eTrade 2000 Annual Report Download - page 30

Ask E*TRADE —In late fiscal 1999, we launched Ask E*TRADE, allowing customers to more easily find answers to
their investing questions. Powered by the Ask Jeeves search engine technology, Ask E*TRADE is a powerful natural
language tool that allows users to simply input their question, in either complete sentences or key words. Ask
E*TRADE then provides links to the content in the Learning Center that corresponds to the question input.
Getting Started —We have also launched a Getting Started feature to provide new and potential customers with
information in three areas: opening an account, funding an account, and making the first trade. Questions in these
areas represent a significant percentage of inquiries from customers who have had accounts less than 90 days.
Proactive Service Notifications —Customers submitting a service request receive two important services: customized
information regarding the request, including specific identification of the type of request submitted, the specific
timeline involved in responding to the request, an ID number for the customer’ s reference and an e-mail sent to the
customer once the service request is completed, providing specific information. This service notification is intended
to make customers understand and feel comfortable
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with their electronic service experience by keeping them informed throughout the process, and by providing assurance that their
request will be carried out accurately and in a timely manner.
COMPETITION
Major Competitors
The market for electronic financial services over the Internet is new, rapidly evolving and intensely competitive. We expect
competition to continue and intensify in the future. As we continue to diversify our services beyond online domestic retail brokerage
offerings to include banking, global cross-border trading, mutual fund offerings, and institutional investing, the number of competitors
in these varied market spaces will also increase. We face direct competition from full commission brokerage firms, discount brokerage
firms, online brokerage firms, and both pure-play Internet banks as well as traditional “brick & mortar” commercial banks providing
touch-tone telephone or online banking services. In addition, we compete with mutual fund companies, which provide money market
funds, cash management accounts and/or electronic bill pay/bill presentment services. As we continue our global expansion, we
anticipate that there will be one or two large specialist players who will follow us in the retail cross-border trading area. In addition,
there will be regional competition from specialists with a pan-regional focus in Europe and Asia.
Factors Affecting Competition
We plan to be the first broker providing a truly online electronic cross-border trading product to our retail customers around the world,
establishing us as the market leader in this area. We believe that the first to market advantage coupled with our brand recognition,
commitment to providing superior content, tools that assist in investment decision-making, and our proprietary technology, the
scalability of which has already been proven within the U.S., will make it more costly for others to enter the market. Further, though
the development of Electronic Communications Networks will provide us with the benefit of lower access costs to global markets, it
should also be recognized that such developments would lower the barriers to entry of global trading and could provide large domestic
competitors in some markets with immediate access to cross-border markets. See “Item 7. Risk factors—Our business will su ffer if we
cannot effectively compete”, “Item 7. Risk factors—Our inability to expand our technology could seriously harm our business”, and
“Item 7. Risk factors—If our international efforts are not successful, our business growth will be harmed and our resources will not
have been used efficiently.”
REGULATION
Our business is subject to stringent regulation by U.S. Federal and state regulatory agencies and securities exchanges and by various
non-U.S. governmental agencies or regulatory bodies, securities exchanges, and central banks, each of which have been charged with
the protection of the financial markets and the interests of those participating in those markets. These regulatory agencies in the United
States include, among others, the SEC, the NASDR, the New York Stock Exchange, the FDIC, the Municipal Securities Rulemaking
Board, and the OTS. In other areas of the world, these regulators include the Financial Services Authority, the Securities and Futures
Authority, the Bermuda Monetary Authority, and the Office of Superintendent of Financial Institutions in Canada, among many others.
Additional legislation and regulations and changes in rules may directly affect our manner of operation and profitability.
E*TRADE Securities, Inc. and certain of our other subsidiaries are registered as broker-dealers with the SEC and as such are subject
2002. EDGAR Online, Inc.