Charles Schwab Corporation’s ability to successfully leverage IT and introduce innovations that have transformed the brokerage industry is charted in this case from the firm’s early focus, after the deregulation of brokerage commissions in 1975, on providing investors low-cost execution services to January 2000, when the company offered expanded brokerage services to select customers through multiple channels, purchased U.S. Trust (a New York-based money management firm that catered to the wealthiest Americans), and participated in the distribution of Initial Public Offerings through its partnership with Credit Suisse First Boston, J.P. Morgan and Hambrecht & Quist, forged in 1997. After charting the technology solutions for the delivery of products and services up until the mid-90’s, the case describes how Schwab faced the challenge of the Internet, launched a Web-trading service in March 1996 for e.Schwab customers and then extended the service to all customers beginning January 1998. Three aspects of Schwab’s IT capability are described: the structure of the IT organization (called the Schwab IT Enterprise, or SITE), the partnership between SITE and Schwab’s business units, and the company’s IT infrastructure. In closing, the case asks how Schwab can overcome the threat posed by the Internet: the reduction of pure transactional services to a commodity business and the disintegration of a well-informed customer base, whose next click of the mouse could easily be on a competitor’s site.
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