DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Online aggregators are a growing phenomenon in the UK 2
Online aggregators generally earn a fee by linking consumers to financial services providers 2
Aggregators earn the core of their revenue in three ways, depending on their business model 2
As the number of Internet users has risen, online aggregators have become increasingly popular 3
Confused.com and moneysupermarlet.com are two of the largest aggregators for consumer credit products 3
moneysupermarket.com focused on consumer credit products when entering the market 3
Confused.com looks to become a significant player in consumer credit, following its success in insurance 4
Aggregators offer a number of acquisition advantages to lenders, but are not problem-free 5
Online aggregators chiefly allow for low-cost and large-scale acquisition 5
But lenders are concerned by aggregators' focus on price and the inability to know their applicants 6
Aggregators' orientation on price means many lenders are unable to portray products in the way they want 6
Lenders can receive too many applications from the wrong kind of customer 7
Customers acquired via this channel yield low profits and offer little cross-sell opportunity 7
Online aggregators have changed the competitive dynamics of the consumer credit market 8
Price competition has increased, giving rise to lower margins for lenders 8
The 'Big Four' players, although reluctant at first, have become active players in this channel too 8
Consumer credit product innovation for aggregator-only distribution is gradually becoming more common 8
In order to stay ahead, lenders have no choice but to embrace this form of distribution 9
It is ultimately in lenders' own interest to work with, rather than against, online aggregators 9
Even in the current difficult consumer credit environment, lenders still need to work with aggregators 9
The online aggregator space still has significant room to grow unless consumer skepticism gets in the way 9
A large number of other players, such as Tesco Personal Finance, have moved into this space 10
Only considerable consumer skepticism can really hamper this channel's growth, but this is unlikely 10
Some aggregators are going into the editorial space and becoming opinion-makers within the industry 11
Aggregators are becoming more sophisticated comparers and need help from lenders to take this further 11
A number of aggregators allow for product differentiation by credit rating, but this is at a beginning stage 11
There is discussion around using customer feedback as a way to rate lenders, but this is a long way off 12
Aggregators are keen to draw up a code of conduct for transparency, which can only be good for lenders 12
APPENDIX 13
Definitions 13
Consumer credit 13
Online aggregator 13
Methodology 13
Further reading 13
Relevant links 13
Ask the analyst 14
Datamonitor consulting 14
Disclaimer 14
List of Tables
Table 1: moneysupermarket.com group revenue and operating profit, 2004-06 (£m) 4
Table 2: Revenue and profit for Confused.com, 2004-06 (£m) 5