emerge from the University. “It’s all part of a feedback loop – it creates demand for students and that draws computer scientists, which then feeds back into the local business community,” he added.

Part of the plan for the company now is to focus on three opportunities: the pension reforms which took effect in April, which allow UK citizens to draw their pensions in cash from the age of 55; the Retail Distribution Review, which forces financial advisors to unbundle their services and make costs clearer to the consumer; and the rise of big data tools that allow financial institutions to offer more customised services to their customers.

According to Wakeley, the first of these factors changes the way consumers interact with banks, because they can now access their pensions early directly, not as an annuity. The second is significant because it encourages the 25% year on year growth of execution-only brokers. It also means that people previously had separate accounts for savings, share investments and pensions – now all those are coming together and interacting in new ways.

The evolution of consumer technology is the third pillar of Equiniti’s plan. Wakeley believes that the rise of sophisticated mobile services opens the door to much more sophisticated and personalised personal financial management services to be provided by banks. For example, a smartphone equipped with GPS can follow a user’s location on a daily basis, and therefore knows how long it takes to complete the daily commute. It also has access to the customer’s spending patterns via mobile banking. It is therefore in a position to bring that data together to make useful observations – for example, observing that the customer could have saved money by completing the journey in a more fuel-efficient car, or by taking an alternative route or form of transport. Banks stand to benefit from this, by providing more personalised services that make use of Big Data.

Equiniti is also active in Belfast and in Chennai, India. The company’s presence in Belfast is partly based on the city’s strong reputation as a centre of accountancy and lawyers. US banks such as Citibank are present in Belfast, alongside large US law firms from places such as Chicago and New York. Drawing on that expertise, Equiniti’s operation there focuses on systems and process and compliance. Meanwhile in Chennai, the company carries out a lot of “pure IT” tasks. Chennai was chosen for the 75,000 computer scientists the state of Tamil Nadu produces every year. “You can get very high quality staff,” said Wakeley.

However, what Equiniti does in Cardiff is more specialised to the UK market – a process he refers to as “right-shoring”. “Some things should be done in India, some in Cardiff, some in Belfast and some in London,” he said. “It depends what you are looking to achieve – each place has its advantages for the right kind of task.”

The new facility was officially opened by Edwina Hart, Welsh assembly minister for economy, science and transport, and attended by representatives of local businesses.