1. Public Sector-Operated Price- Comparison Websites Case Studies and Good Practices Johanna Jaeger World Bank Financial Inclusion Practice June 2013

2. 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 consumers Lessons Learned Disclosure can be improved through various measures: Key Facts Statements Glossary of standard financial terms Price-comparison websites Consumer testing 2

3. 3 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

4. Why Price-Comparison Websites? 4 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

5. Main Components to Consider 5 Institutional and Structural Arrangements Back-end Data Operations Front-end Functionality Products and Providers Creation and Maintenance Legal and Regulatory Framework Public Sector- Operated Price- Comparison Websites

6. 6 Institutional and Structural Arrangements BasicMediumHigh 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 MalaysiaHungary, MexicoCanada, Ireland, Norway, United Kingdom

7. 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 7 Legal and Regulatory Framework

8. 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) 8 Initial Creation and Maintenance

9. 9 Products and Providers Canada 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

10. 10 User-Specified Filters Filters for loan products on NCAs site in Ireland: o Size of loan o 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

11. 11 Comparative Data Comparative data for loan products on Money Advice Service (MAS) in United Kingdom: o APR o Total amount repayable o Monthly repayment Limited to 4 key metrics Comparative data for savings accounts on Hungarian Financial Supervisory Authority (HFSA) site: o Interest rate conditions o Minimum and maximum AER o Minimum amount of savings o Expected frequency of savings o Currency Less is more when determining what data to compare

12. 12 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 definitions 2) Include design features such as sorting by column heading and side- by side comparison of user selected products

13. 13 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

14. 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) 14 Back-end Data Operations Consider automated data entry by providers with spot- checking by site staff Be transparent about the frequency of updating

15. Thank you! Financial Inclusion Practice June 2013 www.worldbank.org/consumerprotection 15