PRUDENTIAL SECURITIES is taking a stab at various high-tech ways to re-establish market credibility in the wake of a string of scandals and embarrassments that have done little to enhance the value of its franchise to its parent, Newark, NJ-based Prudential Insurance Company of America.
Among them: an on-line order-placing service customers can use to communicate with their brokers from anywhere, an electronic bill presentment and payment system, a broadened Web-based financial mall, and leased IBM laptops to its financial advisors, according to Pru Securities evp Jack Witkowsky, director of strategic client initiatives.
Leasing the laptops to the sales force instead of simply distributing them is common in the securities sales business. Buying and distributing the IBM 365 XE Thinkpads, together with the necessary software would have cost about $4,500 apiece-or $45 million-if they had to be given to the 10,000 people in sales. As things stand, he's leased about 2,000 laptops for $185 a month as part of an on-going strategy of more or less infecting Pru Securities with technology, hoping it spreads. "We wanted to give (the brokers) a very competent tool that has a real expense to it," he says. "How motivated are you if I just hand you a $4,500 box? On one hand, I needed to get this out today, and on the (other), I wanted people who wanted it and would make some kind of commitment to use it, not somebody who wants a toy." Witkowsky declined to detail Pru Securities's plans for an the electronic bill pay system.
But is the technology initiative enough to redirect Prudential? Kevin Ceurvorst, a Chicago-based analyst and group vp of Duff & Phelps Credit Rating Co. says that although Prudential is making progress, profitability is still marginally lower than the industry average. "The (technology initiatives) are necessary for them to move forward," he says. "But they are part of a technology catch-up phase that the (parent company) is going through. Pru Securities, Ceurvorst contends, has made up a lot of ground in the past two years, though he says that they're still "pushing uphill."