Charles Schwab - Expanding Online Trading Applications
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Case Details:
Case Code : ITSY007
Case Length : 10 Pages
Period : 1971-2001
Pub Date : 2002
Teaching Note : Available
Organization : Charles Schwab & Co. Inc.
Industry : Financial Services
Countries : USA
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"Schwab needed a more efficient IT infrastructure to
improve both time to market and hardware resources utilization. With the rapid
growth of our online brokerage solution, we needed to start looking into more
efficient ways to leverage our hardware and our development resources."
- Purna Roy, Director, Web Systems Availability,
Charles Schwab, in 1998.
Background Note
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US based Charles Schwab & Co. Inc. (Schwab), the market
leader in the global online broking and financial services industry had a 30%
market share of the industry in 2001 and accounted for one-third of overall
global Internet trading businesses.
The company provided high volume trading and customized, timely financial
services for NASDAQ securities1 and
brokerage-dealers and institutional customers through over 310 branches spread
over the US, Canada, UK, Japan, Switzerland, Hong Kong, Australia and New
Zealand. Schwab's main business activities included trading for investors,
phone/online trading, futures and commodities trading, online mortgaging and
supply of investment-related educational material. |
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It was one of the top three mutual fund distributors in 1999 in the US (Refer
Exhibit I & II for Schwab's products and services).
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Schwab was established in 1971 by Charles Schwab
(Charles). Schwab pioneered the concept of discount brokerage i.e.,
offering 'no-frills' transaction services to customers.2
Schwab was known for cutting commission rates consistently, even as
other US brokerages raised theirs by as much as 50%.
As a result, the company's revenues grew thirty times, from $ 4.6
million in 1976 to $ 126 million in 1983. In 1983, Charles sold the
company to BancAmerica, a US-based bank. However, as US banks were
prohibited from expanding into the brokerage business, BancAmerica had
to sell back the company to Charles in 1987. |
Excerpts >>
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