The Rise Of Online Aggregators In The Uk Consumer Credit Market: Industry Research

The Rise Of Online Aggregators In The Uk Consumer Credit Market

Published Date: November 2007

Published By: Datamonitor

Page Count: 14

Order Code: R313-27641

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DATAMONITOR VIEW: CATALYST; SUMMARY; ANALYSIS; Online aggregators are a growing phenomenon in the UK; Online aggregators generally earn a fee by linking consumers to financial services providers; Aggregators earn the core of their revenue in three ways, depending on their business model; As the number of Internet users has risen, online aggregators have become increasingly popular; Confused.com and moneysupermarlet.com are two of the largest aggregators for consumer credit products; moneysupermarket.com focused on consumer credit products when entering the market; Confused.com looks to become a significant player in consumer credit, following its success in insurance; Aggregators offer a number of acquisition advantages to lenders, but are not problem-free; Online aggregators chiefly allow for low-cost and large-scale acquisition; But lenders are concerned by aggregators' focus on price and the inability to know their applicants; Aggregators' orientation on price means many lenders are unable to portray products in the way they want; Lenders can receive too many applications from the wrong kind of customer; Customers acquired via this channel yield low profits and offer little cross-sell opportunity; Online aggregators have changed the competitive dynamics of the consumer credit market; Price competition has increased, giving rise to lower margins for lenders; The 'Big Four' players, although reluctant at first, have become active players in this channel too; Consumer credit product innovation for aggregator-only distribution is gradually becoming more common; In order to stay ahead, lenders have no choice but to embrace this form of distribution; It is ultimately in lenders' own interest to work with, rather than against, online aggregators; Even in the current difficult consumer credit environment, lenders still need to work with aggregators; The online aggregator space still has significant room to grow unless consumer skepticism gets in the way; A large number of other players, such as Tesco Personal Finance, have moved into this space; Only considerable consumer skepticism can really hamper this channel's growth, but this is unlikely; Some aggregators are going into the editorial space and becoming opinion-makers within the industry; Aggregators are becoming more sophisticated comparers and need help from lenders to take this further; A number of aggregators allow for product differentiation by credit rating, but this is at a beginning stage; There is discussion around using customer feedback as a way to rate lenders, but this is a long way off; Aggregators are keen to draw up a code of conduct for transparency, which can only be good for lenders
APPENDIX: Definitions; Consumer credit; Online aggregator; Methodology; Further reading; Relevant links; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: moneysupermarket.com group revenue and operating profit, 2004-06 (£m); Table 2: Revenue and profit for Confused.com, 2004-06 (£m)