Schwab, Quick & Reilly launch wireless brokerage services

Two of the nation's biggest discount brokerages -- Charles Schwab & Co. and Quick & Reilly Inc. -- launched wireless services today, targeting the profitable frequent trader customer base.

San Francisco-based Charles Schwab has about 7 million active accounts, with about 80% of its customers' trades processed via the Internet. Still, the nation's largest online broker doesn't expect a big chunk of its customers to shift to wireless trading right away.

"It's still fairly early," said spokesman Greg Gable. "But, at some point, it will be fairly significant -- we fully expect wireless to become a more and more common way to do all sorts of Internet activities."

Gable said that Schwab's wireless services will only be available to Research in Motion pagers and Palm Pilot users at first, followed by Web-enabled phones later this summer.

Schwab tested the wireless services for six months before going live, he added.

By comparison, it only took three months of testing to get Quick & Reilly's service up and running.

Quick & Reilly a subsidiary of Boston-based FleetBoston Financial, chose New York-based W-Trade Technologies Inc. as its provider of wireless services.

According to W-Trade chief technology officer Sergey Fradkov, his company sells off-the-shelf software modules that can connect a brokerage's back-end systems to a wide variety of mobile devices -- including Palm Pilots, pagers, and cell phones -- without having to build the software from scratch.

"Our platform allows brokerage companies and banks to roll out their offerings much quicker," he said.

Altogether, Quick & Reilly's system was in development for six months, said Quick & Reilly spokesman Charles Salmans.

At present, Quick & Reilly has 1.3 million brokerage customers, about half of whom trade online.

"Probably only a small percentage will use the wireless service at the beginning," Salmans said. "But we expect that to grow very rapidly."

He pointed out that online trading went from zero to 50% of Quick & Reilly's trades in just four years.

"This could be a situation where the adoption rate grow very quickly," he said.

But Jaime Punishill, an analyst at Forrester Research Inc. in Cambridge, Mass., says he's skeptical about quick adoption rates for wireless trading.

"Every brokerage in the world can offer it," he said. "But it doesn't change the fact that most customers aren't ready for it."

Less than 1% of U.S. households are ready for wireless trading, he said. "This is a solution looking for a problem."

He pointed out that a customer has to have investments and Internet access, trade frequently and own a Web-enabled cell phone or PDA.

"What you have left is a very small pile of folks," he said. "But for certain active traders, it's very important and that's a very profitable segment. They have high margin balances, they trade very frequently, they're good customers, and they push the technology envelope."


Copyright © 2000 IDG Communications, Inc.

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