In 1995-96, the internet primarily represented a disruptive technology to Schwab. The internet swiftly changed the brokerage industry by providing customers with affordable online access to large amounts of data related to market investment information and brokerage advice. Additionally, customers had direct access to a larger pool of electronic discount brokers. Schwab was faced with an unanticipated threat which would have game changing ramifications for the industry. By 1993, electronic brokers such as E-Trade, were early entrants in the electronic brokerage industry leveraging the cost advantages of the internet. This resulted in significantly reduced commission prices creating intense competition for Schwab’s customer base. Within several years, commission price wars ensued. By 1995, the internet …show more content…
Schwab had identified the internet technology as providing lower-cost of capital attributes that would spawn the electronic brokerage sector of the brokerage industry, ultimately threatened Schwab’s current commission revenue model. This threat to revenue compounded with Schwab’s inability at the time to seamlessly integrate the web interface to the mainframe delayed Schwab’s launch into web-based trading until 1995 with the development of “e.schwab” and in 1996 with “SchwabNOW”. Schwab had utilized online channels, in order to enhance and provide synergy to existing customer services to create further customer value. This was done in 1993 when Schwab launched the “Equalizer” and “StreetSmart” PC software, providing customers with the convenience of online stock, bonds, and mutual fund trading. Schwab focused primarily on current customer needs, as any successful corporation, providing innovative tools to access accounts and trade online. The utilization of online technology reduced costs, returning those savings back to the