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Tuesday, 11 April, 2000, 20:40 GMT 21:40 UK
Financial future on the web
By BBC News Online's Steve Schifferes
Tomas Carruthers, chief executive of financial website Interactive Investor International (iii), is in an optimistic mood.
That is despite the nervousness shown by investors which has driven his firm's share price below its offer price, just two and a half months after the company floated on the stock market.
He believes that the investment jitters will result in a "flight to quality" in which businesses with clear vision will be the winners.
Mr Carruthers says that many people are now trying to develop internet businesses, but few have a coherent business model as well as a nice website.
iii has positioned itself as a distributor of financial products, and says it provides news and information and impartial and independent advice to the visitors of its web site.
The site's popularity is growing rapidly, having doubled the number of unique visitors in just four months from 389,000 to 1.2m by March. Page views have increased from 23m to 67m in the same period.
iii claims to be the most visited financial website in the UK, with three times the page views of rival Exchange Holdings, which runs Moneyworld and MoneyExtra.
But like many internet companies, rising revenues at iii have gone along with increasing losses.
In 1999, the company had sales of £2.6m, with net losses of £6.8m, compared with sales of £1.4m and losses of £1.9m a year earlier.
Nevertheless, when the company floated on the stock market in February, its shares nearly tripled, giving it a market capitalisation of nearly £400m. After the gyrations of the last month, however, it is only worth about £150m.
Further expansion plans
Mr Carruthers said that Europe was the next target for expansion, with new sites planned in France, Germany and southern Europe.
To fund its expansion, the company can draw on the resources of the Hollinger Group, owners of the Daily Telegraph, who took a big stake in iii. Mr Carruthers says that the Hollinger Group liked the demographics of his firm's clientele.
The site attracts an affluent, middle-class audience, better off than the average internet user, with 64% holding degrees or post-graduate qualifications and 52% having a household income above £25,000 after tax.
More than 95% of its customers have credit cards, 90% life insurance, and 60% mortgages.
Mr Carruthers believes that there is a growing market for independent financial advice, where users can investigate all their financial needs, from share dealing to pensions and mortgages, in one place.
He also plans to attract more women - 90% of visitors to the iii site are currently male - using cross-promotion with Hollinger's other media properties, such as Handbag.com, a website for women run in conjunction with Boots.
He is also planning to invest in other platforms for his product. It will be made available on mobile phones through a deal with BT Cellnet, and on digital television screens for Cable and Wireless cable customers. He is hoping to conclude deals with Sky Digital's Open and OnDigital.
Mr Carruthers says that although simple transactions will be made over mobile phones, he still believes that the PC will be important in the future for more complex transactions.
Mr Carruthers says he is not concerned by the rapid increase in the number of financial service providers who have announced plans for an internet service.
Banks like Barclays, Halifax, and Deutsche Bank say they will launch new 24 hour banking services, while other financial institutions like Prudential, which owns internet savings bank Egg, plan to increase their web investment as well.
iii argues that few sites can both be providers of financial services and distributors of other people's products.
Mr Carruthers believes that his company will be more trusted because it is not trying to sell its own products.
Instead, it gets advertising revenue from those who put banner ads on its site, and a share of the transaction revenue if people buy products through iii.
Mr Carruthers predicts that revenue from the latter will soar as financial services moves rapidly to the web.
And he believes it is still early days for financial services on the web.
"It's just 7AM and the revolution is just beginning," he says confidently.
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