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Retail brokerage Sharekhan, which was recently acquired by French bank BNP Paribas, aims to become the number two broking outfit in the country in terms of number of clients. It will also double its client base from 1.4 million now. The brokerage currently enjoys a 4.2% market share.
As of September 2016, BNP Paribas held 32.6% stake in Geojit BNP Paribas Financial Services, while BNP Paribas India Holding held 0.8%, data on the BSE site show. BNP Paribas will continue to hold a stake in Geojit BNP Paribas Financial Services.
BNP had bought 34% stake in the Kochi-based Geojit Securities in 2006. Sharekhan became a 100% subsidiary of BNP Paribas in November 2016.
The retail broker will spend $15-20 million in the next five years for its digital push that will include a greater focus on mobile services, fully-automated robo advisory services, a new website, upgrading its trading platform and online courses to educate customers, among other things.
Currently, 65% of the broker’s business comes from the online route while another 12% comes from mobile. The broker aims to cross-sell products and be among the country’s top 15 mutual fund distributors by 2020.
“With this ambitious strategy and significant investments in technology as well as in building an exciting brand, we’ll make Sharekhan by BNP Paribas one of the preferred savings and investment partners for retail investors in India. A strong digital-led approach will be at the core of the strategy, as it is in all retail activities of BNP Paribas across the world,” said Thierry Laborde, member of the group executive committee of BNP Paribas SA.
A high-cost structure and onerous compliance requirements have made retail broking a tricky area for foreign brokerages. In 2003, HSBC InvestDirect shut shop in India as a high-cost structure made the business unviable.
“We have been consistently profitable despite market volatility and will continue to manage costs in the future,” said chief executive Jaideep Arora. “One also has to look at BNP Paribas’ experience with Cortal Consors in Europe.”
Cortal Consors is a leading European broker in personal investing and online trading with presence in five European countries.
Margins are wafer-thin, as volumes are dominated by low-yield options. Intense competition among brokers and the proliferation of discount brokerages have also been key in driving down costs.
Sharekhan is present in 500 cities and has 150-plus branches and 2,300 franchisees. Sharekhan was set up in 2000 by Shripal Morakhia.
