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Whose life policy is it, anyway?

The news that online travel company Expedia has moved into profit a year ahead of schedule and that e-bookers is reporting smaller than expected losses suggests not all areas of the online community are suffering as much as others.

It is particularly significant for the personal finance industry that travel is one of the markets where it might be a little early to write off the dotcom opportunity. Both markets offer products which rely heavily on trust and where it is often too late to do anything if they do not live up to expectations.

They are also both industries where technology can produce massive savings.

Because so much of what goes on in both industries is about selling intangibles, the importance of making the consumer feel comfortable about what they have bought should not be understated.

One phrase guaranteed to send me to sleep at the moment is customer relationship management, not because the concept is not an entirely valid one but because so many software companies have latched on to the phrase and are trying to sell all sorts of systems on the back of it.

Don&#39t get me wrong, I believe good customer relationships are absolutely essential to meet the needs of ever more discerning and increasingly fickle financial consumers. However, to me, good customer relationships are about a culture within a business, not just a software system.

Certainly, every business, from the smallest one-man-band IFA to the biggest product provider, is going to need technology to help automate the customer management process. However, it takes more than that. You really have to take the decision that you are going to do everything you need to help the customer.

A good way to judge the extent to which your organisation believes in this is the question of giving the customer access to information about their financial products over the internet and other new media. Are you happy to let them get all the information they want when they want it or do you still want to play the role of gatekeeper?

A new phenomenon will emerge in the next couple of months. Like most things on the internet, it has its origins in the US. Aggregation, as it is known, allows financial consumers to take an overall view of their financial products, bringing together information from a wide range of financial providers.

Current and deposit accounts, credit cards, mortgages, Isas, Peps, life policies and pension plans are all displayed on a single screen. Non-financial information such as frequent flyer miles will often be included in such services.

Some financial institutions, and I suspect some IFAs, will be concerned at the prospect of releasing such a broad range of information to consumers. After all, what would they use it for? To check if they are getting a good deal, heaven forbid.

Whose information is it, really? Any provider or IFA who tries to convince themselves that the best way to deal with this issue is to refuse access to aggregation services is forgetting who the customer is. In any event, using a process called screen scraping, many aggregators use customers&#39 own passwords, with their permission, to grab information from individual companies&#39 client extranets.

This process is not without its weaknesses but in the UK we are well placed to leapfrog the US experience and go straight to what a number of people who have experience of US aggregation have described to me as a preferable option – co-operative aggregation.

One document worth reading is Forrester&#39s December 2000 report – Aggregation: No Rush – a summary of the US experience of aggregation. This suggests that while aggregation has an important role to play, short-term demand for such service should not be overstated. British Telecom has also recently completed what it believes to be the first dedicated UK research into the demand for financial aggregation. A not dissimilar view is presented.

There is the chance in the UK to lay the foundations for co-operative aggregation.

Origo standards have an important part to play, particularly the new contract enquiry standards currently in development. But these will not be enough on their own. There is a need to create real co-operation between all financial services providers, banks, building societies, life offices and fund managers and for each to ensure co-operation between their respective standards bodies.

In the banking arena, much of the necessary work has already been done by OFX and IFX. Origo is a long way towards delivering the necessary standards in the life and pension market and its new contract enquiry standards are also designed to accommodate managed funds should the relevant providers choose to take advantage of them. I am, however, concerned about the mortgage industry, where no clear standards are emerging.

Aggregation will become a powerful and necessary complement to the range of services that can be offered to customers. In the longer term, it has the potential to encourage consumers to use automated delivery systems to obtain information, thus considerably reducing the need for expensive human intervention in the delivery of simple information.

This is a prize worth winning. Perhaps financial services companies may be as likely as travel business to start deriving real benefits (and maybe even profits) from their internet activities.


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