E*Trade is Banking on Web Services

CIO Greg Framke talks about mashups and how using them will help the online trading and financial services company stay competitive

Greg Framke, E*Trade's CIO, credits his predecessors for having the vision to build a corporate computing system that is flexible enough to let the online brokerage offer new products and services quickly and without a lot of hassle or expense. But Framke isn't coasting on the work of others. He can lay claim to his own digital vision. Framke is part of a small but growing group of CIOs who are tapping into a nascent trend: mashups, the combination of computer programs or Web applications from completely different sources.

E*Trade's first mashup, or composite application, is a service that lets customers see how much money they have invested in E*Trade's (ET) various financial vehicles to figure out where they might stash any extra cash for a better return. The service, dubbed the Intelligent Cash Optimizer, is essentially a composite of data from various E*Trade systems. Better yet, it's the combo of a lot of proprietary data that might be difficult for competitors to match.

Why is it better? Because conventional financial services companies typically build their systems in silos, around specific products, and getting those systems to talk to one another can be more excruciating than an IRS audit. "It's a tough game to take legacy systems and stitch them together," says Framke. "It takes time, effort, and money, and in the world of the Internet, time moves pretty quickly."

E*Trade plans to offer more of these composite services and even wants to let consumers take components of E*Trade and mash them up in their own applications. The technology community is taking note too. Framke, who joined E*Trade in 2000 and was promoted to CIO last year, has been recognized by InfoWorld, ComputerWorld, and CIO magazines as a technology leader. BusinessWeek.com's Rachael King spoke with Framke about how E*Trade is benefiting from enterprise mashups and composite applications.

E*Trade has done a lot with Web services, what are the benefits?

We've been able to provide a whole range of financial services products to customers in a very seamless fashion. If you look at E*Trade in 1996, it was really about online trading. If you look at E*Trade in 2006, E*Trade is really about a lot of things, online trading being one of them, but we're also online banking, online cash services, online risk services, online mortgages, and online home equity lines. We've been able to not only provide these kinds of products to our customers in a very integrated fashion, we've been able to go one step further and provide tools with which customers can then optimize their finances.

Can you give an example?

In 2005, we came out with something called the Intelligent Cash Optimizer and it was a tool by which customers could take all the cash [they had] in different products in E*Trade and compare it and decide how they wanted to deploy that cash. We've then gone on from cash optimizer to doing the same thing for lending products and for investing products as well.

In what way are Web services connected to application composites or enterprise mashups?

Web services are something that allow application composites to really happen. So you kind of need to be there before you go to the second one.

Some people use the terms enterprise mashups and application composites interchangeably, but you say they're different. How?

An application composite is two or more applications that are put together without a lot of new code, to present something very new and different to a customer. Mashups are something really different and something that's pretty exciting.

The idea is that you're taking your information and your presentation and you're breaking it down into components and giving it to people to reassemble in any shape or form that they want to reassemble it. Someone could take a component from E*Trade and mash it up with something from Quicken or Yahoo! (YHOO) or Google (GOOG) or anywhere they wanted, to form something that is new and interesting.