Charles Schwab Europe (CSE) celebrated its millionth trade online earlier this year, less than two years after it went live. While the Internet share trading market in the US is relatively mature, European trading online is dominated by traders from the UK and Switzerland.
"We do plan to extend our services across Europe when the time is right," says Sue Griffin, CSE's director of electronic channels.
But entering new markets, says Griffin, requires careful research to comply with local financial services regulations and to make sure the language used is correct. One simple example of the legal differences that exist is that American citizens must prove they have $10,000 worth of savings before they can start trading. Their British and Swiss counterparts have only to prove their citizenship and pass a credit check.
Charles Schwab broke into the UK market by acquiring a company called Sharelink, which had already established a telephone brokering service. On extending the operation to the Internet, early users were at first only able to carry out sterling-based transactions. The functionality for UK traders to invest on USstock exchanges online was introduced in 1999.
Obviously, the main thrust of the Web site is to provide users with access to stock exchanges, the ability to place deals and manage and monitor their account. However, there is a raft of additional services that inform and educate users and enhance their online experience.
"The main aims of Schwab-Europe.com is to drive revenue and be transactional," says Griffin. "But to make this happen and continue growth, we had to look at educating potential customers while at the same time providing additional services to our established customer base."
Following research to further understand the habits of online traders,Schwab-Europe. comwas relaunched in May. The new version of the site is the one that picked up both the E-commerce Award and E-business Gold Award at Computer Weekly's E-business Excellence Awards ceremony a fortnight ago.
The new-look site provides users with a fresh wealth of functionality and links to complementary services, which gives CSEcustomers additional information, better presented information and information while mobile. CSE has achieved this mostly through partnerships with other reputable media companies and service providers.
Registered CSE customers can access the Reuters Investor service, which allows them to look up information and stock analysis on companies they may be thinking of investing in. For an additional fee customers can receive further in-depth information from Reuters.
The site also offers the most active users an online quarterly magazine called The Bulls Eye. This is written by many of the best-known financial writers in the UK: experts from newspapers including the Financial Times, the Mail on Sunday and the Sunday Times. Stories are written specifically for Schwab customers and cover investment topics.
Schwab-Europe.com has also brought in the services of Big Charts which specialises in digital graphs. The adage about a picture being worth a thousand words is especially true when users are charting the performance of a particular stock in comparisonwith another stock or the FTSE.
CSE has also teamed up with specialist training firm Inacademyto provide users with a range of information sheets and tools aimed at makingpeople "smarter investors". The subjects covered include: how tax affects you as a private investor, how the markets work, how to get the best out of online trading, and common dealing terms. CSE plans to add to its education centre to build a comprehensive education portfolio for its clients.
As for security, Griffin is keen to play it low key. "We try to avoid talking about the security at any length," she says. "Any publicity we have about our online security measures will only tempt people to try and hack inside our systems. It's like a red rag to a bull. Suffice to say that we have a very high level of security throughout our systems - our business depends on it."
The latest innovation is the Charles Schwab Europe Data Screen. This customised pager, aimed at the active investor, is the size of a credit card and provides real-time prices on the top 350 performing companies on the London Stock Exchange. Users can also set up their own portfolio and request to be alerted when share prices reach a pre-selected limit.
"We are not interested in introducing technology for technology's sake or shoving technology down our users' throats," concludes Griffin. "But this is an example of where it can really bring benefits to our customers."
Charles Schwab Europe's chief executive officer Bob Dust‚ sees IT as the key to deliver service to investors
Computer Weekly: What do you think is CSE's biggest achievement to date?
Bob Dust: "There are many things I could point to, for example, having developed a great brand or opened up the stock exchange to a new audience. But I think our greatest achievement so far is something that is less visible to the investor. While our main datacentre is in Birmingham, we have just completed the development of a dual datacentre in Milton Keynes providing full redundancy and back-up facilities. We can now offer a guaranteed and robust service and an unprecedented level of commitment to the UK investor. I would go as far as to say that the level of technology we have brought into play in the past four to five months is unsurpassed in Europe."
CW: What future plans do you have for Schwab-Europe.com?
BD: "As more brokers provide the opportunity for people to trade online, the process of buying online becomes a commodity. What differentiates are the tools provided to aid the decision-making process and here I see two challenges. One is to make sure we direct people to the right information, there is so much information out there we must build tools that deliver relevant, usable information.
"The second issue follows on from the first: one of the main differences between working in the US compared with Europe is that in the US all company reports are prepared to basically the same format, you know where you stand when you want to compare the information. In Europe, there are many differences between the countries; the legal framework, the technical make-up, the regulations. It's a real challenge to get some kind of transparency. When we launched CSE we planned to expand into Europe. This is still our plan but it is going to take a lot of work to craft a solution."
CW: What is Schwab-Europe.com's role in empowering the small investor?
BD: "We have striven to even out the playing field in the stock trading arena. Until fairly recently, access to the stock exchanges and the information to do so successfully was focused in the hands of a few. There was a perception that stock trading was only for the wealthy or the sophisticated. Our role has been to provide the tools for users to trade independently and not have to depend on someone else. There's a real appetite out there for people to take control of their future."
CSE chief has IT past
Bob Dust‚ started out as an airline pilot with United Airlines before coming down to earth to join United Airlines' IT operation. After 20 years with the airline, he joined Charles Schwab as chief technology officer in 1984 with a remit to look at expanding the company's ventures on the international stage. Dust‚ came to the UK as chief executive officer of Charles Schwab Europe in July 1998 as the company was launched.
Charles Schwab Europe (CSE) received not only the E-commerce Award at the Computer Weekly E-business Excellence Awards but also took home the Gold Award. This is what the judges had to say about the Schwab Europe.com Web site.
Martyn Emery of the eTail forum:
"A stunning example of how e-commerce can be leveraged by a business to totally revolutionise the manner in which it works. In the space of 24 months, CSE has moved its business from being completely offline to a point where more than 70% of its business is now conducted via the Web, with £5bn traded. The entire trading system has been developed in-house, and delivers a level of performance, end-to-end integration and reliability that can only be described as truly world-class. This clearly required incredible business focus to achieve, and strong management of a talented "version 0 junkie" technical team to deliver.
CSE is now able to redeploy its call-centre operation as a service centre and has started to develop investor education programmes to strengthen its brand. A well deserved award."
The E-commerce Award panel:
"CSE has not only enhanced its e-commerce first-mover advantage, but has continually delivered a robust, user-friendly Web environment which has helped to financially empower its clients.
The CSE entry soon became the benchmark on which other entries were judged. In the end, CSE was the clear winner of the E-commerce Award."
Bob Dust‚, CEO, Charles Schwab Europe:
"I think that it's a fantastic achievement. It's a great motivator for everyone at the company and recognition for how we have legitimised online stockbroking in the UK. In two years, we have registered 100,000 customers, 75% of whom trade via the Web I think. It is really the killer app as far as UK e-business is concerned."