Charles Schwab is set to buy TD Ameritrade for $26 billion, which could create a firm with some $5 trillion in client assets, according to a report from Fox Business.
Digital transformation challenges in banking have been well understood and the strategies to address them simple and clear. However, it is becoming increasingly apparent that the industry is reaching a tipping point in the digital transformation journey.
The move comes amid pressure on revenues caused by October’s race to zero commissions. No-commission trades are pressuring brokerage firms’ revenues and further emphasize the importance of net interest income from accompanying bank sweeps, wealth management, and investment management revenues. It will also drive further improvement in cost efficiencies while also growing client assets and exploring additional sources of revenue from existing clients.
As the trend of new and old companies continue their move to commission-free trading and no account minimums, it’s more important than ever to modernize operations and improve the overall customer experience.
Fortunately, leveraging artificial intelligence and machine learning for back-office automation, data analytics, cloud computing, digital and social media marketing, and personalization are all areas that will help clearing firms and broker-dealers execute on initiatives that are focused on reducing costs and generating additional revenue from existing clients.