Eleven percent of adult Net users in the United States--4.6 million people--are actively trading stocks online, and the growth is expected to continue, according to a new study by Cyber Dialogue/FindSVP.
The number of people trading online increased more than 150 percent between the second and fourth quarter of 1997, the study said.
"Stock trading now competes with purchasing software as the largest online transaction activity," Thomas E. Miller, vice president of Cyber Dialogue, said in a statement. "More people trade securities than purchase books, computers, travel, CDs, or any other products online."
The Internet's ability to deliver global information in a timely manner makes it a natural draw for investors. Another attraction is the lower cost of trading online. Most online brokerages charge between $8 and $30 per trade, whereas brick-and-mortar brokerages charge an average of $80 per trade. On the downside, however, the Securities and Exchange Commission said the complaint it receives most often from Net investors is that technical glitches cause delays and sometimes create inaccuracies in trades conducted online.
The growth of the Net trading market has caused brokerages to compete for traffic, as well, often pitting brick-and-mortar firms with Web services against Internet brands, as often has been the case with other areas of e-commerce, such as book and music retailers.
Yesterday, Charles Schwab announced it would offer investors free investment research and analysis from third parties such as Dow Jones, First Call, and others, in an effort to justify its pricing structure against rivals like E*Trade and Ameritrade. Last month, E*Trade introduced a speech-enabled telephone investing system that allows customers to place orders, check account balances, and enter portfolio information via a toll-free number.
Another big growth area on the Net is banking. In 1997, online banking grew more than 30 percent and now services more than 4.2 million adult users, including 900,000 users aged 50 and older, according to the survey.
"These are not isolated data points, the trend is for Internet users to use online financial services to manage their assets," Miller said. "There is room in the market for even more organizations to provide services, but at the same time, users are becoming more sophisticated and are demanding high levels of service, quality information, and ease of use."