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Factors Driving Performance for E*TRADE and Charles Schwab

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Charles Schwab’s net interest income

Charles Schwab (SCHW) has witnessed an increasing trend in its net interest income during the past few quarters. The Federal Reserve’s decision regarding interest rates is the primary factor responsible for the growth in brokerages’ net interest income. Moving forward, this momentum is expected to continue due to the rising interest rate environment.

Because brokerages operate in a competitive environment, E*TRADE (ETFC) is adding innovative technologies such as cloud technology to outperform its peers. These innovations are expected to help the company increase its market share and its client base.

E*TRADE introduces chatbots

E*TRADE plans to introduce chatbots to serve its customers more efficiently. Chatbots are able to interact with clients in real time to streamline the trading process. This innovation is expected to lead to higher trading numbers and client participation.

Among E*TRADE’s competitors, Charles Schwab plans to launch innovative products to help answer customer queries. With the help of artificial intelligence capabilities, it plans to roll out call monitors. Together, Charles Schwab, Interactive Brokers Group (IBKR), and TD Ameritrade (AMTD) comprise ~6.2% of the SPDR S&P Capital Markets ETF (KCE).

In the next article, we’ll look at E*TRADE’s valuations.

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