Egg hatches cheap credit card in double-quick time

Web bank Egg launched one of Britain's cheapest credit cards this week, thanks to dramatically fast IT development, writes Dan Sabbagh.

Pete Marsden, the bank's IT director, claims Egg can develop a product on average in just 50 days, vastly undercutting its rivals, which typically take a year.

In less than a year, it has spent £30 million on an IT architecture which has supported the launch of six new banking products. As an Internet-only company, it does not have to pay for deploying applications across a branch network.

Egg's credit card has an annual interest rate of 9.9 per cent, and offers a 1 per cent discount on all purchases. This discount rises to 2 per cent for purchases from 80 selected online retailers.

Marsden said rapid IT development and the company's Internet-only cost base make this possible. "It's very difficult for any of our competitors to follow our lead," he said.

Egg's infrastructure is based on Sun Microsystems' hardware, an Oracle database, and software from Netscape and content management specialist Vignette. Marsden said: "We looked at Microsoft, Sun and IBM, and Sun's platforms were the most reliable and scalable."

Egg believes it will be able to support up to two million customers online with its current hardware, compared with 600,000 customers at present.

Marsden claims Egg can launch new products relatively easily by buying off-the-shelf applications and plugging them into the Sun servers using Top End middleware supplied by BEA systems. The middleware supports every major platform type, allowing Egg to avoid the costs of developing a banking application just to fit in with its Sun/Unix operating system.

The development of Egg's credit card system took four months, and cost £8 million. Mark Charrington, partner at consultancy Mitchell Madison, said: "This is a classic example of the invader's advantage. Time to market is fast; the question is, can this be repeated with its second product?"

Development costs in banking are considerable. Marsden said contract programmer rates for financial systems are up to £3,000 a day. A month's extra development with a team of 20 contractors amounts to more than £1.2 million.

Industry specialist Philip Llangluth, also a partner at Mitchell Madison, said shortening development time is crucial in Internet banking.

"It is absolutely right to focus on the development lifecycle," he said.

"A lot of established institutions haven't understood that and use existing development processes which are not fast enough for the Internet."

See also:

Egg director defends IT system

Egg has defended its choice of technology for its ecommerce activities despite embarrassing hiccups in launching products.  14 Oct 1999

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!