German online broker DAB has reported a 21% drop in transactions for Q2.
German online broker DAB, majority-owned by German giant HypoVereinsbank, has reported a 21% drop in transactions for Q2, to 1.54 million. There was a positive side, however: the number of accounts increased by 8% or 37,236 from Q1, reaching 500,949. Assets under management also rose by 8.6% from Q1 to E12.9 billion.
All of Germany’s premier stockbrokers reported losses for Q1 2001, ConSors, DAB and Comdirect. The bear market has hit stockbroking hard, and it is increasingly difficult for online brokers, whose margins are already tightly squeezed, to make money. The online stockbroking industry is under siege.
European players have yet to reach the conclusion that many US brokers have, and that they must reach if they are to progress: online stockbroking is not enough. The online market is too low margin, too competitive, too weighed down by the costs of advertising on the one hand and ultra tight margins on the other for anybody to make much money. In short, bricks and mortar expansion is key to growth.
As US players from E*Trade to Charles Schwab buy up town-center sites for interactive finance ‘education’ centers, European brokers are showing again why Europe is always the last to know when it comes to financial services. European online stockbrokers seem content to wait for the bull market to regain their past good fortune for them. Those that use this lull to build branch networks now will be the ones with the competitive advantage when the good times come.
