eTrade 2000 Annual Report Download - page 9

customer’ s wireless provider offers data coverage.
BANKING
Business Overview
Our banking segment is primarily comprised of the business activities of the Bank and E*TRADE Access. The Bank offers high value
financial products and services primarily over the Internet. Like traditional banks, we provide a wide range of FDIC-insured and other
banking products and services to customers. Unlike traditional banks, we deliver these products and services through the Internet,
telephone and ATMs, thus eliminating the costs associated with brick-and-mortar branches. We believe that this cost-efficient banking
platform allows us to offer significantly higher rates and lower fees than traditional banks and enables worldwide delivery of products
and services through “anytime, anywhere, anyway” access. We believe that our low cost structure is a significant competitive
advantage over traditional banks with brick-and-mortar branches.
Currently, approximately 87% of our banking customer contacts occur over the Internet. Using our secure, comprehensive and
customer-friendly Web site, individuals can open accounts, view consolidated balance statements, transfer funds between accounts
(both intra-bank and intra-E*TRADE), pay bills and compare our premium rates to national averages. Additionally, we seek to provide
superior customer service through highly trained customer service representatives located in our call centers, which are open 24 hours
a day, 7 days a week.
In May 2000, we completed our acquisition of CCS, now E*TRADE Access, the largest independent network of centrally-managed
ATMs in the U.S. This acquisition, a critical component of our “high tech, high touch” strategy, enabled us to deploy a nationwide
ATM network of over 9,600 machines located in 48 states and 3 countries. We believe that our ATM network will enhance customer
convenience and extend the reach of our financial services portal by providing physical touch-points for services. Importantly, the
deployment of the ATM network does not require an investment in traditional brick-and-mortar branches. We are currently developing
Financial Services Kiosks that offer advanced functionality and serve as a cost-effective delivery channel for cross-selling our products
and services. We believe that the physical touch-point provided by our ATM network will expedite the adoption of Internet banking.
Our core banking strategy – high value products and services, superior customer service and “anytime, anywhere, anyway”
convenience – has produced significant growth. From 1993 to 1997, deposits at the Bank increased at a compound annual growth rate
of 47%. From 1997 through 2000, deposits increased at a compound annual growth rate of 140%. Future growth will be driven by
continued adherence to this core strategy.
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We are focused on cross-selling banking products to the E*TRADE customer base. Since acquiring ETFC in January 2000, the
percentage of new banking accounts generated from “cross-sold” customers were 40%, 30%, and 7%, in the fourth, third, and second
quarters, respectively, of fiscal 2000. Working with our Business Solutions Group, we have also begun to expand our
electronic/physical presence in major corporations. During the third quarter of fiscal 2000, we announced that we will install
E*TRADE ATMs at Oracle Corporation’ s major facilities to provide a range of banking and financial services to Oracle’ s 40,000+
employees. We expect to create similar “Virtual Credit Unions” for other companies during fiscal 2001.
Currently, we offer loans, credit cards and insurance products through strategic partnerships with other companies. We are evaluating
whether to offer proprietary products in these areas.
The Bank asset acquisition strategy continues to be conservative. We purchase and manage pools of one-to-four family residential,
first lien mortgage loans and investment-grade mortgage-backed securities. We do not currently originate residential mortgages or
other loans, but instead purchase them in the secondary market.
Products and Services
We offer a variety of deposit products. Our interest checking accounts are designed for customers who seek premium yields and
outstanding benefits, including unlimited personal check writing, free check printing, free Internet banking, free unlimited online bill
payment, access to a nationwide ATM network, and an ATM/debit card. Our money market and SmartSaver accounts are designed for
consumers who are seeking premium and super premium yields with immediate access to funds without term restrictions or early
withdrawal penalties. Our standard certificates of deposit (“CDs”) are designed for consumers who want a fixed premium yield for
2002. EDGAR Online, Inc.