Technology in Stockbroking Industry will be about Delivering Ideas and Execution, Says Centrum Broking's CEO
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The domestic broking industry is observing a growth trajectory. According to an ICRA report, the broking industry is expected to registered growth 5-10 per cent in FY2019 with a revenue projection of INR 19,500-20,000 crore.
While on the other side, India is going to grow richer. According to Finance Minister Piyush Goyal's interim budget speech, India is poised to be $5 trillion economy in the next five years and we aspire to become a $10 trillion country in 8 years.
This will eventually lead to more wealth creation and provide a boost to the wealth management and stockbroking industry.
In conversation with Entrepreneur India, K Sandeep Nayak, ED and CEO, Centrum Broking Limited tell us how the industry will take a shape in the next few years given the ongoing technology disruption and upward trend.
The Next Leg of Growth
Geographically most players concentrate in the top 15 cities. But wealth is getting created across the country. Nayak says going beyond the tier I to tier II and III cities will be the opportunity for players like Centrum.
“I think the industry has to thank Prime Minister Narendra Modi for demonetization. As post the event, the trend of exiting out of physical assets and getting into financial assets rallied,” he pointed out.
Additionally, with the world on Google, people are now exposed to the power of compounding at a much younger age. “Financially literacy in the big cities in improving, but beyond that, it is a challenge and those markets are a bigger opportunity for the wealth management and stockbroking industry,” he added.
On the other hand, the domestic broking industry is disrupted by discount brokers like Zerodha, Upstox, etc.
Having that, this disruption is on the trade execution side. Nayak feels the new age brokers are yet to disrupt the advisory side of the trade and so is the case with the wealth management industry.
He says technology in this space will be more about delivering ideas and getting it seamlessly executed. As wealth increases, the dependency on technology will go down and touch-feel of advice will be important especially among the upper class. In other words, people who have the money, in terms of advice, would still want to speak to someone and get that added comfort.
“Technology can help in generating the idea and delivering to the customer for him/her to analyse but the final discussion is required before executing the trade. So, technology is helping in service delivery and seamless execution. If you think technology will replace human's in advising - it may happen in the retail space but not in private banking,” he noted.
Talking about Centrum inclination to adopt artificial intelligence, the CEO feels the technology is in its early stage. However, the brokerage firm is working on a bot to answer simple customer queries from readily available information.
“But the bot can give vague answers. So, at present, it is a customer service tool and for it to be a product, it is too early to discuss,” he concluded.