Feeds

IF a picture paints a thousand words, a sketch would do for you

Halifax pays $1m for IF.com address

  • alert
  • submit to reddit

High performance access to file storage

Halifax, the UK's biggest mortgage bank, has splashed out $1 million for the domain name address IF.Com.

This will stand for Intelligent Finance, the name for its new standalone Internet and telephone banking operation, announced on Friday (Feb 18). IF also comprises two middle letters of Halifax, the bank helpfully points out. So there you have it, instant brand heritage for a spanking new non-mortgage operation. (Also, IF is no worse than Smile or Cahoot or Egg, other daftly-dubbed British Net banks.)

But what about the low-value, low-wage customers left behind within the Halifax bricks and mortar network (as a mortgage bank it's going to have plenty of those kind of people)?

With IF, the beating Internet heart, ripped out of the Halifax, are these people now to bank with the Halax? Or is to be UFnondotcom. As in "Unintelligent Finance"?

What IFs

Halifax's Internet plans were responsible for the company's market cap increasing £3.8 billion at the end of last week. This is dumb. Egg, the Prudential's online bank, could be valued at anywhere between £2 billion and £4 billion, when it floats this year. And this is a "real" British Internet bank with "real" customers and "real" losses.

Q: How can IF.com be worth as much as the upper high-end projections for Egg, when it is still at the starter's gate -- along with dozens of other British financial institutions, crowding into the net banking scene?

A: Easy -- IF's conjured up a magic ingredient -- a new product said to be "on the scale of the invention of credit cards".

But what could it be? Halifax ain't saying just yet, because that would give the game away. Or maybe it would get hauled up before the Magic Circle, for revealing trade secrets.

"It's the uniqueness of the proposition that stops us from giving you any details of it," says Jim Spowart, who left Standard Life to run IF, in Saturday's FT.

Hmm...
His boss, Halifax chief executive James Crosby, is equally bullish: "We believe that we will make real money (from IF). That is real money. Not Internet money."

Halifax aims to poach 500,000 customers from rival banks for IF, which launches in July, by the end of the year, and it's gunning for two million customers by the end of 2004. Crosby says the company has a target after-tax return on capital of 15 per cent. These figures may come back to haunt him.

So how will the company achieve its targets -- especially when IF, together with esure, Halifax's new online insurance company announced on Thursday (Feb 17), will cost only £150 million (and £1.5 billion of capital to underwrite the business).

IF is kicking off with a £30 million media blitz "shortly", so that leaves only £120 million to spend on developing the databases, setting up and running the customer call centre, and crucially to offer cut price borrowing to savers, and premium savings rates to investors. In Internet banking terms this is not a lot of money.

Some IFs and lots of Buts

To attract well-off and wealthy customers, IF will need to offer better than average rates. Much better than average. But how does it retain these customers, who have already shown that they are footloose by setting up an account with the bank in the first place?

And how does it persuade these customers to buy other more profitable products, such as life insurance, pensions from what will still be seen as essentially a the subsidiary of a mortgage bank (whose parent announced on Friday that it was making £19m of provisions to cover compensation for pensions mis-selling).

Generally speaking, banks are crap at bancassurance - the one-stop personal finance shop - because a: they don't offer best of breed products and b: their customers mistrust them.

Punters with money will continue to use financial advisers and accountants, and they will continue to spread their money around multiple bank accounts. If not necessarily with IF. ®

High performance access to file storage

More from The Register

next story
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.