Magazine article American Banker

Globe-Trotters Still Require Local Guides

Magazine article American Banker

Globe-Trotters Still Require Local Guides

Article excerpt

Partner or perish?

Online financial services institutions that are contemplating the best way to expand internationally may ponder that question -- whether 'tis nobler to go it alone under your own brand name, or to form alliances with local concerns that can ease the introduction.

The path taken by E-Trade Group Inc., which started expanding into foreign markets four years ago, may map the way for other firms. At first, E-Trade took what Judy Balint, its chief international officer, describes as a "low-risk approach," which involved forming joint ventures and signing local licensing agreements.

But now that E-Trade's overseas operation has grown, the company, based in Menlo Park, Calif., is seeking majority ownership of its international ventures "so we can control the development of our network, and consolidate our revenues," Ms. Balint said.

E-Trade now has a presence in 13 countries, and by the middle of next year it hopes to add Israel, Germany, and Hong Kong to its portfolio. It also has plans to reenter France, where its previous relationship broke down when another institution acquired its partner.

The barriers to expansion in foreign markets are diverse, she said. For example, although the United Kingdom is one of the largest potential markets for E-Trade, online investing has not taken off there to the same extent as in the United States, and "there is still a lot of education needed" before British consumers will cotton to online stock trading, Ms. Balint said.

In Europe, E-Trade is going up against some formidable local players, especially in Germany, Ms. Balint said. "But they don't have a global vision, which will limit their long-term growth opportunities. We are still the only true global online player."

E-Trade currently allows domestic trading in all of its countries, except Sweden and Norway, where it allows retail investors to buy and sell equities in U. …

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