Expanding on its investment into wealth management innovation, Charles Schwab announced it is opening two new digital accelerator hubs in Austin, Texas, and San Francisco later this year, designed to function as startups within the company.
Schwab says the hubs — one will be located in Schwab’s new campus being built in North Austin, while a location hasn’t been set for the San Francisco site — will be staffed by hundreds of current and yet-to-be-hired employees. Teams will be tasked with developing better digital experiences for retail investors and advisors. The firm did not disclose the amount it was investing in developing these hubs.
“We aim to deliver a great client experience at every touch point, so we’re accelerating our work in digital experiences that improve clients’ day-to-day interactions,” said Neesha Hathi, executive vice president and chief digital officer for Charles Schwab, in a press release.
Also key to these hub efforts, Hathi stated, will be developing tools to help registered independent advisors gain new clients more efficiently and improving Schwab’s institutional platform offerings.
The new internal startup initiative is part of Schwab’s Digital Services organization, says Schwab spokesman Rob Farmer, which “further centralizes our approach and sharpens our focus with the goal of supporting innovation enterprise wide.”
Among the most visible wealth management innovations at Schwab has been the development and rollout of its digital advice platforms, Intelligent Portfolios. Since the launch of its robo advisor in 2015, the firm has added an institutional digital advice platform and a hybrid advice platform, Intelligent Advisory. The financial services giant now only ranks behind Vanguard in terms of overall digital advice AUM.
Another public effort is focused on developing artificial intelligence-powered call monitors to help customer representatives better serve clients with their concerns. Executives said the company is also exploring the use of chatbots and Alexa.
“Schwab is one of the only large client-facing firms to go all-in on technology and make big bets being competitive with digital tools for clients,” says Doug Fritz of F2 Strategy, a technology consultancy for the wealth management industry.
“When they launched the robo advisor and found that clients specifically appreciated the automated account opening and onboarding, they made an effort to deliver the same type of experience across all lines of business. I’m a fan of what they do and their foresight.”
The hubs are a good initiative as long as they are not siloed within Schwab, says Scott Kirsner, editor of Innovation Leader, a media company that covers innovation in large companies.
“Saying that something will be free to behave like a startup inside a big company is one thing, but in regulated industries like financial services, risk aversion and regulation can get in the way,” Kirsner says.
“You can create a cool workplace, but the key is really making sure there are groups [in the main organization] that want to collaborate with you and help you test the new concepts that you're developing. That's more about diplomacy and relationships than it is about picking the right cities for a new lab.”