IBM Corp chairman Louis Gerstner used a meeting of the Securities Industry Association in Boca Raton, Florida, last week to urge the big Wall Street financial companies to speed up their adoption of internet trading. Gerstner, which wants electronic business to eventually account for a quarter of IBM’s revenues, told delegates he expects their entire industry, not just the discount brokerages, to move on to the internet, warning that big companies which do not offer on-line stock trading to their customers will have less advantage over the new breed of discounters such as E*Trade Group Inc which are snapping at their heels. The brokerages will have to spend heavily on new computer equipment to get into this market; business which IBM hopes will come its way. While Gerstner’s savvy at selling up to CEOs, the company’s going to face stiff competition from Hewlett-Packard Co, which has put Big Blue’s banking and financial business firmly in its crosshairs. Charles Schwab & Co has blazed a way to the internet for the well-established securities houses but Merrill Lynch & Co and Smith Barney, two of the biggest brokers, don’t yet offer on-line trading, although the Wall Street Journal reports the former will unveil its internet service in a few months’ time. Morgan Stanley’s Dean Witter bought on-line trading company Lombard Brokerage and changed its name to Discover Direct, operating it at arm’s length. PaineWebber Group Inc is reportedly still evaluating its internet options, while Prudential Insurance Co America is expected to let its brokers offer online services to a limited number of customers by year- end.
