Charles Schwab will spend GBP10 million to expand its number of investor centers in the UK.
In the world of online investing it is becoming increasingly apparent that while a full-fledged branch network is undesirable in terms of cost, an offline presence through ATMs or advisory centers is an important competitive benefit. This was the motivation for E*Trade’s purchase of Card Capture Services in the US during early 2000, giving it access to 8500 ATMs, the largest independent network in the US. It is also the motivation for Fondcenter, Switzerland’s first online funds supermarket, to have an investor center in Zurich. In both cases online tools and transactional capabilities are being supplemented with offline access or advisory services.
Charles Schwab has been developing a similar ‘bricks and clicks’ strategy within the UK, by importing the US concept of investor centers to the UK. Schwab already has 368 advisory centers in the US, and has already opened two such centers in London and Birmingham. However, it has now announced that it will spend GBP10 million to establish 10 new centers throughout the UK, the first of which opens today in Milton Keynes. Other centers will open in Brighton and Bristol by the end of 2000, and Manchester, Edinburgh, Leeds and Bournemouth thereafter.
However, the success of such centers within the UK has been limited by Schwab’s refusal to heed the mantra of all property agents: ‘location, location, location’. Schwab is not prepared to pay high real estate prices for its investor centers (especially within the London area), and has consequently established them in non-prime locations. This has reduced the number of customers who actively visit them on a regular basis.
Nevertheless, this ‘bricks and clicks’ strategy should secure a beneficial multi-channel retail presence for Schwab, with execution-only services online and basic advisory services offline. It should also reassure investors who are suspicious of completely dematerialized investment services, and feel the need for at least a minimal branch presence. Finally, it should enable Schwab to compete effectively with universal retail banks, which are also offering investment services both on- and offline to try and stem the flow of customers to cost-effective online providers.
