Learning to grow an online customer base
ETRADING
| To bring transparency to both, one major move was the introduction of online investment and trading in financial products. The primary objective of building ICICIdirect, the ICICI group's online investment vehicle, was to empower the individual to take complete control of his investments by giving him a seamless structure which integrated his bank account, his demat account and the brokerage account. The idea was to give him a paperless way to trade in financial instruments. It was also meant to allow the investor to imbibe self-discipline and take control of the investments made by him. |
| Effectively, we gave the retail investor a level field so that he could trade from the comfort of his house or office, while at the same time providing him with value-added services such as market research, analysis, updates and real-time stock quotes. |
| Did we succeed? I think so. In just over two years, ICICIdirect has been able to deliver to its customers the complete experience of online, hassle-free trading. This is reflected in our growing customer base of over 1,66,000, which collectively accounts for 65 per cent of the overall online share trading community in India. |
| We have a presence in over 100 cities and have consistently increased our product and service offerings to customers by extending the idea to online investing in mutual funds and IPOs. We believe we have earned the right to call ICICIdirect a one-stop financial services shop. |
| Did we face any problems? Of course, we did. As with anything new, we learnt as we innovated. Even though ICICIdirect was designed to provide its customers with a hassle-free service, we did receive some customer complaints. For example, the most common customer feedback was about non-receipt of contract notes in time. Some of them had trouble accessing our website, or felt it was slower than they expected. |
| Based on the feedback, we have addressed the issues by using technology. We have now opted for issuing digitally signed contract notes that allow customers to view and print them at the end of the same trading day. We also revamped the site for better navigation and faster access, even though we found that slow speeds sometimes had more to do with bandwidth available from the customer's internet service provider (ISP). |
| We initially started by offering trading facilities on the National Stock Exchange (NSE). But based on our experiences over two years, we felt that our customers may like the opportunity to trade on multiple stock exchanges. We, therefore, recently introduced trading on the Bombay Stock Exchange (BSE). We also started reaching out to new categories of customers. |
| For customers in small towns, ICICIdirect introduced CallNTrade in 106 cities, wherein a customer can call and place orders anywhere, anytime. For NRIs in the United Arab Emirates, ICICIdirect launched cash trading on the National Stock Exchange. |
| Since retail investors also like to put money into mutual funds, we launched online investing in six top-performing mutual funds in the country through Asia's first online Mutual Fund Plaza. We have also allowed our customers to subscribe to initial public offerings (IPOs) of shares and bonds. |
| So, effectively, after starting out as an online brokerage house, we have now successfully repositioned ourselves as a facilitator for investments in various financial products. We are not merely brokers anymore. |
| Who do we benchmark ourselves against? We are committed to benchmark ourselves against global best practices in the broking industry. These initiatives provide the customer convenience and security in his investments through ICICIdirect. CredibilityFirst, a division of Crisil, has assigned the highest broker rating of TXA1 to ICICIdirect. |
| The rating indicates highest ability to service capital market broking transactions. It reflects ICICIdirect's solid operational capability to execute broking transactions characterised by a strong system integration of processing orders with bank and demat accounts. |
| We also innovated with digital contract notes. As per Securities and Exchange Board of India (Sebi) guidelines, all brokers have to issue a contract note confirming the trade(s) done on a particular day by the customer. A contract note is issued in the prescribed format and manner, establishing a legally enforceable relationship between the broker and the customer in respect of the trades stated in that contract note. |
| With the passing of the Information Technology Act 2000, Sebi has permitted issuance of digital contract notes. Our customers can log on to the ICICIdirect site anytime and access their contract notes on the same evening of their trades. And these digital contract notes will be stored on the site for future reference up to seven years. |
| ICICIdirect had also received the first "Web Seal" in Asia; a seal of assurance awarded to companies in the internet world with "control conscious business operations". The seal was issued by global advisory and audit firm KPMG. This was the first web seal issued to any company in the Asian region. The KPMG Web Seal was issued on the basis of a study of various aspects of management control, including management assertions, internal controls, information processing, privacy, security, web page hits or agreed upon procedures. |
| STREAMLINING SERVICES |
| At the broader level, ICICIdirect has constituted an advisory council comprising leading experts from finance, technology, regulatory authorities and various market participants to represent the leading edge of change in financial services and technology, besides bringing focus to the convergence of these disciplines. |
| The council deliberates on best practices and global benchmarks in the broking industry. It advises ICICIdirect on issues such as customer education and transparency, risk management, self-regulation, managing knowledge transfer and tracking trends in information technology. The recommendations made by the council are submitted as a white paper to the regulators, stock exchanges and infrastructure providers to encourage industry-wide adoption of best practices. |
| How have customers responded to our initiatives? Very well, I think. For example, there has been commendable response to our "cash on spot" facility wherein customers are given a daily limit of Rs 10 lakh. If they sell shares, they receive the proceeds in their accounts the same day and do not have to wait until the payout day of the stock exchange to receive funds. These funds can be withdrawn at the end of the day through any of ICICI Bank's 1,000-and-odd ATMs. This increases liquidity for ICICIdirect customers. |
| Besides, customers also appreciate the functionality built by ICICIdirect such as Easy Mail, online bills and accounts, real-time quotes, customised alerts for mailers, and online activation of accounts. We make it a point to help our customers use the facilities we offer by putting up a 'Learning centre', which is a tutorial on investments, and 'My research,' which helps one to research a stock better. 'My research' is a step-by-step guide to research. This feature analyses a company's financials, throws light on the current developments within the company, and gives a peer comparison in a lucid and easy-to-understand format. |
| Our handholding efforts to help investors make their first trade on ICICIdirect have paid off. We receive around 200 requests a day on an all-India basis from customers for conducting demos in their cities. The seminars conducted by ICICIdirect along with NSE for educating investors on futures and options have been a success in all the four cities where we held them - Mumbai, Bangalore, Chennai and New Delhi. |
| Educating and training customers on the use of online services is a major customer retention tool for us. This helps the customer to have realistic expectations from the use of the tools and research materials given to him on the website. It has also reduced the number of complaints. |
| Has online trading worked? Have our investments paid off? In every business, one sees a lot players entering the market in the initial rush and e-broking is no exception. For organisations to succeed, it is essential to ensure that customer-centricity and balance-sheet considerations are in the same direction. ICICIdirect has believed in ploughing back the profits earned into the business to extract greater returns on the same. |
| There are currently over 77 online brokerages in India, with a few foreign players also entering the industry. Irrespective of the amount spent on spearheading the effort, the solution lies in balancing a technology-centric approach to transactions with the human touch factor, which will be a key factor in making the transition from the traditional method of broking to online broking. |
| According to the NSE, as on April 19, 2002, the number of registrations for online trading was about 240,219. In all, 77 members had registered with the exchange for providing online share trading. Of this, ICICIdirect's current customer base accounts for two-thirds of the total. |
| According to NSE, the highest online trading volumes were recorded in February 2001, when it peaked at over Rs 75 crore a day on an average. It averaged at Rs 50 crore a day for the quarter ended March 2002. This is less than two per cent of total trades on the NSE. ICICIdirect holds more than a 40 per cent share of the NSE's online volumes. |
| The author is chief operating officer of ICICIdirect, the ICICI group's online trading vehicle |
| This article appeared in the Indian Management magazine issue of June 2002. |