Impact of digital transformation in broking industry

To meet the continued influx of investors, long term and short term and traders, stock broking companies must revamp their trading structures and their technologies

India Inc. has woken up to the massive pull of the stock markets, and we are currently riding a market that is providing better returns than other major players in the world. To keep up with the growing number of long-term and short-term investors and traders, stock broking companies have to update their trading structures and technologies.

Gagan Singla, Managing Director of blinkX by JM Financial, in a chat with ET Insights, discusses the impact of digital technology on the brokerage business. Interview excerpts.

Q. With the advent of huge leaps in technology, where digital presence is an important factor, what kind of value would you be adding to the transformation?

Given the strong pedigree of the JM Financial Group, which spans more than half a century, there exists a strong understanding of evolving end-user needs in the financial markets. Additionally, due to its longstanding expertise and experience in deal-making in the technology sector, and incubating tech ventures, digital as a business is familiar territory for the group.

Thus, ‘Digital First’ fintech platform –will offer investors a time-tested yet new-age experience through state-of-the-art technology.

Q. With the market being widely dense with many products, how are you planning to differentiate?

Customer obsession is the biggest differentiator. Continuous education through a  3E approach – Education, Enablement, and Experience, is required .

It is our firm belief that in-depth investor education should precede any major changes viz. regulatory, technological, or product-related. Convenience is one thing, but offering black-box solutions is risky, especially for retail investors; this is more critical given the trust and confidence our parent group enjoys.

Research-backed recommendations and smart screeners supported by AI and ML are integrated to enable investors to make informed decisions about investments.

Finally, most tech-led companies leave end customers feeling lost and confused in the name of automated services and solutions. blinkX believes that while technology certainly offers a huge service experience, people take comfort in people. Hence, in addition to leading-edge technology, a dedicated customer experience team that offers a human interface to the investors, is also required .

Q. The last few years have brought huge changes to the trading and investing communities; how would you like to address both of them?

There are three prominent changes that have transformed investments in the domestic investment arena. Digital disruption has narrowed the gap between customers and financial services providers and improved the customer experience. The rise in interest among the younger generation in trading and investing to have an additional income was propelled by the pandemic, and the number continues to increase. Lastly, people have become conscious of setting aside money to invest for unforeseen contingencies like the pandemic that caused the loss of jobs and the lives of many.

But, what has truly stood out and is going to become a megatrend in the coming years is the financialization of savings and assets. Traditionally, over 80% of Indians invested in real estate, followed by gold and financial assets. Slowly, the share of the pie for financial assets over physical assets is increasing.

Huge efforts around investors’ education, aptly supported by regulatory developments and transaction convenience through technology, have been credited with bringing about this transition.

Q. How are institution-backed FinTechs better placed to offer a holistic customer outcome than alternatively funded fintechs?

There are three key elements to a successful FinTech business: investment to build a robust technology platform, understanding and addressing customers’ needs, and strong corporate governance ensuring the protection of the interests of the stakeholders.

The needs of consumers, as well as the technology, are both ever-evolving, and a fintech platform requires continuous capital infusion and a solid understanding of the changing market dynamics. That’s exactly where institution-backed fintech companies score heavily.

On the contrary, alternatively funded fintech companies come with their own share of pros and cons, and temptations to chase mindless growth (call it downloads) over quality. In the recent past, we have observed more and more instances of regulatory recourses, key talent exits, and public spats even with some very popular names.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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