Christos Cotsakos, president and chief executive officer of E-Trade Group, is talking more like a media mogul than a stockbroker.
The on-line brokerage leader hinted strongly in a speech last week that E-Trade might get its own television channel.
"We're working now with some media companies," he said at the Faulkner & Gray BankNet/InvestNet conference in Las Vegas. "We feel so good that there could be an E-Trade channel in the next 36 months," he said.
The idea goes well beyond Destination E-Trade, an aggregator initiative begun last year, which Mr. Cotsakos described as "one of the most successful financial sites ever launched."
In earlier days, he said, his competition was Microsoft Corp., America Online Inc., and Yahoo Inc. It has shifted to cable companies like Comcast Corp. and Tele-Communications Inc., because they control distribution.
"If you don't control distribution, you can be held hostage," Mr. Cotsakos said. "We have learned from Microsoft that we should partner with people in industries we don't really understand."
He expects that within three years, people watching the cable business news channel CNBC will be able to react immediately to the flashing ticker symbols on the screen by performing trades.
It will be crucial for a company like E-Trade to "get control of the wired household and get them to feel good about our brand." He described the home as "the wealth center."
E-Trade has confounded skeptics with its strength. It now handles $1.2 billion of securities a day and processes a billion page-views of financial information. Trades carried out on its platform comprise 18% of the total on the Nasdaq market and 7% on the New York Stock Exchange.
Recent system disruptions have "embarrassed the company," Mr. Cotsakos conceded, but he said the reports were blown out of proportion.
"We take a lot of heat by being No. 1," he said.
The company is working on what he called the fourth tier of its technology architecture. It already has spent $350 million on technology and expects to spend $500 million more, particularly on the "complicated back end."
Mr. Cotsakos believes it is more secure to trade on-line than it is to write a check. To illustrate the point, E-Trade spent $1 million to become the first financial institution to gain the WebTrust seal of assurance, he said. Designed by the American Institute of Certified Public Accountants, WebTrust ensures that on-line businesses deliver the service they promise.
He suggested that banks should be buying Web companies, "whatever the price," because treating Web applications as "an afterthought (is) way too costly."
Three years from now, he asked his audience, "where will you be standing when the Internet becomes the predominant means of communication?"
E-Trade, which spends about $80 million a year on advertising, intends to be on top. A recent consumer study showed E-Trade is one of the top four electronic commerce brands along with eBay, Priceline and Amazon.
"Our following is 20 times greater than the next nine e-commerce brands," Mr. Cotsakos said.
Christopher Musto, a senior analyst at Gomez Advisors Inc., said E- Trade's advantage is its people "with excellent skill sets from a wide variety of industries that don't hold financial services as sacrosanct."
The battle between brokers and banks has "a lot to do with attitude and politics," said William Burnham, a senior research analyst at Credit Suisse First Boston. "The primary focus in on-line banking is on cost and improvement rather than on how to get incremental growth."
Credit Suisse First Boston estimates that on-line trading grew 35% in the fourth quarter and volumes in the industry were 40% higher in April than in January.
On-line brokers have made such headway because "in the banking space we have seen a lot of distractions," Mr. Burnham said. "Essentially, banks wasted 18 months in a pointless fight over standards." In that time, companies like Microsoft and Intuit Inc. have "gone from being bogeymen to becoming partners."
Mr. Burnham said unless bankers quickly "seize the initiative, they'll be run over by the on-line brokers."