Mobile-app based trading picks up pace

Sandhya Shah, 54, has been trading in shares through a mobile application for the last 1 year. She alternates between the app and her desktop, but says the app is convenient even though it’s not as comprehensive as the desktop. At her age, Shah says it’s important to adapt to modern technology and she didn’t hesitate in interacting with her broker’s helpline to understand how to use the new platform.

Mobile broking transactions were slow to pick up after the regulator approved this platform in September 2010. Six years on, the format is now attracting users at a much faster pace.

In August 2016, 2.2% of the trading on BSE was via mobiles and this has more than doubled (though on a really low base), compared to 0.82% in the year-ago period.

For the National Stock Exchange (NSE), 3.16% of cash market trades in August 2016 were via mobiles.

Why do brokerages like mobile?

It’s not an immediate cost benefit, but over time the potential of scale is likely to result in lower operating cost per customer.

“Operating cost can be dramatically low—the same platform can serve a lakh clients or a crore or more,” said Vinay Agrawal, chief executive officer, Angel Broking Ltd.

According to Chaitanya Shahare, head, IIFL Markets App, India Infoline Ltd, mobile platforms have the ability to engage with multiple customers at an individual level through customised information. “This helps increase activity per person.”

Initial set-up costs aside, this platform offers an opportunity to an industry whose margins are already under pressure due to fierce price competition. Moreover, it’s the fast adaptability that customers have shown, which paves the way for potential growth in the future.

“In India we seem to have leapfrogged from offline to mobile very fast. Growth of the mobile segment in the last one-and-a-half years has been tremendous,” said Agrawal.

Trivikram Kamath, executive vice-president and head - operations, finance and technology, Kotak Securities, also said that this market has expanded since their app started in 2011.

What’s in it for you?

It’s really about convenience all the way. With Aadhaar-based know-your-customer (KYC) process in place, a new user can open an account via the mobile app itself. Although processes differ across brokerages, it’s been made simple with minimum need for physical documentation.

All apps aren’t yet optimised, but where the facility is available you can open an account in around 15 minutes and start trading in an hour.

“A new investor can open a trading and demat account in less than 15 minutes. This is subsequently followed up with an in-person verification and a physical signature,” said Rahul Jain, head-personal wealth advisory, Edelweiss Broking Ltd.

For Angel Broking’s platform, an investor can open an account in less than 12 minutes. Along with e-KYC, they have a facility of digital or d-KYC. A thumb impression serves as the digital signature and the system auto-inserts personal information from the Aadhaar database. IIFL Securities Ltd, too, offers a 15-minute account opening facility for KYC-compliant investors who have an Aadhaar card. With Kotak Securities, an existing investor can open an account in 30-40 minutes. Account opening aside, it is the ease of conducting a transaction on the go that has caught on. You needn’t be in front of a desktop to enter trades. Moreover, information dissemination is in realtime and the notifications can be customised to bring you updates on the stocks that you are tracking or want to buy.

“Along with research and reports, investors can access live TV through the app as we have a tie-up with Bloomberg. Charting facilities, too, are available. But all this keeps getting upgraded; so far we have launched 26 versions of our mobile app,” said Shahare. Push notifications, like the ones you get with WhatsApp, aren’t available on other online platforms, and that makes the mobile unique. For storage and security, app development teams at broking houses are constantly working to reduce data usage per activity done on the app. Also, none of the clients’ personal details are stored on the app and the sensitive data is encrypted. So if you lose your device, you needn’t worry about data theft.

What’s next

As investors become more aware about asset allocation and other market-linked products like mutual funds, there is a need to provide access alongside stock transaction facilities.

“As a group we don’t want too many apps for users and are trying to integrate the personal finance app with this existing one. Ideally, we would like to have an integrated account opening facility in place in 3-4 months,” said Arun Choudhary, head-online and retail channel, Motilal Oswal Financial Services Ltd.

Jain believes along with customisation, use of biometrics will come into focus going forward.

As upgrades happen, investors will also benefit from a wider access to information, thanks to robo-advisory facilities getting interlinked.

Overall, it’s a win-win for both customers and broking firms. But, as conducting transactions become more convenient, users need to be careful not to trade excessively.