The stock brokerage business has come a long way. With the
onset of the digital era, innovative features like rapid trading,
real-time data and interactive webinars have transformed the
industry. Online brokerages find that they need to invest in
innovation to maintain a competitive edge.
Like travel agencies and video stores, the history of stock
brokerages is yet another example of an industry that has moved
from one-on-one interaction to the internet.
For generations, investors turned to professional stockbrokers
to buy and sell stocks, and brokers maintained close
relationships with their clients. On the occasion of a
birthday or a child's graduation, investors could expect a call
from their stockbroker.
In recent decades though, technology has swiftly replaced the
professional stockbroker for most Americans.
In the 1990s, low cost brokerages like
built online trading platforms. New e-brokerages like
) launched their companies online.
Today, online trading is pervasive. Cut-throat competition is
the norm in the industry -- brokerages vie to offer the lowest
fees, the biggest registration bonuses and the most helpful
features. For firms to differentiate themselves in a crowded
field, they need to innovate.
As computers get faster, brokerages continue to push the
limits for the very fastest trade execution and data delivery.
, based in New York City, is an online brokerage that appeals to
active traders with low-cost orders and high speed trade
execution. The firm is set to release Lightspeed 8, its fastest
trading platform yet.
Lightspeed hosts free webinars to teach prospective
clients about profitable trading strategies. "People who apply
the strategies that they learn in a webinar and see their
portfolios grow will be more likely to sign up for a Lightspeed
account," figures Lightspeed's Chief Retail Officer Michael
When Benzinga spoke to Sedek, the company was preparing for
a webinar on Wednesday, November 14
at 4:30 PM
EST to teach people about its new Lightspeed Trader
platform. Sedek says that the new platform offers the
fastest-available trade execution and data.
Other online brokerages focus their innovation strategies on
improving the user experience for mainstream
investors. ShareBuilder CEO Dan Greenshields told Benzinga
that his firm caters to young professionals and tech-savvy
Greenshields said, "For digital natives, before they're going
to go and open an investment account or make any investment, most
of them will go and do at least one web search-and a lot of them
will do three or four. A lot of them will read blogs, go to
multiple sources, including us."
ShareBuilder recently released a comprehensive Bond Fund
Center and Retire MyWay portal to help customers make more
sophisticated investing choices.
E-brokerages have kept on top of trends in mobile
technology. Greenshields continued, "Younger investors use
mobile phones, so ShareBuilder has apps for Android, iPhone, iPad
and the Kindle."
Scottrade is a large online brokerage that targets a
mainstream audience. Benzinga spoke with Gina Bhawalkar,
Scottrade's Senior User Experience Manager, who emphasized that
studying user needs is essential to innovation at
brokerages. "We really involve clients in the online
development process. On any given project, we bring clients to
our in-house usability lab and get their feedback on the
project. Client feedback drives what we do, and that makes
us unique in the industry."
Scottrade's commitment to user testing bears considerable
fruit. Based on user feedback, Bhawalkar's team built features
like a new log-in page and a "quick-trade bar" that clients find
intuitive and helpful.
Social media is also an important feature for clients at
Scottrade. The company developed the Scottrade Online Community,
a space where clients can share trading ideas and discuss
Another upstart e-brokerage in New York is courting a new
niche: young, inexperienced investors.
was founded on the belief that young people expect technology to
have a game-like design.
Co-founder Gaspard de Dreuzy describes the company's
philosophy. "The new generation needs a more inviting,
exciting and social platform. Drag. Drop. Trade. It should be
The possibilities for the industry are endless. De Dreuzy
forecasted the future for online brokerages, "We anticipate a
growing focus on younger investors, more social mechanics and a
need for all existing players to differentiate themselves with
better, identifiable user experience."
De Dreuzy continued, "Transaction-based revenues will be a
smaller piece of the revenue mix. We think that
micro-transactions for advanced functionality and content
delivered via apps in a store will grow."
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.