In an intensely competitive brokerage marketplace, standalone player Reliance Securities is using technological tools, be it robots-driven analytics tool to real time data feed on mobile apps. We spoke to B Gopkumar, Executive Director & CEO of Reliance Securities, on the changing landscape and customer needs.
What is driving brokerage business?
The interesting thing is that we had only two segments — bank-led brokers and standalone brokers like us. Now you have a third segment, the discount broker. All the three ecosystems will continue to exist. Every segment gives a particular value to customer. Typically, a price-sensitive customer will go to a discount broker and would be happy about the level of service he gets. For bank-led subsidiaries, the 3-1 product is more of a convenience. Ours is how much value we can give to customers. For us, it is important to communicate what we give. We do get customers from high-end brokers.
Digital remittances, UPI has also changed things?
We were the first to start, it worked well for us. Eight-nine per cent remittances come from UPI. This segment is also becoming agnostic to bank-led or standalone. Another area is research. Historically, research as a product has evolved. At some point of time, research was so important. Thanks to the digital world, importance of research to a customer reduced drastically. The third revolution that is coming up is your ability to give independent research, which is data-driven, algorithmic trading.
Also, fundamental research in times of maximum trades is in Futures & Options.
I still feel it is a phase of the markets. Exchanges also came up with a lot of products and indices. I think it is the phase of the economy too, there is huge amount of volatility. People would like to look at F&O as an instrument to trade, instead of holding stocks, because they see prices coming back to the same point. In a fairly linear market like, say 2004-06, people liked to hold on for a longer term. Even fund manager churn was much lower then. In volatile times, even fund managers would like to dabble and see how to maximise returns for customers. To that extent, it still is a world of volatility, it will continue for some time. It is here to stay.
Index has become a misnomer, it is becoming misleading. Investors look at their stocks and see why their portfolio isn’t going up (when the index has moved up). The leftover feeling is large. The market is becoming stock-specific. The challenge for us is to pick the right stocks, also how to communicate, and bring value to the customer.
Your areas of research?
We largely look at mid-caps, that’s where the value is. Large-caps are over-researched. That said, we still have a couple of large-caps in our portfolio. Large-caps are mainly driven by primary research. We also build some themes like dividend, yields etc. Retail investors don’t appreciate thematic reports, we do it for institutional.
Ideas you can share?
We believe markets are going to be volatile. Action will shift to India now. Markets have not discounted the political formations. We still say keep 60 per cent in large-caps and 40 in mid-cap. Mutual funds, we say, have a multi-cap focus. And don’t try to time it, but gradually invest money. You can choose five dates for SIPs. Don’t choose just one day, or 1st or 7th of the month.
Communication is also a challenge, how do you do?
What helps us is the analytics, the varieties of personas we built (categorisation based on investor behaviour and mindset). We know exactly who we are talking to. The mobile app we brought in was directly from customer response, to give all research upfront instead of keeping it behind a login. We give you real time data, other apps may not. Non-broker apps are typically five-minute delayed feeds. In our case, we had to buy real time feed, to give better customer experience. We opened the app for all except for trading.