Technology can be a great differentiating factor for companies vying for the same space, particularly in hotly contested sectors like brokerages. Leading players in the market are leveraging tech for both their frontend and backend ops with cutting-edge technologies such as cloud, authentication, advanced charting, etc. Muqbil Ahmar, Executive Editor, dynamicCIO and Grey Head Media (DC) interacted with Shrini Vishwanath (SV), Co-Founder and CTO, Upstox – the second-largest brokerage in the country by way of customer base – on how they are using technology to turn around things. In 2020, backed by its mobile trading platform, Upstox achieved 2 million customer mark in less than five months of hitting the 1 million customer customer base. Upstox is now aiming for the next big leap in their user base with strong focus on a new technology line-up.
DC: How has Covid-19 accelerated the transition to digital for the stock markets? What will be the new normal in the industry?
SV: The lockdown was an opportunity for a lot of people to analyze their current financial portfolios. The ‘work-from-home’ operating model enabled many new investors to look at direct equity investing as an option. Technology has played a critical role in making that a reality. Today, investors can seek a better understanding of the global investment landscape and manage their portfolios in the new normal with the help of technology.
In India, stock-broking firms have seen the opportunity to make trading hassle-free using design and technology to reduce their customers’ costs. Technology-based firms in the financial services space have empowered customers with tools and insights for savvier investment decisions. Low-cost trading, deeper penetration of smartphones, faster internet, and simplification of trading applications have made it possible for an increasing number of people across age groups to trade in the stock market seamlessly.
DC: What are the challenges one faces in driving digital transformation? How to overcome them?
SV: Modern businesses are leaving no stone unturned to increase efficiency and maximize profits. Confronting digital transformation challenges and overcoming them isn’t just a choice but a necessity. With rapid evolution, digital transformation is often accompanied by some challenges. To create the agility to respond to new opportunities in the future, businesses need the right platform to shift digitally. It should integrate with existing frameworks and bring in improvement without causing disruption and delays in productivity.
One of the biggest challenges in the broking industry has been generating awareness about India’s stock market. The Digital India initiative has helped in increasing internet penetration in India. It has helped to take digital-only platforms, such as ours, deeper into India while also enabling easy access to information about the stock markets. At Upstox, we are continually working to make equity investments more accessible, easy, and seamless by taking a customer-first approach.
DC: The last year has been an exciting year for India’s brokerages. A record number of first-time retail stock owners continued to open trading accounts fuelled by cutting-edge digital trading platforms that offered intuitive, easy-to-use customised software for a Millenial customer base. Close to 6.3 million new DEMAT accounts were opened in the last 9 months, tallying the total count to 44.46 million. What technology initiatives you are taking to manage the post-COVID times?
SV: To cater to the massive trading volume and new accounts, which we believe will continue even in a post-Covid world, we scaled our backend. We migrated a large part of our processes to cloud-based systems, ensuring smooth access to all products and exchanges. For enhanced customer service, we also made app ticketing the primary customer service touchpoint.
Keeping in mind the need for more knowledge, the risk involved in options trading, and the need for high-speed data access for faster decision-making, Pro-Web 3.0 by Upstox has been equipped with top-notch features to offer a better trading experience. To enable easy conversations between traders, Upstox launched the industry-first feature of ‘Chart Sharing’ that allows customers to share the applied analysis and drawings with their peers on a real-time basis. Upstox has also made Digital Gold available for its customers, making it super-convenient to buy gold online at live market rates.
DC: How has technology changed the year 2020 for the broking industry?
SV: Technology has revolutionized many sectors, and the broking industry is no exception. The industry has seen several changes in 2020, especially its digital transformation, which took off faster than imagined. It has changed the way people trade, as an increasing number of people turned to equity markets for investment post-pandemic. To cater to this unprecedented trading volume and deliver enhanced trading experiences, brokers adopted new-age solutions such as cloud-based systems and IT-enabled applications that form the broking industry’s backbone.
Cloud-based systems have increasingly helped brokers to meet the spike in trading volumes and new account openings. It offers easy scalability, cost-effective and time-saving services, and a high level of flexibility. Today, one can enjoy high-value trading seamlessly, even on a smartphone. Technology has emerged as a critical differentiator in a highly-competitive market that helps brokers continuously create value for investors.
At Upstox, we have seen technology contribute significantly to retail participation from Tier-II and Tier-III cities. Currently, 70% of Upstox’s total customer base comes from these regions. Overall, 65% of our diverse customer base consists of first-time Demat account holders, and 75% are millennials.
DC: The number one and number two stockbrokers in India are both digital brokerages. Do you think traditional ones are passe now?
SV: India is a vast market that opens up room for more players. Today, investors entering the market are digitally savvy and expect a seamless user experience and an easy-to-use interface. Upstox offers accessibility and simplicity through advanced charting and analysis tools for people from all walks of life.
Traditional brokers have been around for a long time and have a different way of functioning. They excel in holding a specific plan for the people they cater to. They call people personally, walk them through the entire procedure, and carry out a detailed orientation of their service.
DC: What were the key challenges in the brokerage space during covid and how have you used technology to bring solutions to it hence?
SV: The ongoing pandemic has altered consumers’ behavior and thereby of businesses, as they adjust to the new normal. The most significant opportunity has been to alter people’s mindsets and adapt to a world where there is no one-to-one contact. The vast majority of interactions with customers take place virtually. While the shift towards digitization has been underway for some time, the current pandemic and subsequent lockdown have accelerated the process, as evidenced by the marked shift towards digital businesses.
Despite the significant challenges ahead, the global pandemic has also presented opportunities for digital optimization and transformation. Exponential technologies can play a leading role in digital transformation, allowing businesses to gain a competitive edge, improving not only operational resilience but enabling flexibility in a new reality characterized by rapidly changing market dynamics.
DC: What are some of the ways in which your organization is making a difference to increase customer stickiness/engagement?
SV: At Upstox, we focus on creating value for customers. Our digital-first approach helps us grow and build a rich user experience and advanced features, which our customers love. We have been growing rapidly due to our world-class product and positive word-of-mouth by our customers. We ensure that our fast, reliable, high-tech, and easy-to-use online trading platform and best-in-class services provide end-to-end support to traders from various backgrounds. We always work towards changing or modifying our services with the evolving needs of the customers.