The opportunity is huge but brokerages need to learn a lot from E-commerce players
The wave of digitisation has changed the way we deal with finances and broking is no exception. In the last 6-7 years due to the Internet, the trading volumes have doubled. While this provides a huge opportunity to brokerages, the challenge is how to leverage the newer technologies to provide value to the customer and to stay relevant. A panel discussion titled 'Online Broking - The E-way to growth' at the Outlook Money Conclave 2018 exchanged ideas on the future of online broking.
Dhiraj Relli, MD and CEO, HDFC Securities, feels that a lot of personalised tools have evolved to help the customer achieve his goals and take informed decisions. Whether it is online or offline the customer expects different service standards where they not only compare with other competitors but also from other industries whether it is Uber or E-commerce firms. Brokerages need to partner with Fintech players and plug in the solution in their platforms. The way a brokerage gets information from the customer can be through several modes, face to face chat, phone, online trading or chatbots. “ Brokerages need get information from the customer in whatever way he is comfortable,” he says.
Kamlesh Rao , MD and CEO, Kotak Securities, believes that brokerages have a lot to learn from E-commerce players. Customer behaviour is now being shaped by how we shop online- a customer wants to compare online before making a purchasing decision. The customer wants to have all the information and evaluate it at his end to evaluate where he wants to put his money. “The information needs to come in a better, clutter-free format so that the customer can decide for himself,” he says.
Building customer loyalty is a big challenge for brokerages. Data from the US says that 35 per cent of customers changes bank accounts instantly on getting a better offer and 35 per cent change within 3 months. Arindam Chanda, ED & Head, Broking, IIFL Holdings says that while discount brokerage have made an appearance in the last 2 and two and a half years, the top 5-6 brokerages have still managed to increase their market share.
“While robo-advisors are already playing an important role and suggesting portfolios to customers based on available data, customers come back to us with a lot of questions. So a hybrid model with some amount of human intervention could be the way forward,” he adds.
To sum up, there is no one size fits all solution. While discount brokerages only offer a transaction platform , full service brokerages can provide more value to the customer by leveraging the newer technologies like AI and machine learning to make sense of the huge amounts of data and provide customised investment advisory to customers.