View more on these topics

Online opportunities

Where did it all go wrong for business-to-consumer financial websites? Only a year ago B2C personal finance websites were all the rage. Any self-respecting high-street bank, life insurance company or mortgage provider was building and launching a consumer-facing website.

Many were investing millions of pounds launching entirely new brands to try to attract a younger, affluent and internet-savvy consumer to spend their money on financial products via the web.

Some commentators predicted a gold rush of new internet-generated business. Others predicted the death of the adviser as these well-educated, wired urban professionals or “wuppies” would “disintermediate” by cutting out the adviser and going direct to the provider to buy via the internet.

The mortgage broking world embraced the new channel. Savills Private Finance, the IFA business of estate agent FPD Savills, launched Netmortgage in 1999, while IFA mortgage specialist John Charcol bec-ame charcolonline.

So, why has the gold rush failed to materialise and what lessons can we learn?

Two years after its launch, FPDSavills closed its mortgage selling website. The reason Savills Private Finance managing director Mark Chilton gave was that homebuyers were using its site in the main simply to find out what the rates were and then taking this information on to a face-to-face or telephone discussion with an adviser. They were not buying the mortgage via the internet, even though the facility was available.

Chilton says: “Our view is that we were just ahead of our time. Consumer-facing mortgage sites will take off but not until the consumer feels comfortable about making transactions over the internet.

“Until then, mortgage aggregation services are not likely to make enough money to make them viable business propositions, particularly given the high costs of driving traffic to the site. We have developed a great technology platform and we will probably reuse it when we feel the time is right.”

Savills has been far from alone in leaving – even if only for the time being – the B2C market for financial services products. A more recent high-profile B2C withdrawal has been Misys&#39 decision to close its consumer financial services sites and

Last year, IFA internet service provider The Exchange sold its consumer portal offering to Bristol & West for a fraction of the money poured into it.

The message is clear, B2C financial services web offerings are in the main not a good bet for the boards of large public financial services companies and they are unlikely to escape culling to protect shareholders&#39 interests in the short term.

These wuppies, however, are still in the minority. Without a strong transaction-ready site, good promotion, as well as continual investment to improve the functionality, security and servicing capability to support the site, it will be difficult to attract these valued and, frankly, still rare customers.

There is, however, no doubt that the internet as a whole has been seen as a very positive influence for the financial services market. Business-to-business web solutions look like being the ones that will bear fruit, at least for the immediate future.

Furthermore, many providers see the internet as a potential saviour as they search out ways to reduce margins to accommodate the emerging 1 per cent world being hastened by the introduction of stakeholder and the advent of the all-powerful financial services market regulator the FSA this year.

Indeed, recent research of mortgage providers in the UK conducted by Focus finds that the most significant reason for mortgage providers to invest in internet solutions is to save money so that charges can be reduced without eroding profits too drastically.

In this survey, conducted in June 2001, 50 per cent of providers said that they thought the internet would make it significantly cheaper to process new business applications, while 39 per cent thought that they would be able to win more business via the web.

Eleven per cent gave the major benefit for doing business electronically as ensuring compliance procedures were followed by intermediaries.

There is also no doubt that many providers are investing in internet solutions today to enable them to take advantage of this new channel.

But it is also clear that most of this investment is in business-to-business web offerings, providing the means for IFAs and other intermediaries to process new mortgage applications or even a life or pension product via the internet, saving both parties valuable time and money.

Few major players are now making significant investments in consumer-facing websites. Recent developments in the market bear this out. Big-name players Alliance & Leicester, Nationwide and the Halifax took a combined 51 per cent in offline mortgage processing software provider Mortgage Brain with the intention of building a single mortgage processing platform.

No doubt we will see many more technology providers and financial providers working more closely together to take advantage of some of the savings that are clearly up for grabs by processing applications via the internet.


Mercantile Building Society – Product 85i

Thursday, 18 October 2001.Fixed term: Until October 1, 2003.Fixed rate: Loans up to 80 per cent of valuation – 4.99 per cent, 81-95 per cent – 5.24 per cent.Minimum loan: £25,000.Maximum loan: North-east England, up to 95 per cent of valuation subject to a maximum of £250,000, rest of UK up to 75 per cent […]

Conner: &#39Note worthy&#39

Abbey National, the UK&#39s second-biggest mortgage lender, has signed an agreement to become the official bank in a regional version of the Monopoly board game.Abbey&#39s logo is set to appear on the boards and banknotes used in 13 regional editions of Monopoly – based on towns, cities and regions across the UK – after securing […]

IFAs call for centralised cover for armed forces

Front-line soldiers in the Middle East will find out this week they have been refused life insurance by AIG, the Ministry of Defence&#39s appointed prov-ider, prompting IFA calls for centralised underwriting.The news comes as Britain&#39s leading life insurance companies confirmed they would not take new life business from troops already on a war footing in […]

Revenger&#39s £175m tragedy for industry

George Chapman was born in 1559 and died in 1634. He was a playwright whose Jacobean tragedies graced the stage of his day.So what does Chapman have to do with the pension review? Well, the answer is a simple one, for Chapman first uttered the words which the 21st Century financial world has echoed in […]

Tax avoidance (the fight goes on)

In recent times, we have witnessed high-profile celebrities and sports stars make the headlines for potential tax liabilities on ‘failed’ tax avoidance schemes. We are now used to reading about these individuals, but what about those who advise on such schemes? Read more


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm