Online brokerage accounts gaining popularity fast
While the internet has not experienced the same level of penetration in Poland as in other markets only roughly 5.2% of the population uses the medium it is rapidly becoming a popular tool for disseminating banking and brokerage services.
Of the country's 37 member brokers, around four to five now offer some kind of internet-based services, offering the ability to conduct transactions online or a more enlarged range of services that hint at a movement towards establishing entire online brokerage houses. The number of brokerages on the web today is a far cry from 1996, when only one leading house, Dom Maklerski BOS, had an internet presence.
"In the beginning, only the simplest services are offered via the internet," said Wladyslaw Dmochowski, deputy director of product development at Dom Maklerski BIG-BG. Dom Maklerski BOS, for example, offers only order placement on shares quoted on the Warsaw Stock Exchange (WSE), access to account information, bank transfers, the possibility of buying shares sold through the WSE on the primary market and placement of orders for extra trading.
Client interest in internet-based brokerage services is growing, executives said. At Dom Maklerski BOS, 30-40% of all new brokerage clients request that they also be able to submit buy and sell orders over the web, said Maciej Czajkowski, internet department employee at Dom Maklerski BOS. Bankowy Dom Maklerski PKO BP has seen similar interest. In the first two weeks of its internet operations, the brokerage house signed up 350 clients for its internet services; roughly 30% of them were new clients, said Marcin Olszewski, director of internet service at Dom Maklerski PKO BP.
"The interest of the clients has surpassed our expectations," said Agnieszka Tryba, a representative in Dom Maklerski PKO BP's promotions department.
Another new internet entrant, Dom Maklerski Banku Zachodniego, which set up its web services as a 1999 Christmas present, receives about 20-30 e-mails daily inquiring about the possibility of conducting trading online, representatives said.
Some brokerages are doing more than just enabling clients to complete transactions online. PKO BP's brokerage house, for instance, has an extensive range of online services, allowing clients to apply for loans as well as purchase units in a mutual fund over the internet. Future plans include expanding the internet offer to its maxiumum potential.
Another large house, Baring Securities (Polska), stresses the importance of online transactions. "The internet is of interest to us in the context of enabling our clients to realize transactions online," said Dariusz Chrzastowski, general director at Baring.
Convenience is key when it comes to the internet, as the web gives customers 24-hour access to their brokerage accounts from any place in the world. The internet also allows individuals to better "visualize" what they are investing in, said Marek Minorczuk, head of the promotion and marketing department at the BIG-BG brokerage house.
By often taking the human element the broker out of the picture, the internet also reduces the cost of transactions for brokerage houses. That, in turn, allows the outfits to offer lower fees. Dom Maklerski WBK has already pushed down fees for internet transactions. The brokerage charges a maximum fee of 0.8% of an equity transaction, in comparison with the maximum 2% charge customers are levied if they put an order in via phone or fax.
Dom Maklerski BOS also dropped its internet fees. The brokerage charges a flat fee of 0.8% of the transaction value and requires a minimum deposit of zl. 15,000, in comparison to the zl. 50,000 required in normal accounts.
Neither Dom Maklerski BZ or Polski Dom Maklerski have put together new fee structures for internet accounts, representatives of both firms said. But they added that both are already known for their rock-bottom fees.
While interest in internet transactions is on the rise, security worries are still hampering their continued development, executives said. "People in Poland are afraid about the security of their data and cash," Olszewski said.
A development expected to boost internet transactions is the WSE's introduction of its new computer system, Warset, in July. BIG BG's Minorczuk said Warset will revolutionize the speed of brokerage transactions.
It currently takes up to 10-15 minutes to process a transaction and introduce it to the WSE's system due to the lack of a direct, online connection between the WSE's and the brokerage houses' systems. The lack of such a connection means that an order might have to be manually typed into the WSE's system, which takes a significant amount of time. The time-consuming nature of the current transaction process has hampered the development of internet services at many brokerages, which offer services requiring instantaneous or near-instantaneous access.
In addition, the load of transactions on the WSE server means the network connecting brokerages to the exchange is often slow and from time to time the entire system freezes up, brokerage representatives said.
Warset will enable brokerages to automatically transfer orders to the WSE, thereby eliminating all manual work and much of the time delay while also reducing the possibility of mistakes.
