Fidelity Investments announced this week it’s offering its customers two-way wireless stock trades via 3Com Corp’s new Palm VII handheld organizer.
The new service is said to include tracking capabilities for Fidelity’s most active traders. In addition, the Boston, Massachusetts firm is launching a new Web site and it will also offer voice recognition telephone ordering.
“Our real philosophy is total access anyway you need it and want it,” said Stephen Cone, Fidelity’s president for customer marketing and development.
By employing the new e-commerce technology, Fidelity hopes to match some services already being offered by its online broker rivals such as No. 1 Charles Schwab and No. 2 E*Trade.
Analysts say that even though the popularity of mutual funds hasn’t kept up with the frenzy surrounding Internet stocks, online sales of mutual funds are skyrocketing.
According to Fidelity, it’s opening up 5,000 new accounts daily, a pace that could add 1.5 million accounts this year. The new Fidelity Web site will be aimed at clients who make at least 36 trades per year and maintain a minimum account balance of $20,000. The company has 75,000 such clients now out of its customer base of 3.3 million.
Industry experts say this is not just a smart move — but also necessary insurance in assuring Fidelity’s frequent traders won’t decide to move on to one of the popular online brokers. However, the increase in Fidelity’s day trading volume — almost double the level of 1998 — has created problems for the company. Its Web trading service was interrupted for 29 minutes on May 10 after a mainframe computer crashed — its first outage in a year, officials said.
Analysts caution that Fidelity could end up suffering the same growing pains that the top online brokers have, if it doesn’t heavily invest in the necessary Internet infrastructure needed to handle the additional crunch of traders.
Schwab is now installing its seventh and eighth mainframes — with plans to add two more by year’s end, according to Dawn Gould Lepore, Schwab’s executive vice president and chief information officer. This is in response to a plethora of complaints that have swamped the Security and Exchange Commission from traders claiming that past outages have prevented them from consummating stock orders.
By Fidelity adding two-way wireless transactions into its portfolio, some wonder if the blue-chip mutual fund seller might not be opening itself up to the same kind of complaints — especially if its not prepared to handle the surge in volume that might follow. On the other hand, Fidelity doesn’t seem to have much choice, if it wants to remain a viable online investment player.
What do you think? Let’s talk about it.