Brokerages ring in volumes with mobile apps

In a bid to revive their brokerage business, a number of broking firms are taking a leaf out of the successful e-commerce companies and upgrading their mobile trading platforms. Firms like IIFL and Edelweiss Securities have not only hired techies to build applications that enable users to trade stocks on their mobile phones smoothly but also offer features that add value.

For example, Zerodha, the largest discount broking firm, has spent close to ₹1 crore in developing its new multi-language trading app Kite that enables users to buy stocks even as they read a news story on the app. “If you’re reading a news story about Reliance Industries, this feature will let you just right-click on the name and lead you to the app, where you can immediately fire off an order,” said Nithin Kamath, Founder and CEO, Zerodha.

The IIFL Markets App is probably the most expensive trading app available right now. The app cost the company close to ₹30 crore over the last 14 months to build. Since it was launched six months ago, IIFL says it earns a quarter of its brokerage revenue through the app, with almost 30 per cent of clients now using the mobile platform to trade.

Chaitanya Shahare, Head, Products, IIFL Markets, said the ideal app should work seamlessly even if the trader is on a 2G network. “We provide live feed from four exchanges on the app, and there’s a lot of other information to show on a small screen,” he said.

“We’ve enabled one-tap buying and selling on the app. You can’t develop this sort of technology, with good user experience and trading interface, from within the financial industry; these ideas come from people who have worked with online start-ups. We’ve even hired developers from start-ups such as TinyOwl and Localbanya to build the app,” he added. Shahare, a post-graduate from IIM Calcutta, was earlier head of Digital Marketing at Meru Cabs.

The reason why the broking firms are doing this is clear from recent trends where being a stock broker is no longer the money spinner it used to be. In the past few quarters, trading volumes in the market have stayed flat or have risen only marginally while the entry of discount brokers has forced the old guards of the industry to cut their fees to stay competitive. But on the bright side, only about 2 per cent of Indian investors access the markets. And brokers are now keen on expanding this volume and creating high-quality mobile trading apps, to keep their business going.

Edelweiss Securities spent “a couple of crores” developing its app and now has 12-15 per cent of its trades coming via mobile phones, according to Riyaz Ladiwala, Senior Vice-President — Digital Transformation.

The Edelweiss app was the first to provide live feed of SGX Nifty, a derivative of the benchmark Nifty index that trades on Singapore’s stock exchange and which is seen as an early-morning indicator of how the Indian markets will open. Similarly, Reliance Securities spent about ₹1 crore for its app by third-party developer Heckyl Technologies.

In addition to the slowing market, these brokers are facing big challenge from bank-sponsored brokers who have savings account-holders as a captive customer to cross-sell a demat account. So essentially, a well-designed and fast app is a client acquisition tool for brokers such as IIFL and Edelweiss. Shahare says, “A good trading app needs servers to be optimised, otherwise the app will hang at peak hours — at market opening and closing.”

Ladiwala of Edelweiss says, “If you place our app next to our desktop trading platform, both will let you trade at the same speed. The point is not to display all the information that is available, but to filter out all the clutter and hope clients stay put with us.” (ICICI Securities did not respond to questions sent over email.)

The move seems to be working. About 60 per cent of IIFL’s six lakh mobile user base are guest sign-ins. Shahare says in their experience, about 5 per cent of these guests become IIFL clients after spending 45 days on an average on the app. “We want those who make 2-3 trades a day to go mobile,” says Kamath of Zerodha. “It’s not a play for revenue now, but getting new clients this way gives us a pool of clients we can sell other products to, such as mutual funds.” About 20,000 people log in to Kite every day.

“The app is meant for working professionals who want to keep up with the market during their commute to work,” Ladiwala of Edelweiss explains. “Or a garment or diamond trader, who watches the TV ticker all day anyway, but can’t trade at a desktop. We want these clients to start trading with us on their mobiles.”

In the long-term then, as volumes start rising, the initial cost of developing these apps won’t matter much — they would get recovered.