Dear Sherus,
I trust you and your loved ones are safe and healthy in these trying times.
We are in the fifth phase of the lockdown and fortunately for us, despite the challenges posed by the COVID-19 pandemic, our business has been on an uptick. We have been successful in migrating to work from home and leveraging digital assets to service customers effectively. From the beginning of May we have been opening new accounts and the current account opening experience has been better than ever before.
We have also initiated a project, Sharekhan 2.0, to reinvent Sharekhan by ensuring impeccable service to our customers, be it by handholding them for their investment needs, providing them digital tools and access to our services or rolling out education initiatives for them. The project seeks to address all the challenges the full-service broking business has been facing for the last two years, including stiff competition from discount brokers, declining activity of customers, a growing number of inactive customers and pricing wars.
Based on our strengths, the project identifies seven core benefits that Sharekhan shall offer to customers in its new avatar: (1) research; (2) an efficient team of true-value relationship managers; (3) a strong physical network of branches and franchisees; (4) advanced online trading technology; (5) professional trading and investing education for all customer types; (6) a wide range of financial solutions; and (7) the unwavering support of the parent company, BNP Paribas. We need to work on these strengths relentlessly to demonstrate value to our customers.
Having our ambition in full-service broking business intact, we also see demand from certain segments of the retail investors for discounted brokerage. To complete our gamut of broking services, we will soon foray into the discount broking business under a separate company and brand. In a digital media conference on June 2, 2020, we have announced our plans to roll out a no-frills trading platform for buying and selling securities at flat price brokerage in the second quarter of this fiscal.
Our aim is to be amongst the top three discount brokers in the next five years. The new business will follow a start-up model and be launched in phases. In the first phase, we will roll out the beta version of the discount broking platform and test it thoroughly in live mode with the help of 100 volunteer alpha traders and investors. The new company and brand will be revealed in the second phase in Q2FY2021.
Launching the discount broking service through a separate brand and company ensures that Sharekhan is not affected by direct cannibalisation. Though it is natural to have initial apprehensions, it will be wrong to assume that customers will ignore what Sharekhan has to offer them. Our study shows that customers contributing more than 85% of our revenues use services not offered by discount broking entities. If customers ask you about the discount broking business, just tell them that it will be a separate company and apprise them of the benefits of full-service broking service. They will see value in our brand and stay with us.
Besides, given the low penetration of the equity market in India, there is a lot of growth potential in the full-service broking business. Plus, the stock broking industry itself is set to grow on the back of increased household savings, digitisation, increased penetration of mutual funds and a growing population of high net worth individuals. Let us, therefore, make the most of these opportunities to grow Sharekhan. I believe that with two companies and service models, Sharekhan will grow stronger on the back of a larger client base, bigger market share and higher profitable growth.
Meanwhile, the war against COVID-19 rages on and we all must continue to follow all necessary precautions, whether we work from home or office. I am confident that we will get through this unprecedented crisis together, we just need to hang in there.
Please take care of yourself and your family and stay safe.
Thank you.
Jaideep Arora
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