Financial firms need to take more inspiration from Silicon Valley, says Walt Bettinger, CEO of Charles Schwab Corp.

Consumers want their banks and brokerages to offer technology with the same level of personalization as ride-sharing and food delivery apps, Bettinger said in a wide-ranging interview after Schwab released fourth-quarter results last week. last.

“Customer expectations of the experience they have at their financial services company are shaped by the experiences they have at Uber, DoorDash, or Amazon,” Bettinger said.

Schwab, a 50-year-old firm with more than $8 trillion in client assets, shook up the brokerage industry by eliminating commissions and announcing a $26 billion acquisition of rival TD Ameritrade just months before that the pandemic is propelling transactions by individual investors.

Bettinger, 61, discussed the challenges of bringing two large companies together in an era of remote working, Schwab’s relocation to Westlake from San Francisco and what it will take for the company to offer direct crypto trading, among other topics.

The interview has been edited and condensed.

What are the biggest changes coming to your industry in 2022?

We are only dealing with general trends that the pandemic has likely accelerated. The willingness of customers to engage in multiple ways, as opposed to just in person, is something the pandemic has pushed. Customer expectations are shaped by their experiences outside of financial services. They’re comparing financial services companies to Amazon or Uber, and they’re looking for those types of experiences.

What lasting imprint could the pandemic leave on the financial advice industry?

Trust is still often best built with an organization or with a person through live interactions. But once that trust is established, customers are much more interested and open to doing it virtually. We have grown so rapidly, adding over 3 million new homes last year alone. We’re hiring people, but customers are ready to engage and interact in different ways than they might have in the past.

January 2021 record trading levels are down. What happens afterwards?

Inevitably, we go through periods of trading peaks. You are coming to a new normal, and that new normal tends to be higher than it was before. That’s really where we are today – in a range that’s probably about normal for a market that isn’t advancing at all-time highs consistently or a dramatic bear market.

It is important to keep in mind that these volumes are multiples of what they were when we acquired TD Ameritrade. We are dealing with two times when we thought we would be five years after the acquisition.

What are the challenges of integrating TD Ameritrade into Schwab?

We are achieving the largest integration in the history of the investment services industry amid the pandemic. This makes communication more difficult. This makes building relationships infinitely more difficult. We are on track with our schedule, which is primarily scheduled for the second half of 2023.

TD Ameritrade has world-class platforms. Thinkorswim is a wonderful trading platform. But what is different is the scale of Thinkorswim’s availability to Schwab, with over 33 million customers.

Small brokers attract young investors. How will Schwab compete?

Our average client in this younger demographic comes to us with $25,000 to invest. We’re winning a different type of investor, with a significant amount of money for someone that age.

You have moved your headquarters to Texas. Has the pandemic affected real estate projects?

These days, I’m not 100% sure what the definition of head office means. The vast majority of our employees are working from home. Virtually any employee who wishes to work remotely will be able to do so unless the position absolutely prevents it.

For a company that is growing as quickly as we are, it’s probably less that we’ll reduce our footprint and more that we may not have to add as much despite our large hires.

Will Schwab get into crypto?

Crypto is hard to ignore, right? It is quite important today. There are many ways customers can invest in crypto today. What we do not offer is direct trading. We would welcome the opportunity, should the opportunity arise from a regulatory perspective. There is a huge void in this space today for a company like Schwab. Transaction costs in crypto trading are exceptionally high, spreads are exceptionally high.

Personalized investing is becoming increasingly popular. Why?

The next place we’re going, definitely in my mind, is customization for every investor. Distributors with close relationships with end customers will be in a much stronger position. Rather than just being available to people who have millions of dollars, distributors like Schwab, with our size, we need to reduce that to a much smaller level of assets.

Annie Massa, Bloomberg