The cut-throat world of retail stockbroking just got fiercer with National Australia Bank (ASX: NAB) stepping-up to the plate with a competitive online broking offer.
Nabtrade has rejuvenated its trading platform and slashed the trading fee to $14.95. It is also offering a linked high interest account which currently pays 4.5%. The $14.95 brokerage fee is a significant discount to its peers and continues National Australia Bank's position of "breaking up with the banks" and undercutting the oligopoly pricing. The low fee will certainly put pressure on the other major players to cut their fees too.
At present the Commonwealth Bank (ASX: CBA) has a commanding online broking position, with CommSec holding roughly 50% market share. However at $19.95 per trade, which is in line with Etrade and Westpac Online, they are no longer price competitive. ANZ Bank's (ASX: ANZ) Etrade offering has around a quarter of the online broking market with a reliable platform and extensive product suite. Westpac Bank's (ASX: WBC) revitalised online broking site now offers comparable features to its peers but commands a much smaller share of the market, with a similar share to Nabtrade of about 7%. Macquarie Group (ASX: MQG) also recently upgraded its online trading platform but the website still lags the majors in terms of features, cost, and ease of use.
Foolish takeaway
Given their size, online broking is never going to be a substantial contributor to the profits of the "Big 4". It is an important offering however, for both retaining and enticing customers. Online brokers offer a low-cost way to trade compared with full service stockbrokers. There are important differences between each of the platforms with regard to ease of use, free and paid services, and fees charged for trading in options, international shares, or with a margin loan. As always, it is worth shopping around!
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Motley Fool contributor Tim McArthur owns stock in Macquarie Bank. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
