Sharekhan banks on online business

The spread of Internet has made it viable for stock brokers to rope in relatively small clients and simultaneously expand their geographical presence, says the head of a brokerage.

Sharekhan, a Mumbai-headquartered brokerage, recently opened another branch in Chennai. The company today has established 31 physical outlets in Chennai over a four-year period.

The company's CEO, Tarun Shah, says that technology has played an important role in its expansion.

Internet helps the company to service clients whose asset size would otherwise be unattractive for a brokerage. Today, about 30 per cent of Sharekhan's total business comes from on-line transactions and the balance through conventional means, says Shah. About 80 per cent of Sharekhan's on-line business comes from smaller clients.

The smaller clients typically contribute about Rs 600 a month to Sharekhan's revenue, says Shah. It's the Internet that makes it viable to service these clients because servicing costs are lower over the medium, he adds.

Shah sees the company's on-line business making up 50 per cent of the total business over the next two years. Other things remaining the same, small clients' business would make up 40 per cent of the total business.