This week sees the launch of one of the most exciting new financial services product this year. Marks and Spencer, Britain's leading retailer, has launched in a pilot area the Marks and Spencer Credit Card. M&S has for many years been running a very successful Financial Services business based around its Chargecard. The Chargecard, until only a couple of years ago, was the only way to pay for M&S goods using plastic. When the stores started to take credit and debit cards this put an enormous pressure on the FS business. To respond to the growing pressures, M&S decided to launch its own Credit Card which can be used anywhere under either the Visa or Mastercard schemes. Though exciting this would not have been a compelling proposition for its customers who typically already carry such a credit card. The added dimension which makes this unique is the launch of the &more loyalty scheme, rewarding customers for purchases both within its own stores and elsewhere the credit card is used. Bonus points are also rewarded against certain buying behaviours such as linked promotions or multi-buys. This is the first major UK retailer to offer an integrated credit card and loyalty product that joins the financial services proposition to its customers' retail buying behaviours and patterns. Every quarter, M&S will mail to its card users money off vouchers and brochures which are personalised giving you bonus points off on your favourite M&S goods. M&S has a huge Chargecard base which it intends to migrate onto the credit card platform. For those customers who do not want a credit card or whose credit risk profile is not suitable the &more loyalty scheme is added to our existing Chargecard customers. This is being rolled out as a pilot in South Wales to over 200,000 customers in a combination of credit card and Chargecard. It will be serviced by the existing M&S call centre in Chester and a purpose built centre in Worcester. Bluerock Consulting is extremely proud to be working with M&S running the Technology, Testing and Credit Risk Management aspects of the project. Can or should EBPP and Aggregation services Co-exist? The merits of aggregation services continue to be debated in the Financial Services industry including (a) client side versus server side technology; (b) value creation; (c) return on investment; and for some Financial Institutions (FI's); (d) the decision to include or ignore Electronic Bill Presentment and Payment (EBPP) consolidation as a part of the overall account aggregation offering. It's fair to say that the take-up of EBPP services has been slower than expected in the UK over the last 18 months; key billers have taken a phased approach towards development of their services and promotion to their customers. In addition, there is a 'watch and wait' approach by interested parties to see which service providers might emerge as having the solutions that best complements their own business objectives. To discuss the synergies and differences between EBPP consolidation and aggregation services we should perhaps first define an aggregation service as 'the delivery of mainly financial information to create a single view for the customer', whilst EBPP 'creates a single view of actionable bills and statements from a variety of companies'. Some aggregation services also include loyalty points, e-mail, etc. Similarities for the customer are; one password, one site and a single view of information; but, the major difference is that EBPP is built on the premise of a strong relationship held with the provider of billing and statement information. In addition, EBPP provides the customer with a set of features enabling complete 'Bill Management' centred on viewing, paying and communicating with their bill provider through their chosen channel. How does EBPP differ to that of a typical aggregation service? The emphasis for aggregation is primarily customer centric. It attempts to presents an up to date and accurate statement of net worth to the customer, at their request, in a simple and aggregated fashion. The relationship with the customer drives the development of the service and the content and usage of the product. In contrast to aggregation, whilst still customer focused (convenient and consistent view of all bills, accurate data, and useful messaging features) EBPP consolidation requires a relationship between the bill provider, the consolidator and the delivery channel (eg. the portal or on-line bank) and delivers significant benefits to all parties involved. Bill providers view EBPP consolidation as a way of driving up usage of their own e-billing offering and as an effective mechanism for the delivery of targeted marketing communications. Most key bill providers have invested heavily in e-billing account services and their return on investment is dependent on the use and take-up of such services, their ability to cross-sell products, create operational savings and enhance customer relationship management. As a minimum, EBPP consolidation allows consumer visibility of a targeted message from the bill provider. The consumer is encouraged to view a bill summary provided by the consolidator and then move to the bill provider's site to see more detail without the need to provide further passwords or information. This is the driver for the increased usage of the biller's own e-billing website. The customer finds this much more convenient than multiple trips to multiple bill provider websites, which would require the provision of several login credentials and would expose consumers to inconsistent experiences of viewing and paying their bills. One of the basic principals of EBPP consolidation is the power to see all your bills together which stimulates the use of an otherwise untapped route for traffic to the bill provider's website. As EBPP consolidation is based upon permissive levels of data exchange, utilising varying degrees of integration solutions between the biller and the consolidator, it provides billers with an opportunity to improve the e-billing experience for their customers. Examples are: providing consistent bill reminders, additional marketing and operational messages in addition to those within their own services, promoting on-line self-help and a host of value added services for their individual customers. EBPP consolidation also encourages and enables prompt and complete payment behaviour and provides another route for those payers using physical means to move to an automated method. EBPP consolidation can also be used to encourage DD sign up and confirmation, which for some billers is a key objective. Key areas for FI's to consider for an EBPP consolidation service By adding EBPP consolidation to their service portfolio FI's can provide a valuable service to their corporate customers as well as providing extra functionality to the on-line current account for the personal customer. Several FI's have been interested in an EBPP service but are waiting for the market to evolve. FI's want to know: - which EBPP consolidators will have the compelling bill data? - how many EBPP consolidators will exist and which one should they partner with? - what other FI's are considering such a service and with whom? - what are the challenges for integration with on-line banking platforms? - how an EBPP consolidation service might impact the strategic vision of overall account aggregation? The FI's role in EBPP appears to be key. Many already hold relationships with billers providing financial services (including payments) and have a ready-made distribution channel and payment mechanism via their on-line banking product. On-line bank users already pay some bills electronically, and EBPP provides a logical extension to this by being able to view the bill while you pay. In addition, extra features will allow the management of bills on-line and provide the ability to file, filter and analyse the bills and exchange messages across all participants (e.g. notifying the customer that a bill has arrived, generating visits for both the on-line bank and bill provider). These features provide tangible additional services and differentiate the product offering. An additional advantage of the on-line banks as a delivery channel for consolidators is their trusted brand and their unique relationship with their account holders and billers. However, billers still may require an element of protection for their bill data. How might the future look? One scenario for the industry, benefiting on-line banks, financial institutions, bill providers and personal customers alike, is for FI's to offer a service providing a complete statement of one's personal financial situation, including outstanding commitments, tax code and any other financial information. The customer would see the information all in one place and would have the ability to review each item for further, more detailed information. From the customers perspective, their current account will take on an increasing important role; first becoming an easier way to manage their money, e.g. paying and viewing bills together, then developing into the hub of their financial situation; hence, the logical place to look for everything, perhaps even the place to start when completing the tax return? FI's need to become the single location for their personal customers' financial experience rather than just providers of standalone products. Extending the range of the current account product to become a snapshot of total assets (account aggregation) and liabilities (EBPP) is a logical step that enables them to fulfil a central role. EBPP consolidation is the logical first step to achieving that aim. EBPP is more functionally rich, allows the FI's to build a more robust relationship with corporate customers, presents less sensitive data and generates payment activity from the current account. About Clear Today, Clear operates an EBPP consolidation service across two consumer facing internet access points, the first being Clear's own portal (www.clear.co.uk) which has been operational since June 2001 and the second being a co-branded service accessed via msn.co.uk (www.money.msn.co.uk) which was launched at the beginning of August 2002. A further co-branded service will be available via Yahoo! Finance later this year and distribution amongst on-line banks is expected mid-2003. The service currently provides access to over 10 UK billers, most of which are 'household brands' and are available nationally. In addition to EBPP consolidation, Clear can provide B2B consolidation, hosted biller direct services, intra-biller/bank consolidation, single sign on applications for internal bank/biller products, and e-payments/billing consulting services. The core Clear application has been developed over the past two years as a result of initial market research with consumers, extensive discussion with billers and banks around their needs/requirements (particularly, technical integration methods) and feedback from consumers using the service. For further information, contact Sue Marsh, Head of Banking Strategy - Tel 020 7025 6406