Public Sector-Operated Price-Comparison Websites

Case Studies and Good Practices

Johanna JaegerWorld Bank

Financial Inclusion Practice

June 2013

Consumer Disclosure

Key Issues• Consumers lack information to be able to make informed

decisions• Existing disclosure requirements unclear and

fragmented• Lack of guidance on type and form of information

disclosed to consumersLessons Learned• Disclosure can be improved through various measures:• Key Facts Statements• Glossary of standard financial terms• Price-comparison websites• Consumer testing

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Helping Consumers Shop Around Makes a BIG Difference

Credit Card Loans Average Interest Rates in Peru

Source: Superintendence of Banking, Insurance and Private Pension Funds of Peru

Why Price-Comparison Websites?

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Purpose of Websites

• Allow consumers to easily search for and compare product offerings

• Increase market competition by creating competitive pressure among providers

WB Technical Note

• Examines websites in Canada, Hungary, Ireland, Malaysia, Mexico, Norway, and United Kingdom

• Compares differing approaches and highlights good practices

Technical note provides regulators with concrete, practical information on operating price-

comparison websites and the strategic considerations to take into account when

designing such sites

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Main Components to Consider

Institutional and Structural Arrangements

Back-end DataOperations

Front-end Functionality

Products and Providers

Creation andMaintenance

Legal and Regulatory Framework

Public Sector-Operated Price-

Comparison Websites

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Institutional and Structural Arrangements

  Basic Medium High

Main characteristics

Focus on price comparison

Comparative tables with basic user-specified filters and limited functionality

Combination of price comparison and product selection

Advice and complementary tools not well integrated

Focus on product selection

Highly interactive with tailored results

Intuitive navigation and clean design

Embedded advice Advanced

complementary tools

Case study countries

Malaysia Hungary, Mexico Canada, Ireland, Norway, United

Kingdom

Regulatory power to compel reporting of data

Price comparison websites typically benefit from regulation that directly or indirectly requires financial providers to report data

• Direct power to require data supply on fees and prices:o Financial regulators (Hungary, Malaysia)o Consumer agencies (Ireland, Mexico)

• Finanzportalen in Norway benefits from regulations that require such reporting

Websites should build relationships with providers to facilitate obtaining timely, accurate data and coordinate with other financial sector regulatory bodies on data needs

Content of reporting requirements Prerequisite to building websites: requiring financial providers report

specific comparable metrics such as annual percentage rate (APR), and total cost of credit using standardized calculation formulas

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Legal and Regulatory Framework

Initial Creation

Outsourcing (Ireland, Malaysia, Norway, United Kingdom) versus in-house creation(Canada, Mexico)

Time ranges from 18 months to two years (Canada and Ireland, respectively) Costs range from US$260,000 to US$1.7M (Ireland and Norway, respectively)

Ongoing operations

Funding sources: direct funding from host institution (Hungary) levies imposed on financial providers (Ireland and United Kingdom) grants from other government bodies (Norway)

Staffing: Most sites operate with minimal staff (1-2 full time employees), outsourcing and/or automating many operational tasks

Consumer testing and focus groups for assessing effectiveness of tools and customer experience (used in Canada, Ireland, and Mexico)

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Initial Creation and Maintenance

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Products and ProvidersCanada

• Banking package selector tool

• Savings account selector tool

• Credit card selector tool

Hungary

• Consumer loans

• Bank selection program

• Deposit & savings search

• Credit cards

• Mortgages• Real estate

and vehicle leasing

Ireland

• Loans• Current

accounts• Regular

savings• Lump-sum

deposits• Credit

cards• Mortgages• Student

banking products

Malaysia

• Base lending rates

• Current accounts

• Savings accounts

• Credit cards

• Housing loans

• Fixed deposits

• More…

Mexico

• Personal credit and payroll simulator

• Credit card catalog

• Mortgage simulator

Norway

• Small loans• Credit• Current

accounts• Bank

deposits• Mortgages• Insurance• Remittances• Total cash

costs• Exchange

banks • Investments

United Kingdom

• Loans• Current

accounts• Savings

accounts• Credit cards• Cash

individual savings accounts

• Savings bonds

• Mortgages• More…

Most sites provide comparison tools for loans, current accounts, savings accounts, credit cards, and mortgages

Standardized and commoditized products (e.g. basic loans and current accounts) best-suited for comparison tools as they have a limited set of standard metrics to compare and are used by majority of population

Goal of websites should be to cover as many providers as possible

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User-Specified Filters

• Filters for loan products on NCA’s site in Ireland:o Size of loano Term of loan

• Easily adjustable filters alter search results

• Filters for current accounts on Finansportalen in Norway based on “usage pattern” (i.e. # of withdrawals, transfers, bill payments per month)

• Pre-populated with average user statistics, user can then adjust

Be intuitive, limit to key criteria and design filters

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Comparative Data

• Comparative data for loan products on Money Advice Service (MAS) in United Kingdom:o APRo Total amount repayableo Monthly repayment

• Limited to 4 key metrics

• Comparative data for savings accounts on Hungarian Financial Supervisory Authority (HFSA) site:o Interest rate conditionso Minimum and maximum AERo Minimum amount of savingso Expected frequency of savingso Currency

‘Less is more’ when determining what data to compare

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Features and Functions• NCA in Ireland allows users to select

specific products for side-by-side comparison

• Can click-through to more detail or provider website, email/print/save info

MAS site in United Kingdom provides: • Sorting by column headings• Definitions embedded in headings• Clean, colorful, easy to navigate

design

1) Embed guidance and definitions2) Include design features such as sorting by column heading and side-by side comparison of user selected products

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HFSA site in Hungary

• Calculators for credit ratings and household budgets

• Informational materials on financial products and services

FCAC site in Canada

• Calculators• Tip sheets• Quizzes• Budgeting tools• Educational materials

Complementary Tools

• Consider what package of tools will be most helpful to consumers in achieving stated regulatory objectives

• Work to integrate complementary tools into seamless user experience

Data collection

• Manual approach: Data collected from financial institutions and manually input by site staff (Ireland, Mexico)

• Automated approach: Financial institutions given individual logins to back-end content management system and update data on product offerings directly (Hungary, Malaysia, Norway)

Data updating

• Updates on regular quarterly, bi-annual, or annual schedule (Canada, Mexico)

• Continuous updating whenever products modified (Hungary, Ireland, Malaysia, Norway, United Kingdom)

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Back-end Data Operations

Consider automated data entry by providers with spot-checking by site staff

Be transparent about the frequency of updating

Thank you!

Financial Inclusion PracticeJune 2013

www.worldbank.org/consumerprotection15