Abbey National launches online mortgage services

Abbey National's online mortgage service will break new ground, but it is not without risks. Nick Huber reports

Abbey National's online mortgage service will break new ground, but it is not without risks. Nick Huber reports

Online financial services may now be as commonplace as TV makeover programmes, but Abbey National's new mortgage application service breaks new ground by aiming to link back-office systems with those of a rival company.

At the launch of an online service for mortgage advisers last week, Abbey National revealed that it was planning to link its legacy systems to rival financial services companies including Legal & General.

Although the details of the back-office link have yet to be finalised - one option is to use an XML-based Web browser - the initiative is one of the first concrete examples of online co-operation between financial services rivals in a bid to improve customer service.

But, as the catalogue of Web banking glitches continues to grow, the prospect of opening up commercially-sensitive back-office systems to rivals raises major security and strategic issues.

Abbey National remains upbeat about its online mortgage service. The service allows a mortgage adviser to receive an agreement in principle from the Abbey National Web site, entitled Introducer, within 60 seconds.

A mortgage application is transferred to Abbey's back-office system through the site, where a middleware platform channels information to its legacy systems.

If all goes smoothly, and the main mortgage providers create links between their systems, then mortgage brokers should be able to get quick mortgage agreements in principle from a wide variety of providers.

Customer data would only need to be keyed in once before being transferred to the Abbey National Web site, where the mortgage request can be confirmed in principle or rejected, after an automated credit check.

"We are in discussions with quite a few other brokers," said Neville Sharman, head of retail intermediary e-commerce development at Abbey National.

The new system will rely on XML data tags, whether data travels through a Web-based link or is transferred directly between systems through an extranet.

This in itself will be time consuming, but not too stretching, according to Sharman. The main challenge will be in testing the link to make sure it is reliable and secure.

Conscious of consumer security concerns, Sharman said the Introducer site will use 128-bit encryption - the most powerful commercially available security on the market - alongside multi-layered password protection.

Abbey National's service is also of wider significance in that it highlights a trend in the finance sector for automated services such as online fund supermarkets.

"Fund supermarkets link to a variety of fund managers and one company might provide systems support to different companies," said Mike Fowler, managing consultant and head of systems practice at insurance consultancy Winchester White.

"The role of IT is no longer locking staff away for years and building a monolithic system. There is much more integration activity."

The innovative nature of Abbey National's mortgage application service is impressive. But what happens if data in a mortgage application is corrupted or lost during the transfer between company IT systems? Who will take the blame and fix the problem?

One answer lies in prevention, such as watertight contracts spelling out liabilities and responsibilities for the service before systems are linked. "What you don't want to get into is contractual disputes when the thing is actually launched," said Fowler.

Abbey National stressed that it is taking this issue seriously, but said many IT problems would be linked to Internet connection difficulties with the Introducer site and the responsibility of the mortgage advisers' Internet service provider. However, Sharman acknowledged that IT agreements will be necessary when the Introducer service is linked to other companies.

"Issues with our system will be down to us and we provide a helpdesk number for the site," said Sharman. "We will have to reach some kind of written agreement as to who owns each bit of the system."

However, this also raises the issue of intellectual rights derived from the development of the system.

While Abbey National cannot claim a copyright on Introducer, it will claim joint ownership with Legal & General to stop third-party suppliers recreating the same system elsewhere.

Abbey National's Internet mortgage service is something of a landmark for e-commerce and IT systems. The planned link-up of back-office systems to revamp customer services offers a win-win situation for companies, their customers and the mortgage advisers as intermediaries.

But IT managers will doubtless view the latest e-business development with more caution. Providing a financial service over the Internet is nerve-wracking enough but linking back-office systems with a rival ups the sleepless-night factor even higher.

Service agreements and responsibility for different parts of the service will have to be hammered out between IT departments before any Web-link goes live.

Unless this happens, the new breed of co-operative financial services could soon descend into acrimony.

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