At the blink of an eye, Covid-19 has changed the way your stock broker deals with you.
When the lockdown began late March, bringing economic activities to a grinding halt, for Dalal Street it invoked memories of the pain caused by the Global Financial Crisis of 2008: plenty of job losses and downsizing & closure of brokerages. To add to the worries, there was talk of closing down financial markets for a few weeks.
The disruption did force a few financial entities go belly up, and made the mutual fund industry struggle. But stock brokers took it head on, bringing in technologies to better connect with clients, improve relationships and expand businesses.
Many managed to grow bottom lines, too.
The new products and services offerings ranged from utilities that alert investors about potential pump-and-dump schemes, software that give you algorithmic rule-based investment advisory and fringe benefits like online yoga classes.
The lockdown period saw an influx of new investors into Indian stock market, and stock brokers reported up to 100 per cent jump in trade volumes and new account openings compared with the pre-lockdown period.
Industry watchers said people tried to use their free time to dabble in shares and create a new source of income.
Central Depository Services (India) said nearly 18 lakh new accounts were opened during March, April and May against a combined 8.41 lakh opened during January-February.
Brokerages rushed in to draw these new customers with newer, more attractive offerings.
Mumbai-based Angel Broking launched an algorithmic rule-based investment advisory software called, ARQ Prime, that aims to eliminate human emotions in investment decision making with strong risk management rules in place.
The product found many takers with over 38,000 subscribers in less than a month of launch, claimed Vaibhav Agrawal, SVP Research, Angel Broking.
IIFL Securities launched a tablet office product, called AAA, that helps financial advisers in their day-to-day work. The company claimed the product drew 3,000 users and there has been an increase in demand for the product by over 250 per cent since March.
India’s largest brokerage Zerodha introduced a utility that warns investor when they are making an investment where the risk is high.
“If an investor wants to buy a stock that has SMS tips circulating about it, we warn the investor that this investment may lead to losses, as these SMS tips are generally part of pump-and-dump schemes,” said Nithin Kamath, Founder & CEO at Zerodha.
Some brokerages cut fees. Discount broker 5paisa cut DP (depository participant) charges, which one has to pay while selling shares, by half, and claims it now offers the lowest rate in the industry.
Some more products and services are in the pipeline. Kamath said Zerodha is testing its bond investment platform that it plans to launch soon.
Agrawal of Angel Broking said the company was working on advance charting course to help trade through charts. Besides, it plans UI-UX improvements of its platform to draw more tech-savvy traders.
“We are planning a special subscription-based product offering for investment ideas and a basket of stocks that will help active market participants,” said Chintan Modi, Senior Director, IIFL Securities.
Unlike the financial crisis of 2008, when many brokers had to shut shop, the current crisis has become an opportunity to increase profits. “The recent rise in delivery volumes in the cash market has also been a driver of profitability,” says B Gopkumar, MD & CEO of Axis Securities.
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