The one-stop shop that is taking off

Despite the big banks, one online loans giant has started account aggregation, having all your financial information on one screen, says William Kay. Now the far tougher competition for customers will mean better deals on offer

One mighty financial group was responsible for two million people borrowing more than £3bn last year, issued 1.7m credit cards and 200,000 mortgages, enabled 62,000 people to open current accounts and 121,000 savings accounts, and was visited by 12.4 million people.

The figures tot up to a 7 per cent share of the UK loans market, one in 20 new credit cards and 3 per cent of the mortgage business. Yet this huge torrent of demand is flowing through a modest organisation that employs a few dozen people on two sauna-hot floors of an anonymous trading estate on the outskirts of Chester in Cheshire. And next month it promises, or threatens, depending on your point of view, to put a bomb under the banks.

The company is moneysupermarket.com, and after many delays it is launching a website which will allow everyone to put all their financial accounts, including loans, mortgages, credit cards, savings and bank current accounts, on one page.

This is the long-trumpeted service which goes under the jargon label of account aggregation. So far only two such services have got off the ground in the UK, thanks to a ruthless rearguard action by the big banks. The first was introduced in September 2001 by the giant Citigroup, the system it had established in the US. And last spring, Egg, the internet offshoot of Prudential, produced a rival version.

Moneysupermarket's product will enable users to switch cash between one account and another, including utilities bills. But it will upset the high street banks for one reason: against each customer's account will be a comparison reporting how much could be saved by switching to the market's best.

This is expected to accelerate the trend towards people moving their financial provider, especially for bank accounts. As such, it could be a strong force for more open competition in the consumer banking market. Moneysupermarket will run the service under its own name, but most people will sign up to it with banks and internet portals such as Freeserve or Yahoo which will take a "white label" version under their own brand. It will be up to these sites whether they run the full "open market" account comparison or tailor it to cast their own products in a better light.

Simon Nixon, the 34-year-old founder and head of moneysupermarket, said: "The portals taking the open-market service will be saying to customers, 'Don't sign up to the banks' account aggregation service, sign up to ours. It's independent and we will compare the whole market against your products automatically'. That will be their argument. But the banks will be saying, 'We're a bank, used to you using us from the security point of view. Don't use the portals because you're not used to using them'.

"People are more likely to give their passwords and personal details to their own bank rather than to a portal website. Although some sites such as Freeserve or the FT have strong brands, would you readily give your passwords to them? A lot of people would prefer to go to the bank. But as time goes on, people will become used to account aggregation and they might swap [to a portal version] if they feel their bank is not giving them good service."

In the US, 25 per cent have signed up to portals for account aggregation, but 75 per cent have stuck with their bank because they feel more comfortable about divulging confidential information to them.

"We can aggregate anything for you," Mr Nixon said: "So what we would like to create is your own customised home page that is a one-stop shop for everything from bill-paying to news feeds." Account aggregation is likely to spearhead a series of such website services moneysupermarket expects to launch this year, as it moves into a new expansion phase.

Mr Nixon said: "The big thing for us, of course, is the future. What you see now of moneysupermarket is phase one of our development. We realise that if we just stay at the same level someone else is going to creep up, do exactly the same thing and displace us.

"You have to keep moving at the speed of light and what we have been doing is to plough profits straight back into research and development of new, innovative software, like account aggregation. The spinoff from creating the technology for [our version of] account aggregation means we can do a lot of other things."

Moneysupermarket claims there is only one other profitable financial web site, the other being eloan in the US. The British version was started three years ago by Mr Nixon and his girlfriend's brother, Duncan Cameron, after Mr Nixon realised his trade magazine, Broker Update, was being overtaken by the switch to constantly updated computerised information. That led in 1994 to Mortgage2000, an internet version of Broker Update which gradually absorbed its parent. It is a sign of Mr Nixon's single-minded determination that he had no qualms about pulling Mr Cameron out of university to write the software.

"His mum was furious with me because she wanted her son to get a degree," Mr Nixon said. "He only had six months to go but I told him he had to leave his degree and write this program, and it would make him rich. He was a bit of a whiz kid and he thought, 'I'm not learning anything from this degree, this is an opportunity'. If I didn't get him I'd have got someone else, so the job wouldn't have been there in six months."

Moneysupermarket was born of Mr Nixon's fear of being left behind in the race. When Freeserve was launched in 1999, he thought mortgage brokers would be out of business so he decided he had to appeal direct to consumers. Mr Nixon said: "There was a conflict of interest, in that our broker subscribers would think we were competing with them. But we sold it to the brokers that the type of person who would use the internet, compare mortgages and buy online wouldn't use a broker anyway. I believe that is true today: I would compare mortgages online, but I wouldn't buy that way."

Only one in 200 moneysupermarket customers commits to a mortgage online, as opposed to the 40 per cent who happily sign up for loans or credit cards online. That has taken moneysupermarket down the road to simpler, smaller financial products such as travel and pet insurance, savings and current accounts and annuities.

The next step for Mr Nixon is to venture abroad. He has had approaches to produce foreign versions of moneysupermarket, in line with foreign laws and regulations.