Believe it or not, price comparison websites have been around for more than two decades now. Thanks chiefly to an advertising arms race by the major providers featuring, among other things, meerkats, Italian tenors and – my personal favourite – twerking businessmen, comparison sites are now an integral part of many people's lives.
The appeal is clear, they offer a quick and easy way to compare prices and switch providers across a range of markets. Left to our own devices, most of us would find it tricky to compare prices, and switching between providers would be considerably more difficult– and for many people, just too much effort.
Going beyond insurance
What comparison sites have not so far managed to crack is broadening reach beyond motor and home insurance. According to our Financial Research Survey (FRS), although just over one in four of us visit at least one comparison site per month, with unaided brand awareness of sites extremely high, most switching activity is linked to motor or home insurance.
However, there are signs that activity across other markets is increasing, especially across energy and broadband, where persistent efforts to encourage switching by regulators and consumer groups is boosting activity.
Evolving technology that allows proactive monitoring of products, such as WeFlip and Autosergei, is also beginning to be introduced. This algorithm-based technology can alert customers to new providers if better deals become available. Although currently mainly linked to energy, sites are beginning to roll out this technology across other markets.
The potential here is enormous, especially given recent moves to also develop Open Banking that can allow providers to access your detailed financial transactions. The combination of both proactive monitoring and Open Banking could therefore hand consumers considerably more power to switch providers and pick products. Another outcome could be that banks end up surrendering their relationships to comparison sites and new aggregators.
A question of trust
However, realising the true potential of these initiatives hinges on consumer trust, both about the security of our data and comparison sites in general. Nicky Morgan, former Chair of the Treasury Select Committee, has recently rightly warned that a single data breach at an Open Banking startup could fatally damage trust for the entire Open Banking concept.
Whether comparison sites always offer the best deal is arguable. Sites do not trawl the entire market. Instead they will only list providers that they have commission-paying relationships with, and as a result some providers choose not to be featured on sites.
All of which means that while 48% of us say they are likely to use a comparison site in the future, just 38% say that we trust sites, according to the latest results from the FRS. For sites to continue growing in the future, addressing this trust mismatch will be key.