May 19, 2013
E*Trade (NYSE: ETFC) is a leading online brokerage firm, which also offers retail banking services, such as checking and savings accounts and CD accounts. [1] E*Trade makes money by charging commission fees to its customers for transactions made. These fees are variable and are based on the size of the client, the size of the trades, and the frequency of the trades. For the full year 2010, E*Trade reported a total revenue of $2.4B and a net loss of $1.3B.
The online brokerage firms have been facing increased competition and downward price pressure as traditional retail banks, such as Bank of America (BAC) and Wells Fargo (WFC), have entered the industry. This pressure prompted E*Trade to find another retail outlet: retail banking.[2].
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