Online Brokerages: Technology and the Customer Experience

July 15, 2009
Product Trends/ Reviews
North America


The future of online brokerage has never been brighter. Capabilities have vastly improved over the last few years, and continued improvements are making the option of self-service ever more appealing.

Capabilities have vastly improved over the last few years, and there is no reason to believe that continued improvements will not make the option of self service even more attractive.

The world of online investment continues to evolve, further benefiting the enthusiastic clients who take advantage of online firms' growing services and capabilities. As poor markets and a declining number of advisors push more and more investors toward a self-service environment, many online brokerages are creating and enhancing strong value propositions, blending both best-in-breed technology and an outstanding client experience.

A new report, Online Brokerages: Technology and the Customer Experience, the second of two Celent reports in 2009 on online brokerages, emphasizes the changing facets of the brokerage/client online interface. The report also discusses online brokerage platform technology developments since the last Celent report on this topic in 2005.

Celent identified the following major trends and developments in the online brokerage world:

  • Technology has never been better deployed or more readily available to support the investing public as it is in the online brokerage space today.
  • Options are growing as the investment product of choice for the active trader, the traditional investor, and the stand-alone firm.
  • The move to more sophisticated investment products is supported by huge improvements in online platforms in terms of capabilities and trading sophistication.
  • There is heavy competition between firms for the desirable active trader, who, for many stand-alone firms, can be the difference between profit and loss.
  • The rise of social networking has resulted in new features for many online platforms, allowing newer sites to differentiate themselves from established players.
  • The accelerated growth of investment self-service may be the harbinger of even more rapid growth over the next few years for online firms, to the detriment of the advisor-centric brokerage firms.

"Online brokerages continue to develop at the speed of the Internet. Business models are quickly changing to reflect the different value propositions that individual client segments find most appealing," says Isabel Schauerte, Celent analyst and coauthor of the report. "New technologies are leapfrogging outdated systems, and those firms that are willing to invest and adapt, both in terms of technology and a strong client experience, will be future online brokerage winners," she adds.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary


Client Segments and the Value Proposition

Client Education and Social Networking

Developments in Online Brokerage Technology

Online Brokerage Platforms

The Future of Online Brokerage

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