In the mid-1990s, when forward-thinking financial services firms were racing to claim "firsts" on the Internet, Charles Schwab & Co. stuck solidly behind its proprietary PC software. It did not give customers access to their financial records until 1998, when it started what has become a wildly popular Web site.
Now that wireless account access has become the leading-edge service offering, Schwab executives are vowing not to get caught behind. Its e-planners have launched wireless initiatives that place the San Francisco-based discount brokerage among the leaders of financial services firms preparing for the future of the unwired Internet.
Schwab recently added itself to the list of online brokers offering cellular telephones and a few free trades as an incentive to add or move assets into a Schwab account. Schwab brands its wireless Web service PocketBroker. Customers who open a new account with at least $10,000 or move the same amount into a Schwab account receive an Ericsson cell phone as a gift and two free wireless trades.
A number of firms, including cross-country rival Fidelity Investments of Boston, are also trying to lure new assets under management with free cellular telephone offers. What is telling for the rest of the financial services industry is that the online brokerage leaders think it is worthwhile to give away phones to get these assets. (Think King Gillette and his free razor-holder offer at the turn of the 20th century.)
Robert Sofman, Schwab's senior vice president for global wireless solutions, said the company views the wireless Web as a distinct and separate channel, one that can easily attract more assets. Schwab also believes that wireless services will help it draw customers from market segments where it is underrepresented today, such as super-high-tech consumers in their early 20s.
To ensure that Schwab would not fall prey to intra-organizational squabbling over how and when to deliver wireless services, senior management created a wireless division.
"About seven months ago, we pulled all our resources into one unit reporting right up to the vice chairman," Mr. Sofman said. The strategy is to deploy wireless services globally; PocketBroker has been offered in Canada since 1998, and the company plans to introduce it in Japan and the United Kingdom, Mr. Sofman said. He declined to specify when the services are expected to be offered there.
Schwab says it does not play favorites among the different types of wireless handheld devices. "We want to provide services to our customers independent of any device," Mr. Sofman said. "We are in the process of signing deals with all kinds of manufacturers."
PocketBroker is accessible from any Web-enabled phone at www.pb.schwab.com, and can be found on the finance menu of AT&T's Digital PocketNet service and the Sprint PCSWireless Web. On Nov. 9, Schwab announced an agreement to provide customers with nationwide access to PocketBroker through Nextel Online.
"We're going out seeking carriers and trying to have placement on their menus," Mr. Sofman said. Nevertheless, "we have the wireless URL, so any customer can reach us" with a Web-enabled handheld device - whether Schwab is on the menu or not.
"Wireless investing is about making life easier by breaking down the barriers that prevent customers from getting the information they want, when they want it," Mr. Sofman said.
Greg Santoro, vice president of wireless Internet services for Nextel, agreed. "Delivering financial information quickly and conveniently is crucial to investors," he said.
Sprint, Verizon, and other carriers "are not cutting exclusive deals with financial providers," Mr. Sofman said. "They have an interesting problem on their hands. There are a finite number of financial firms available. It will be difficult for the carriers to determine who to work with. Either they or someone else will have to figure that one out."
Last month Fidelity Investments announced a wireless offer that was clearly aimed at the upper end of the investor marketplace: Customers had to have a minimum $50,000 in new assets to qualify for a free Sprint cell phone, which retails for about $50.
By contrast, Schwab's offer "has a significantly lower asset hurdle" - $10,000 - along with "a choice of any cellular telephone, and any network carrier," Mr. Sofman said. "We want to make it available to everyone, because we're still not sure who will be the wireless user."
Mr. Sofman joins the ranks of leading financial executives who believe that a wireless Web product is all about customer upkeep rather than profit margins. He is still looking for a return on investment, but he does not expect much in the near term.
"There's likely to be a marginal trade lift," Mr. Sofman said. "But the clear motivator for us is from customer satisfaction and retention. This is a very new space. We have yet to understand what the relationship between the customer and the device will be and what the killer apps will be."
He pointed out that handheld devices with Internet connectivity are still far from ubiquitous, and said "it'll take a while before wireless services proliferate in the U.S.' "
John J. Jedlicka, a former American Banker reporter, is a freelance writer based in Atlanta.
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