BL Interview. ‘Nothing different between gaming and broking apps’

We redesigned ourselves saying we have to build some distinctiveness and decided to be a full-service provider, because we are focusing on bank customers, and adopt One Axis approach. We are the first in the industry to have in-house AI-based products, which we launched in April. For priority banking customers, it’s critical to build products like this. Today, everybody has become more of transaction building platforms. It is not that we don’t build platforms; but you must build something which helps customers take informed decisions.AI, globally, has taken off well and it’s a constant learning programme. We have a three-month optimised AI portfolio. A human being can only look at 15-20 factors. In AI, it’s looking at 500 factors including reading a sentiment analysis in a newspaper.

We are adding on both sides. ‘Burgundy customers’ generally want access to research and corporates. We also took a conscious call saying we will do largely mid-cap and small-cap companies because we believe the large cap is over-researched. If you look at our distribution of 140-150 stocks, only 30 per cent is large cap; 70 per cent ismid-cap and small-cap because that’s where we believe we can give value to customers when you run a model portfolio. Also, we are not picking stocks based on market momentum; if capital goods is doing well, let’s try to research. AI is a separate set of people who are working on data sciences, and they are Python developers. Two years back we started the team but nobody in our organisation knew about it; not even HR. What we were trying to do was very exploratory because to do in-house itis very difficult and takes time.

Yes, it surprised us, but I think we had an answer. I believe that laziness of our own system has helped create that. But he is the first guy to venture into it and it’s an advantage. But if you look at other discount brokers, they can’t make money forever. What are they really chasing — it’s valuation, while we are not. We are chasing something to add value and be profitable. Most discount brokers are working on valuation and valuation comes from customer velocity, which is what they are building. But sustainability is still the problem. Having said that, the segment has done well in terms of volumes and product; it’s a highly competitive market. I’ve never seen such intense competition in my life, from a business perspective.

The interest of people in equity markets really went up and we found huge participation. But it is not what it was during Covid times. Client participation has gone down — 15-20 per cent active customers have gone down because they’re back to office, though the action in option market continues, but it’s not a form of long-term investing. That is a worry. We believe that customers should hold for long term. But it’s become more of a speculative platform, which is not good for the industry.

No, the options market is going on. I don’t know from where the money is coming and where this tamasha happened. But there is nothing different between a gaming app and broking app. There are a lot of brokerage firms that say that below 30 years we will not charge for options trade. It is dangerous because you’re cultivating a game where one of the motivation factors is that I’m not paying brokerage.

We’re telling them to stagger the investments. Volatility will be the game for the next two years and asset allocation is what we focus on. You must hold on and continue to be in equities. We have also told large customers that if you are in cash then it’s time to spread and start another portfolio.