eTrade 2005 Annual Report Download - page 13

Table of Contents
For additional statistical information regarding products and customers, see Item7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations (“MD&A”) beginning on page 20. Three years of segment financial performance and
data can also be found in MD&A beginning on page 35.
COMPETITION
The electronic financial services market, over the Internet and through other distribution channels, continues to evolve rapidly and is
competitive. As we continue to diversify and expand our services, we expect competition to increase. Our retail segment competes with
full commission brokerage firms, discount brokerage firms, online brokerage firms, Internet banks, mortgage banking companies,
non-financial service companies originating loans and traditional “brick& mortar” retail banks and thrifts. These competitors also
provide Internet trading and banking services, investment advisor services, touchtone telephone and voice response banking
services, electronic bill payment services and a host of other financial products. Our institutional segment, in addition to the
competitors above, competes with market-making firms, investment banking firms and other users of market liquidity in its quest for the
least expensive source of funding.
In offering our products and services, we face competition in the following areas:
•
For investing and trading products, we compete with online focused firms and large traditional financial institutions. Pricing for
trading products continued to come under pressure from online focused firms during 2005.
•
For cash management products, we compete with online focused banks that traditionally have compelling rates, as well as
traditional financial institutions that concentrate on physical presence via branch networks to deliver products and services.
Deposit pricing continued to come under competitive pressure in 2005 as banks seek to grow their deposit base by offering
appealing rates to attract customers to their businesses.
•
For lending products, we compete with traditional banking institutions as well as consumer finance companies and other
non-bank lenders. Loan pricing and credit standards continued to come under competitive pressure in 2005 as lenders sought to
grow their businesses in the face of rising interest rates.
We believe we can continue to attract customers to our products and services in these areas through our compelling combination of
product, price and service. In addition, we believe our low cost infrastructure allows us to deliver products priced at competitive levels.
Our ability to leverage technology is an increasingly important competitive factor in the financial services industry. We believe our
focus on being a technological leader in the financial services industry enhances our competitive position. We are not only focused on
utilizing technology to deliver products and services to our customers in a secure manner, but also in building a back office that can
process and deliver information timely and efficiently.
In our efforts to attract quality employees, we encounter competition in some business lines and corporate functions. Our ability to
continue to compete effectively in our business will depend upon our ability to attract new employees and retain existing employees.
Many of our competitors have longer operating histories and greater resources than we do and offer a wider range of financial
products and services. Many also have greater name recognition, greater market acceptance and larger customer bases. These
competitors may conduct extensive promotional activities and offer better terms, lower prices and/or different products and services
than we do. Moreover, some of our competitors have established relationships among themselves or with third parties to enhance their
products and services. Our competitors may be able to respond more quickly to new or changing opportunities and demands and
withstand changing market conditions better than we can.
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2006. EDGAR Online, Inc.