Riding the Whirlwind

Strategic Interactive Marketing for the Insurance Industry

Key Points:

Proprietary Service Providers offer comprehensive services to both consumers and suppliers.

These services include e-mail, forums and chat areas, information databases, entertainment, shopping malls.

5.11 Proprietory ISPs

5.11.1 These have been in existence alongside the Internet for many years. They include such companies as CompuServe and American On-line (AOL). Initially aimed at the business community they are now expanding to serve individuals. Recent new entrants are Bill Gate's Microsoft Network, Murdoch's LineOne, and Branson's Virgin Net. These systems aim to provide comprehensive information and entertainment services rather than just a simple Internet connection.

5.11.2 Value added services offered include:

• e-mail, e-mail to fax, and e-mail to post services.
• forum discussion groups, often used by computer companies to support their customers.
• Real-time chat areas allowing users to discuss a topic of mutual interest, or to "interview" a celebrity.
• information databases. E.g. stock market prices, company reports, newspapers & journals, patents, weather and traffic reports, etc. Many of these have a premium rate charge. Some are restricted to closed user groups (e.g. doctors accessing medical information).
• shopping malls including home banking.

They are easy for consumers to set-up and access, and they provide secure communications for the payment of goods and the sending of correspondence.

Microsoft, Virgin and News International are new entrants but they are using the Internet network rather than their own.

- One Stop Service -

5.11.3 The advantages of these proprietary systems are:

• they provide a one-stop service for users. This is especially with software where they provide a single load-and-go software package plus user help for all the services above. On the Internet users must seek out and install different software that may not work together.

Proprietary systems like Compuserve provide a more cohesive, robust and easier to use environment.

• in many cases, users can access their services world wide for the price of a local phone call.
• they provide a consistent user interface that is often also used by the suppliers of the value added services.
• they use private telecommunication networks that offer a higher degree of reliability, security and performance.
• electronic commerce facilities are included. Users making purchases from the electronic shopping malls see the charge appear on their statement from the service provider.

5.11.4 The recent expansion to private individuals has been at great cost as these proprietary networks seek to gain market share through special offers and unlimited usage subscriptions. As a result, service is suffering and profits are disappearing.

TSB is using CompuServe for its home banking service and Microsoft is linking up with 57 US banks.

Other banks are using their own private networks because they feel they are more secure.

- Account Software Links to Banks -

5.11.5 Within UK financial services, TSB uses CompuServe for its home banking service. World-wide, Microsoft is teaming up with 57 banks to use its Money accounting system as the access method into home banking. Similarly Quicken has links with 37 banks in the US.

5.11.6 Other UK financial institutions have preferred to provide direct access into their own computer systems. NatWest, Nationwide and the Bank of Scotland with their home and business banking systems use this approach.