Full steam ahead for online broking
Online brokers are aggressively expanding their product ranges to entice new clients from full service broking firms, as the popularity of online trading as an investment vehicle increases. AC Nielsen.consult estimates that of the 1.6 million people who use the Internet regularly and trade shares, around 83 per cent are involved in online trading at some level. Merrill Lynch HSBC's Scott Walters says that of its 42,000 online customers, between 25 and 35 per cent are active and trade shares at least once a month. He says that his firm is increasingly gaining customers from full-service brokers, as customers discover they can get a lot of the products which they used to get from offline brokers.
Online brokers are enticing these new clients with research and product facilities, broadening their bases with such products as margin lending, banking deposits and managed funds. TD Waterhouse is moving in this direction as it seeks to become an all-encompassing financial services provider, says its MD of investor services, Karen Buck.
Another key way that online brokers are tapping into new customer bases is through alliances with banks, such as E*Trade's relationship with the ANZ. The bank's stake in the company was increased to 35 per cent in return for bringing in 35,000 of E*Trade's 100,000 customers.