Strategies of Online Brokerage Firms to Remain Viable and Competitive in the Present Day Market Environment

Abstract

The online brokerage industry has boomed since the mid nineties. Initially dominated by the pure online brokerage firms, they snapped up market share with relative ease. Markets evolved quickly and electronic trading gained widespread popularity and acceptance. In time, true to Joseph Schumpeter’s concept of “creative destruction”, conventional brokerages realized the importance of having an online presence to retain market share, and began implementing E–Business models to their existing ones. Pure online firms burdened with the knowledge of growing competition from the traditional, well resourced heavy weight brokerages, poor market conditions and declining investor confidence have to face up and adapt to the changing environment or risk extinction. The purpose of this article is to shed some light for the reader on the strategies used by pure online firms to retain and expand their market share in this highly competitive sector of the brokerage industry.