It's two-way traffic on the internet

BROWSING the worldwide web is a one-way activity. Rather like television viewers, internet users visit websites, look at them, and move on. The experience, apart from the occasional registration form, is mostly passive and anonymous.

That might soon change as interactivity becomes the watchword for the next generation of websites.

The same technology enables websites - or at least the companies that own them - to view us. Marketers call this relationship-building or profiling: each time we visit a website it records the pages we view, the prices we request and the products we buy. The software (such as Broadvision and Art Technology's Dynamo) can be invisible to the user, and it is incredibly powerful.

For companies selling goods and services on the web, this is heaven. The software automatically creates customer databases with highly detailed pictures of visitors' likes and dislikes, allowing firms to target net users with special offers, discounts and products from other parts of their business. Large banks and financial services groups are watching developments closely: some are already investing in the technology.

Relationship software goes beyond the simple mailshot because it learns from internet users' previous activities. If visitors register and use a password, the software can combine viewing and spending patterns with information from the registration file, which usually contains data such as date of birth, occupation, salary and e-mail address.

Not everyone will welcome developments that give banks, insurance companies and lenders even more insight into our private lives. However, internet developers say the benefits outweigh the drawbacks.

Dynamo is already in use on the Institute of Directors' website, where it builds up a profile of members' interests based, for example, on the IOD publications they order on-line.

The site was developed by Bath-based Relay Business Systems, which is also working with the Principality Building Society and insurance brokers Hill House Hammond. Relay's operations director, Shaun Oxenham, says current internet commerce sites are "first generation". As companies realise the potential for the technology, financial services over the internet, including banking and investment, will be transformed.

A stock investor could use a Dynamo website to buy or sell shares at a given price, automatically. An insurance company could remind customers when to renew their policies, or to alert them when they become eligible for a discount. An insurance company website will already know customers' car details and claims records when they visit.

Mr Oxenham describes Dynamo's core as a "traits" database. One application he anticipates is currency purchase for regular travellers. A Dynamo website can be set up to buy foreign currency at favourable rates - say, Fr10 to the pound - and hold it in an account. It could also be used to help adults manage accounts for their children.

Relay encourages its customers to point out that they use Dynamo on their sites. Mr Oxenham suggests that intelligent software can even cut down on the amount of information we receive. "It makes information more relevant, appropriate and timely," he says.

Internet users should also be able to turn the tables on smart web sites. If companies let users enter their own preferences into the traits database, we can tell firms the sort of information we do - and do not - want to receive. If financial companies integrate this information with postal marketing databases, we might see less, but better targeted, junk mail landing on our doormats.

q Links: Broadvision, www.broadvision.com; IOD, www.iod.co.uk; Relay, www.relay.co.uk