Financial Service Organizations on the Internet: Market Assessment 2002

Banks in the Lead
In the late 1990s, pioneering work by innovative stand-alone Internet banks led to a sudden rush into Internet provision by the traditional banks. Some moved too quickly and experienced security system failures that a delayed launch might have avoided. However, retail banking has now accepted the Internet as a standard current account channel.

The Property Boom
The crisis in the housing market, where demand exceeds supply, boosted online homemaking sites. These already had a high profile in 2000 but by 2002, they were much larger and more comprehensive. Such sites lead the homemaker to other sites offering cheaper mortgages, as well as other financial sites on the Internet.

Insurance- A Mixed Picture
General insurance is gradually gaining in popularity as a commodity bought via the Internet. It is important to differentiate from general personal lines insurance, which can be bought at a reasonable price direct from a number of companies or through a funds supermarket. The success of online insurance may lead to the shrinkage of call centres.

Growth in the online life insurance and pension provision market has been slow, hampered by the complexity of the product and by regulatory change in the face of bad publicity. In view of this, the number of life products advertised online is comparatively small and demand from consumers is poor.

Investment Outlook
Funds supermarkets have developed during the past 5 years and are likely to take a more prominent role following the changes in UK legislation regarding the 'polarisation' of sales of financial products. Until 2002, there were two main sales channels for financial investments — independent financial advisers (IFAs) and tied agents or direct sales. From 2002, it will be possible for tied agents and direct sales staff to sell financial services products from companies other than their principal one. This should bring more choice and competition to the market and should reduce the market power of IFAs. This will depend on the market and on economic pressures. It will have some impact on IFAs and on the in-house marketing of products by financial services providers. The fortunes of the industry over the next 5 years depend on the state of the stock market rather than on turmoil in distribution.

The Future
The revolution in the distribution channels leading to online financial services will be consolidated before 2007. Technological change envisaged includes the development of a smart card that carries cash and financial information on it and can be interfaced with the Internet, the eventual introduction of third generation (3G) mobile telephony, affordable broadband connections, which will make the Internet easier to use, improved payment transfer through electronic systems, and greater Internet security.

• Banks In The Lead
  
• The Property Boom
  
• Insurance — A Mixed Picture
  
• Investment Outlook
  
• The Future

1. Introduction

• Background
  
• Definition

2. Strategic Overview

• Market Dynamics And Segmentation
  
• Market Sectors
  
• Retail Banking
  
• Loan Providers
  
• Building Societies
  
• General Insurance
  
• Mortgage Providers
  
• Financial Advisers
  
• Independent Investment (Brokers And Funds Supermarkets)
  
• Pensions And Life Insurance
  
• The Current Status Of The Market
  
• Retail Banking
  
• Loan Providers
  
• General Insurance
  
• Mortgage Providers
  
• Financial Advisers
  
• Independent Investment (Brokers And Funds Supermarkets)
  
• Pensions And Life Insurance
  
• Total Industry Value And Growth
  
• Table 1: UK Users Of Financial Services On The Internet By Volume (Million Users), 1997-2002
  
• Figure 1: UK Users Of Financial Services On The Internet By Volume (Million Users), 1997-2002
  
• The Largest Sector
  
• The Sector With The Highest Growth Rate
  
• The Sector With The Lowest Growth Rate
  
• The Smallest Sector
  
• Distribution
  
• Distribution Of Electronic Cash
  
• Mediated Access
  
• Competitive Structure
  
• Retail Banking
  
• General Insurance
  
• Mortgage Providers
  
• Financial Advisers
  
• Independent Investment (Brokers And Funds Supermarkets)
  
• Advertising
  
• The Consumer
  
• Unemployment And Earnings
  
• Table 2: Proportion Of UK Workforce Claiming Unemployment And Average Earnings Growth Rate (%), 1997-2001
  
• Prices, Interest Rates And Savings
  
• Table 3: UK Consumer Expenditure Index And Retail Price Index (Index 1995=100 And %), 1997-2001
  
• Table 4: Interest Rates, Savings Ratio, Equity Prices And House Prices (% And Index 1995=100), 1997-2001
  
• Demographics
  
• Table 5: UK Population Projections By Age, (000 And %), 1996, 2001 And 2006
  
• Market Forecasts
  
• Regulations — Electronic Commerce Directive
  
• Marketing

3. Retail Banking

• Background
  
• Internet Banks
  
• Alliance & Leicester
  
• Cahoot
  
• Egg
  
• First-E
  
• Intelligent Finance
  
• Lloyds Tsb
  
• Smile
  
• Traditional Banks
  
• Barclays
  
• Lloyds TSB
  
• Quality Of Online Banks
  
• Table 6: Virtual Online Banking Survey League Table, Years Ending March 2002 And December 2001
  
• Market Size
  
• Table 7: Number Of Major British Banking Groups' Bank Accounts Accessible By Computer, 1997-2002
  
• Figure 2: Number Of Major British Banking Groups' Bank Accounts Accessible By Computer, 1997-2002
  
• Table 8: Number Of UK Online Bank Customers (Million), 2001
  
• Figure 3: Number Of UK Online Bank Customers (Million), 2001
  
• Table 9: UK Stand-Alone Internet Banks By Number Of Online Customerse (000), 2001
  
• Figure 4: UK Stand-Alone Internet Banks By Number Of Online Customerse (000), 2001
  
• Consumer Trends
  
• Proportion Of Adults Intending To Start Conducting Day To Day Financial Transactions Via A Bank Internet Website
  
• Advertising
  
• Online Banking
  
• Table 10: Main Media Advertising Expenditure By Companies Engaged In Online Banking (£000), Years Ending March 2001 And 2002
  
• High Interest Current Accounts
  
• Table 11: Main Media Advertising Expenditure On Online High Interest Current Accounts (£000), Years Ending March 2001 And 2002
  
• Figure 5: Main Media Advertising Expenditure On Online High Interest Current Accounts (£000), Years Ending March 2001 And 2002
  
• Online Savings Accounts
  
• Table 12: Main Media Advertising Expenditure On Online Savings Accounts (£000), Years Ending March 2001 And 2002
  
• Figure 6: Main Media Advertising Expenditure On Online Savings Accounts (£000), Years Ending March 2001 And 2002
  
• Distribution
  
• Table 13: UK Branch Networks Major British Banking Groups' Banks (Number Of Branches), 1998-2002
  
• Figure 7: UK Branch Networks Major British Banking Groups' Banks (Number Of Branches), 1998-2002

5. Building Societies

• Background
  
• Market Size
  
• Table 16: Users Of Building Societies On The Internet (Million Users And Index 1997=100), 1997-2002
  
• Market Shares
  
• Table 17: Five Largest Building Society Mortgage Lenders By Mortgage Balances Outstanding (£Bn And %), Year Ending 31st December 2000
  
• Figure 9: Five Largest Building Society Mortgage Lenders By Mortgage Balances Outstanding (£Bn And %), Year Ending 31st December 2000
  
• Consumer Trends
  
• Proportion Of Adults Who Conduct Their Day To Day Financial Transactions Via A Building Society Internet Website
  
• Proportion Of Adults Who Intend To Start Conducting Their Day To Day Financial Transactions Via A Building Society Internet Website
  
• Advertising
  
• Distribution
  
• Table 18: Branch Networks Of UK Non-Converted Building Societies (Number Of Branches), 1998-2002

6. General Insurance

• Background
  
• Market Size
  
• Table 19: Users Of General Insurance Companies On The Internet (Million Users And Index 1997=100), 1997-2002
  
• Market Shares
  
• Consumer Trends
  
• Proportion Of Adults Who Have Used A General Insurer's Internet Website
  
• Proportion Of Adults Who Intend To Start Using A General Insurer's Internet Website In The Future
  
• Marketing Activity
  
• Advertising

10. Pensions And Life Insurance

• Background
  
• Market Size
  
• Table 25: Users Of Life Insurance And Pensions Products On The Internet (Million Users And Index 1997=100), 1997-2002
  
• Consumer Trends
  
• Proportion Of Adults Using A Life Insurer Or Pension Company Internet Website
  
• Proportion Of Adults Intending To Use A Life Insurer Or Pensions Company Internet Website In The Future
  
• Advertising

8. Financial Advisers

• Background
  
• Market Size
  
• Table 21: Users Of Financial Advisers On The Internet (Million Users And Index 1997=100), 1997-2002
  
• Consumer Trends
  
• Proportion Of Adults Using A Financial Adviser's Internet Website
  
• Proportion Of Adults Intending To Use A Financial Adviser's Internet Website In The Future
  
• Advertising

7. Mortgage Providers

• Background
  
• Market Size
  
• Table 20: Number Of Users Of Mortgage Providers' Websites (Million Users And Index 1997=100), 1997-2002
  
• Consumer Trends
  
• Proportion Of Adults Using An Internet Website To Look For A Mortgage
  
• Proportion Of Adults Intending To Use An Internet Website To Look For A Mortgage In The Future
  
• Proportion Of Adults Using A Website To Look For A Home
  
• Proportion Of Adults Intending To Use A Website To Look For A Home In Future

4. Loan Providers

• Background
  
• Market Size
  
• Table 14: Number Of Users Of The Internet To Look For A Personal Loan (Million Users And Index 1997=100), 1997-2002
  
• Consumer Trends
  
• Proportion Of Adults Using A Website To Look For A Personal Loan
  
• Proportion Of Adults Intending To Start Using A Website To Look For A Personal Loan In The Future
  
• Advertising
  
• Table 15: Main Media Advertising Expenditure By Enterprises Engaged In Online Personal Loans (£000), Years Ending March 2001 And 2002
  
• Figure 8: Main Media Advertising Expenditure By Enterprises Engaged In Online Personal Loans (£000), Years Ending March 2001 And 2002

9. Independent Investment

• Market Size
  
• Table 22: Online Execution-Only Trades By Volume (Million), Years Ending March 1999-2002
  
• Consumer Trends
  
• Proportion Of Adults Using An Online Stockbroker
  
• Proportion Of Adults Intending To Start Using An Online Stockbroker In The Future
  
• Advertising
  
• Table 23: Main Media Advertising Expenditure By Companies Engaged In Online Investment Services (£000), Years Ending March 2001 And 2002
  
• Figure 10: Main Media Advertising Expenditure By Companies Engaged In Online Investment Services (£000), Years Ending March 2001 And 2002
  
• Table 24: Main Media Advertising By Companies Engaged In Online Stockbroker/Share Dealing (£000), Years Ending March 2001 And 2002
  
• Distribution

11. An International Perspective

• US Market Developments
  
• Payments
  
• Smart Cards
  
• Internet Penetration
  
• Table 26: Households† With Internet Access And Connection Rate By Country (%), January To March 2002
  
• Figure 11: Households† With Internet Access And Connection Rate By Country (%), January To March 2002
  
• Competitor Environment

12. Pest Analysis

• Political Factors
  
• Economic Factors
  
• Social Factors
  
• Technological Factors

13. Consumer Dynamics

• Introduction
  
• Overview
  
• Table 27: Overall Response To Questions By Consumers (% Of Respondents), 2002
  
• Conducting Financial Transactions Via A Bank Internet Website
  
• "I Conduct My Day To Day Financial Transactions Via A Bank Internet Website"
  
• "I Intend To Start Conducting My Day To Day Financial Transactions Via A Bank Internet Website"
  
• Table 28: Conducting Day To Day Financial Transactions Via A Bank Internet Website (% Of Respondents), 2002
  
• Conducting Financial Transactions Via A Building Society Internet Website
  
• "I Conduct My Day To Day Financial Transactions Via A Building Society Internet Website"
  
• "I Intend To Start Conducting My Day To Day Financial Transactions Via A Building Society Internet Website"
  
• Table 29: Conducting Day To Day Financial Transactions Via A Building Society Internet Website (% Of Respondents), 2002
  
• Using A General Insurer's Internet Website
  
• "I Have Used A General Insurer's Internet Website"
  
• "I Intend To Start Using A General Insurer's Internet Website"
  
• Table 30: Using A General Insurer's Internet Website (% Of Respondents), 2002
  
• Using A Life Insurer Or Pension Company Internet Website
  
• "I Have Used A Life Insurer Or Pension Company Internet Website"
  
• "I Intend To Start Using A Life Insurer Or Pensions Company Internet Website"
  
• Table 31: Using A Life Insurer Or Pension Company Internet Website (% Of Respondents), 2002
  
• Using A Financial Adviser's Internet Website
  
• "I Have Used A Financial Adviser's Internet Website"
  
• "I Intend To Start Using A Financial Adviser's Internet Website In The Future"
  
• Table 32: Using A Financial Adviser's Internet Website (% Of Respondents), 2002
  
• Using An Internet Website To Look For A Mortgage
  
• "I Have Used An Internet Website To Look For A Mortgage"
  
• "I Intend To Use An Internet Website To Look For A Mortgage In The Future"
  
• Table 33: Using An Internet Website To Look For A Mortgage (% Of Respondents), 2002
  
• Using A Website To Look For A Personal Loan
  
• "I Have Used A Website To Look For A Personal Loan"
  
• "I Intend To Start Using A Website To Look For A Personal Loan In The Future"
  
• Table 34: Using A Website To Look For A Personal Loan (% Of Respondents), 2002
  
• Using An Online Stockbroker
  
• "I Have Used An Online Stockbroker"
  
• "I Intend To Start Using An Online Stockbroker In The Future"
  
• Table 35: Using An Online Stockbroker (% Of Respondents), 2002
  
• Using A Website To Look For A Home
  
• "I Have Used A Website To Look For A Home"
  
• "I Intend To Start Using A Website To Look For A Home In Future"
  
• Table 36: Using A Website To Look For A Home (% Of Respondents), 2002
  
• None Of These, Don't Know
  
• "None Of These"
  
• "Don't Know"
  
• Table 37: None Of These, Don't Know (% Of Respondents), 2002

14. Company Profiles

• Barclays Plc
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Advertising
  
• Charcol Ltd
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• Brand Developments
  
• Innovations
  
• Advertising
  
• Charles Schwab Holdings UK
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Direct Line
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Advertising
  
• Egg Plc
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Advertising
  
• Profitability
  
• E*Trade
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Advertising
  
• Profitability
  
• Fidelity Fundsnetwork
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Innovations
  
• Legal & General Group Plc
  
• Corporate Strategy
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Nationwide
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Profitability
  
• Future Company Developments
  
• Rightmove.Co.UK Ltd
  
• Corporate Strategy
  
• Strengths And Weaknesses
  
• New Product Development
  
• Brand Development
  
• Innovations
  
• Advertising

15. The Future

• Introduction
  
• Table 38: Selected Forecast Economic Criteria (% And Index 1995=100), 2002-2007
  
• Market Size
  
• Table 39: Forecast Number Of Users Of Financial Services On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• New Developments
  
• Consumer Issues
  
• Barriers To Entry
  
• Regulations
  
• Demographic Changes
  
• Table 40: UK Population Projections By Age (000 And %), 1996, 2001, 2006, 2011, 2016 And 2021
  
• Retail Banking Use
  
• Table 41: Forecast Use Of Internet Banks By Volume (Unit And Index 2002=100), 2002-2007
  
• Loan Providers
  
• Table 48: Forecast Number Of Users Of Personal Loans Sites On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• Building Societies
  
• Table 42: Forecast Number Of Users Of Building Societies On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• General Insurance
  
• Table 43: Forecast Number Of Users Of General Insurance Companies On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• Mortgage Providers
  
• Table 46: Forecast Number Of Users Of Mortgage Providers' Websites By Volume (Million Users And Index 2002=100), 2002-2007
  
• Looking For A Home
  
• Table 47: Forecast Number Of Users Of Home Search Sites On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• Financial Advisers
  
• Table 45: Forecast Number Of Users Of Financial Advisers On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• Independent Investment (Brokers And Funds Supermarkets)
  
• Table 49: Forecast Number Of Users Of Stockbroking Websites By Volume (Million Users And Index 2002=100), 2002-2007
  
• Pensions And Life Insurance
  
• Table 44: Forecast Number Of Users Of Life Insurance And Pension Products On The Internet By Volume (Million Users And Index 2002=100), 2002-2007
  
• Market Dynamics
  
• Political Factors
  
• Economics Factors
  
• Social Factors
  
• Technological Factors

17. Glossary

• A-Z Of Definitions
  
• Above-The-Line Or Main Media Expenditure
  
• Annual Growth Rate
  
• Below-The-Line Advertising
  
• CIF
  
• Constant Prices
  
• Current Prices
  
• FOB
  
• Forecasts
  
• MSP
  
• `Real'
  
• RSP
  
• About The Sources Used
  
• ACNielsen MMS
  
• Prodcom
  
• NOP
  
• Trade Association Data
  
• Trade Sources

16. Further Sources

• Associations
  
• Publications
  
• General Sources
  
• Bonnier Information Sources
  
• Government Publications
  
• Other Sources
  
• Fund Supermarkets
  
• Banks
  
• Building Societies
  
• Stand-Alone Internet Financial Providers
  
• General Insurance Companies
  
• Life Assurance And Pensions Companies
  
• Financial Advisers
  
• Stockbrokers
  
• Personal Loans
  
• Property