The Hindu Business Line : Expect more investors to transact online: Reliance Money

Kolkata June 3 For securities broking companies, the rules of the game are changing like never before, argues Mr Sudip Bandyopadhyay, CEO, Reliance Money. "It will keep on evolving. More than ever, there will be technology to aid investors... some of the country's top brokers will become household names", he notes even as he addresses some tough issues.

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Banking, broking and demat accounts under one umbrella make perfect sense. Don't the ICICI Directs of the world have an advantage?

For one thing, it is not easy to get a banking licence. That said let me add that the key issue is to make a difference to the way an investor wants to conduct his transactions. A broker without direct links with a bank can do well if it can work out tie-ups with one or more banking outfits.

A number of players have done this already. There is no reason to believe that such an arrangement will not run smoothly, especially when it is supported by efficient technology.

Technology may be getting more inexpensive, but it's still not widely accessible. How do you read the situation?

The cost of technology - in our case, let us refer to Internet connectivity and quality of broadband - is indeed more reasonable these days. But, as pointed out by many authorities in the past, Internet penetration is still very low.

Weigh our country against some of the more advanced nations and you will see that we do not compare favourably on this front at all. Internet penetration is just about 3.6 per cent in India. The good thing, however, is that the growth being recorded on this count is quite impressive. In fact, the entire communications business is advancing rapidly. Look at the way in which cellular phones are getting popular.

At the end of the day, this should translate into gains for investors too.

Only a small portion of all trades in India is done online. Most investors still want to call and trade, right?

Yes, that has been the case so far. At one level, broking services providers have seen both strategies at work - clients do prefer to call and transact, some of them also log on from homes and elsewhere.

As you will agree, investors need to have a certain belief in their brokers and the systems that are put in place. More of them, it is expected, will in future make use of web-based services in order to do their investments. That will lead to larger numbers.

Shouldn't transaction costs become cheaper still?

The point we want to make is that brokers who conduct business and charge brokerage the traditional way can achieve this only up a point. It makes sense to have flat fees and provide a range of fee options for investors to choose from. That, coupled with a wider footprint across the nation, will be the key to growth.

Broking companies need to have more points of presence and come closer to customers. That is why tying up with large organisations for installing such things as trading kiosks is important. It will be a bit like placing ATMs at key locations. You will just have to visit one of them and carry out a range of transactions. In the process, the need to visit your bank is practically obviated.

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