Charles Schwab Corp. dove into the cash management fray Monday by unveiling Schwab Bank Investor Checking - an account that links to a Schwab brokerage account.
"This is a product that is really designed for our investor clients, so it is very strong working in conjunction with our brokerage product," said Richard Kenny, the president and chief executive of Schwab Bank.
The checking account offers free online bill payment, up to $35 a month of rebates on ATM fees, and immediate cash transfers to and from a Schwab brokerage account. Clients can use one log-in process to view both their checking and brokerage accounts online.
"It works very much as an adjunct to the brokerage relationship. Clients basically don't need to keep any balance in their checking account. They should think of the brokerage account as the central relationship," Mr. Kenny said in an interview.
The checking account is the latest offering designed to expand Schwab's relationship with brokerage clients. Since launching the bank in April 2003, the San Francisco company has introduced mortgage products and a credit card.
Mr. Kenny said his long-term goal is to establish a banking relationship with 25% of Schwab's brokerage clients.
"My consistent target has been that we want to have a main bank relationship with 25% of our brokerage clients," he said. "That doesn't have a this-year timeframe on it. That's a progression over time."
Matthew Snowling, an analyst at Friedman, Billings, Ramsey & Co., called that 25% goal "a stretch" right now. "They certainly have the customers. It's just a matter of conversion.
"This is certainly a step in a series of steps, but the struggle would be to get your brokerage customers to start thinking of Schwab in a different way," he said in an interview Monday.
Mr. Kenny said Schwab began testing the checking account among employees last year and introduced it to some clients late in the first quarter. A priority this year is to convert about 45,000 clients with the Schwab Access brokerage account, which provides cash management features, including online bill payment, a debit card, and rebates on ATM fees.
He said he has sales goals but did not want to disclose them.
E-Trade Financial Corp. and other competitors have introduced similar cash management products to solidify relationships with their customers and develop new sources of revenue as it has become more difficult to survive on trading commissions alone.
