UK-based Misys has shut down its loss-making Internet consumer financial services businesses, screentrade.com and theformula.com, marking its complete withdrawal from the consumer (B2C) end of the financial services market.
The decision to pull out of the consumer market follows the company's failure to find a suitable partner to share the expensive ongoing development and marketing costs of these activities.
In the year ended 31st May 2001, the estimated net cost of the B2C activities to be charged to the profit and loss account is £19 million, out of the total estimated figure for the Internet Services Division of £23 million. The estimated cost of closure is £10 million, which will be shown as an exceptional item.
Misys chairman Kevin Lomax says: "Having been one of the UK pioneers of Internet-based consumer financial services with screentrade, it is particularly disappointing that we have had to take this decision.
"Although we established a strong foothold in the marketplace with screentrade, slower-than-anticipated consumer adoption of the Internet for purchasing a broader range of financial services products has resulted in ongoing losses at a level which can no longer be justified by potential returns."
Screentrade was launched in November 1997 as a destination site for consumers to compare and buy home, car and travel insurance over the Internet. Theformula was developed by Misys as the successor brand to screentrade, allowing consumers to compare and either buy or apply for a wider range of retail financial services products, including life insurance, personal loans and mortgages.
Both screentrade and theformula have been closed to new business with immediate effect. Existing policyholders will remain fully covered by their policies and will receive letters from Misys to this effect; ongoing servicing of the policies will also continue to be handled by the company. Policyholders will receive a further letter prior to the expiry of their policy, with advice on the process for renewal.
Misys says it will continue to seek a buyer for the screentrade ‘insurance book’ and/or a buyer for the screentrade brand and site infrastructure.
The company, which earlier this week agreed a £75 million bid for IFA network DBS Group, says its B2B portal activities m-link and i2i-link are unaffected by its withdrawal from the consumer market.