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Technology Stocks : Softbank Group Corp -- Ignore unavailable to you. Want to Upgrade?

To: Edwin S. Fujinaka who wrote (3365)	1/19/2000 2:01:00 AM
From: Edwin S. Fujinaka	Read Replies (1) \| Respond to of 6018

Softbank's strategy for ETrade Japan is not geared to lowest commissions. Looks like a very sound strategy and I think the success of Schwab in the US should be a model to emulate rather than minimal commissions. Also their emphasis on IPOs will attract a lot of business once Softbank has all the pieces in place like Nasdaq Japan and their high bandwidth wireless ISP. Although I don't consider it to be vital to Softbank's success, the high speed wireless ISP could make them bulletproof. Issued: January 17, 2000 Softbank's approach: Stressing service online Financial chief says brokerage won't be caught in fee-cutting war MINA HASEGAWA Staff writer Yoshitaka Kitao Winning the trust of customers online means more than cutting commissions, according to Yoshitaka Kitao, president and chief executive officer of Softbank Finance Corp., a subsidiary of Softbank Corp. That's why he says the Softbank group has emphasized customer services in its online brokerage. Following are excerpts from The Nikkei Weekly's interview with Kitao. Q: How has your company's Internet-based stockbroking business been going since it started in October? A: It has been going very well so far. At first, we aimed to open 100,000 customer accounts by the end of this September. The number of accounts reached 50,000, and assets under management reached 220 billion yen by the end of December. Q: It's said that other online brokerage houses such as Monex Inc. and DLJdirect SFG Securities Inc. have had some system troubles and have received complaints from customers. How about ETrade? A: No, not at all. As a Softbank company, we have had great advantages on the Internet. In addition, we have adopted very prudent customer-service systems. For example, there are more than 100 people working at our call center to quickly respond to customer requests; other low commission online brokerages have only five to 10 employees in similar sections. Q: Compared with other online brokerages, commissions charged by ETrade are relatively high. Why do you think having a huge call center is more important than cutting commission fees? A: As an Internet brokerage, the most important thing is to win the trust of customers since they can't see our faces across the counter. Trust won't be won by simply charging low commissions. Instead we have to make trading more convenient for customers. It's true that we charge 2,500 yen as minimum trading commission, while others charge only 1,000 yen to 1,500 yen. When hunting a whale, it is necessary to have the latest rigging equipment. Other online brokerages are like small boats trying to reel in big fish. If a whale, or massive orders, come along, they'll capsize. But we'll have the equipment and the staff to handle a whale. What I worry about is troubles caused by other companies in the online brokerage business that may mar the image of the whole industry. We are trying hard to create good relations with customers. Q: Did you learn your business philosophy and strategy through your experience working at a leading Japanese securities house? A: Yes. I worked for Nomura Securities Co. for 21 years and learned indispensable lessons about the securities business. Recently, I have heard some entrepreneurs say that online brokerages and the traditional securities business are different, but I really don't think that is true. Individual investors buy stocks because they want to earn profits. It doesn't matter whether we are offering our services via the Internet or in a traditional setting. Unlike other online stockbroking companies, we have put stress on stocks offered through initial public offerings, which could provide great wealth for investors. Nomura Securities once dominated the industry because it dealt with both primary and secondary markets. We also need to deal with primary and secondary markets in order to balance our business and let individual investors who haven't had the opportunity to buy in on an IPO know the real pleasure of stock investment. The Softbank group owns several Internet-related ventures that are going public; shares will be purchased by our customers on a lottery basis. Beyond Softbank's subsidiaries, there are other newly rising Internet companies that have received capital from Softbank. We will be involved as an equity partner and a managing underwriter with any IPO of an outstanding Internet-related venture. Q: In Japan, it is said to be difficult to start a venture business because of the difficulty of raising capital. A: Certainly that is true. The Japanese financial system has attached too much importance to indirect financing since its wartime economy. In order to control the flow of capital, Japanese financial authorities have had to justify indirect financing for a long time. In addition, Japanese banks have, in principle, carried out collateralized financing under the guidance of the Ministry of Finance. Masayoshi Son, president and chief executive officer of Softbank, once told me that he was afraid of nothing more than talking with bank branch managers. Establishment of Nasdaq Japan is based on Son's wish to lessen fund-raising difficulties for venture companies.