By Gurpreet Sidana
Covid 19 has been a black swan global event that forced a rapid business transformation across the industries, including financial markets & stockbroking. For a long, retail investment processes around account opening and trading activities involved tedious paperwork and human intervention as there was no other choice available to the investors. However, the pandemic superseded the existing methods and a new era of end-to-end DIY account opening and discount broking models emerged. All along, Covid induced lifestyle & work from home restrictions marked a significant demographic shift in overall investor profile and preferences.
Increased retail participation
We saw a substantial jump in trading activities as well as interest in opening of new accounts by young and first time investors. The uptrend continues till date and recently we also saw a historic milestone in Aug 2022 as the number of demat accounts in India crossed 100 million mark i.e. 40 million up from March 2020 level. Despite high market volatility during pandemic, Nifty 50 yielded returns annually over 14% & 24% in 2020 & 2021 respectively. Several factors such as prolonged lockdowns, reduced FD returns, need for a financially secured future etc. together brought a massive interest of new-to-market investors in share markets from Tier 2 & Tier 3 as well.
Technology as the backbone of transformation
Technology significantly played as a backbone to transform stock broking. Responding to the emerging needs, brokers were quick to shift to the DIY model by launching online account opening journeys, eDIS facility etc. SEBI, exchanges and depositories also offered extended ease in terms of quick dispensations and provided alternate digital options for many activities to keep the system rolling. Owing to lockdowns, the retail investors started utilising online platforms exclusively to trade in equities from the comfort of their homes.
The overall ecosystem was such that we saw a cascading shift towards online broking services. On an average, daily turnover through internet-based trading rose by 70% YoY in the cash market to reach Rs154 bn in FY2020-21 as compared to Rs91 bn over the same period in FY2019-20.
Now as brokers were servicing a larger base through differentiated platforms, it was also important to ensure consistent and seamless user experience. Just like an ecommerce app/website, brokers also conceptualised their comprehensive products and services for the masses and added value in their financial journey. This is the time when discount broking plans became a good marketing fad for new retail entrants. At the same time, brokers also invested in improving their technology, security and capacities for the new age customers.
Data driven personalised communication
Data is gold in this digital age. With technology at the forefront, brokers also worked on defining investors’ profiles. They developed quantitative trading capacities and aligned big data processing and machine learning technologies to assess real-time market analytics for identifying unique & personalised solutions like customised brokerage plans, theme based investment portfolios etc. for existing as well as new customers. Broadly all brokers in their capacity adopted marketing automation tools, rolled out customised and personalised communications backed by AI & ML capabilities. The idea was one, to forge a deep human connection on broking platforms. The future is all about adding value to the customer with each engagement, whether the customer is just checking platform offerings, exploring investment choices or making a fresh trade.
In all, digitisation is not an end, but a means for brokers to improve customer connections. Post Covid, it helped brokers to resonate with investor’s needs and offer the best possible investment solutions with improved conversions. In a way, technology offered an interactive medium to bridge the gap between the service providers & end users. We expect this to further strengthen in the years to come.
(Gurpreet Sidana, Chief Operating Officer, Religare Broking. Views expressed are the author’s own.)