What has been the growth driver of the Brokerage industry? What type of new investors have you seen coming into the market?
The broking industry has posted a record performance in the recent fiscal. Recent dynamics in stock markets suggest that there is an emerging class of individual investors with distinctive motivations and behaviors. Actually, the Brokerage industry saw uptick driven by robust corporate earnings, favorable liquidity in both international and domestic markets, higher internet penetration, and retail participation.
The Industry has been witnessing an upsurge in the number of investors willing to invest in stock market. To note, Indian investors opened a record 14.2 million new demat accounts in FY21, nearly three times the figure in the previous fiscal year, as the global Covid-19 pandemic and business disruptions opened up new investment opportunities. Worldwide, young investors are shifting investing trends – and economies along with them. It could be seen that easy access to trading platforms, databases and research tools has made the stock market ecosystem favorable for Millennials and Generation Z.
With unparalleled digital access to financial information, up-to-the-minute analytics driven by artificial intelligence and machine learning, young investors find it easy to identify the right investment opportunities. Besides, social media—YouTube influencers, Twitter, and Telegram stock-tipping chat groups—has attracted these generation. With access to sophisticated trading platforms, tailor-made suggestions and holistic financial planning at their disposal, these generations take quick decision.
A unparalleled disruption is taking place in the Brokerage Industry. How is SMC leveraging on and preparing for it?
The last few years have brought about a paradigm shift in the manner investors trade in the stock market. With financial savings rising and lowering interest rates, equity as an asset class will continue to remain attractive. Brokering industry has seen a lot of changes and transitions in past decade led by disruptions from discount brokers, buoyancy in equity markets, digitalization and increased interest among various investor groups. However there is still less than 5% penetration of Indian capital markets as compared to developed countries where it is 20%-50%. So, there is a lot of headroom for Indian capital market penetration to grow.
No doubt, discount broking firms have helped expand the market by bringing on board a large number of first-time investors; 60-70% participants are new entrants. With new age investors flocking to the stock market, traditional broking firms too are gearing up. But one thing is sure that sooner or later a lot of discount broking clients will come to a full-service broker because they will feel the need for a branch network and a relationship manager to handhold them. To note, nearly 80% of the new clients are of less than 50 years of age, 50% of the clients are of less than 40 years. Even a growing number of women are now entering the stock market; it is good to see that the proportion of women investing in stock market has increased from about 16% to 25% across India in the past two years.
SMC has identified the major thrust areas that need focus in order to remain competitive in this dynamic environment; Technology and product development being in the forefront as they become the backbone of any organization. We are investing tremendously in select innovative products. We are successfully running a mobile trading app “SMC Ace”. We are also planning to launch another new mobile trading app to enhance the customer experience. Besides, SMC has already launched a web based Analytical Research Tool, Autotrender, which has been indigenously developed by our research and IT team. In addition to Autotrender, we are also focusing on our advanced research products which are open to all traders/investors. Our company has also introduced Algo trading platform to suit the needs of those clients who want to automate their strategies. SMC too has launched Stoxkart – an online discount broker providing one of the lowest brokerage structure.
The above initiatives will certainly go a long way and play an imperative role in improving their trading/investing performance. All in all, thanks to the initial lockdown in 2020, now around 50% of the overall clientage is coming from T3/T4 cities and 25% are coming from T2 cities. That means our investors base is gradually rising even though the penetration level might be well below the levels seen in developed countries. It’s still a large number and the only way we can cater to this rising population is through technological innovations. Here, we are fully aware that the technological disruption of the trading and investment business is here to stay.
Please walk with us through the new initiatives for business partners
SMC offers one-stop investment solutions in trading & investments, which provides a range of services to grow client’s wealth and protect what they have worked so hard to earn. Since inception, we have effectively leveraged technology to deliver our products, services, and class-leading experience to our ever expanding client base. To gain more visibility for our business associate’s business digitally, we created their digital profiles in the form of websites and SEO optimized them for hyper local searches over google search and google maps. This activity helped the businesses to engage with their customers by responding to their reviews, answer questions, etc.
In our vast stock broking and investment experience, we have realized that processes and operations are the backbones of our business. SMC has made it robust in order to achieve optimum productivity and efficiency, ensure mitigation of risks, and minimise losses. With the SMC brand, the Company is transitioning into a new-age FinTech platform capable of enabling millennials from new age India to meet their financial dreams. SMC provide regular training program to our Business Partner on Client Acquisition, Risk Management System (RMS), Back Office Operations, Trading activities, Research software, in addition to providing wholesome knowledge of various products offered by SMC.
A Business Partner can ride high with wide range of products available to diversify the income instead of solely depending on only Broking. Dedicated support staff for each product, effective lead management system, joint lead conversion activities and attractive commission structure keeps the motivation level high of the associate. Besides, SMC Global has done many a strategic alliance with different banks for offering online trading services to the bank customers. This tie-up offers an integrated 3-in-1 account comprising of a Savings, Demat and Trading account providing a hassle free and convenient trading experience to the bank customers through the portal www.smctradeonline.com apart from mobile trading app (SMC ACE) and desktop based software.
Ultimately it helps SMC to increase its presence and client base across India. SMC has also launched Mobile eKYC application. The application helps SMC business partners to open paper less account in few minutes through Aadhar Based Esign. We’ll continue to onboard customers digitally, deliver the most cutting-edge solutions at the comfort of a mobile tap.