The possible widening of Egg’s business model comes as it prepares to launch a raft of new services next month, including an interactive digital television service and a mortgage supermarket.
Egg is also considering abandoning its Internet-only strategy and opening up a network of branches. The admission is one of the first signs that the demand for Internet-only banking is finally bottoming-out.
Although a move into service provision is a logical step for many financial organisations, it could result in companies losing competitive advantage, analysts have warned. Egg is considering acting as a consultancy to smaller financial companies that want to launch online services.
A growing number of hardware and software suppliers have become service providers over the past few years. Financial services providers are following suit in areas such as cheque clearing and online fulfilment.
Analyst firm Gartner said there is a market for companies such as Egg to move into consultancy. It stressed, however, that it could pose major headaches for IT managers by undermining a company’s competitive advantage in technology.
“You have got to be very clear in your strategy and what you are good at,” said Alexander Drobik, vice-president for e-business at Gartner. “Egg has its IT infrastructure for online financial services as its competitive advantage.”
Egg could also find itself in disputes with consultancy customers if it chooses to provide IT infrastructure services and technology to competitors, added Drobik. “It could be a good deal for smaller financial service companies. But if you are an IT manager at a small building society would you want to go to a company that is trying to take customers away? Would you be certain of getting the latest technology?”
Next month will also see Egg expand its online offerings with the launch of a mortgage supermarket. Customers will be able to get online quotes for mortgages. They will also be able to offset money in their other Egg accounts and savings against the mortgage. In a separate move, Egg is to launch an interactive television service after an intensive six-month development project. The online banking service, available through Sky TV from next month, is the first example of a major financial services company delivering services over interactive digital TV.
Time to market was cut by using common XML-based standards to link Egg’s existing back-office and Web infrastructure to the new channel of interactive TV. The IT system for the Open Interactive service was developed by Egg’s current e-business supplier Vignette. Stuart Evans, Vignette’s field architect, explained, “When you have the basic architecture for Web banking and security you can deliver electronic services to different channels.”
Customer information requests are sent from the set-top box to Egg in an encrypted XML format, using the Internet data transfer standard HTTP.
Egg already uses Vignette software to update Web content on its financial services and pull customer information from its back-office systems. “Instead of talking HTML with a browser we are talking XML with a set-top box,” said Evans.
The onset of Interactive TV could force banks to make changes to their back-office systems, warned Evans. “Banks in the UK don’t do real-time balances but stress may be put on back offices to do real time bank balances.”