BS BFSI Insight Summit: Broking industry sees high growth on digital push

After two years of record highs, brokerages see the slowdown as a reset for sustainable growth - driven by rising incomes, digital depth, and maturing investors

The Indian broking industry is passing through a lean patch after two years of rapid growth and expansion. Speaking at the Business Standard BFSI Insight Summit 2025, the industry’s top executives, however, chose to describe it as a much-needed reboot for the next phase of growth rather than a reset. 

India’s broking industry is now transitioning into a more stable and strategically focussed growth cycle after two extraordinary years of record account openings and peak retail activity in cash and derivatives segment. Trading patterns are normalising, new regulatory frameworks are being absorbed, and brokerages — both discount and full-service — are reshaping their business models for scale and sustainability. Far from viewing this as a slowdown, industry leaders see it as an essential reset that will unlock the next decade of expansion. 

 

Industry leaders were unanimous in their view that “reboot” will prepare the ecosystem for deeper participation, higher-quality users, and more enduring revenue pools. This will go a long way in creating the next growth cycle, given that penetration is still low and the Indian economy and household income continue to grow at a steady pace. 

“Long-term fundamentals remain exceptionally strong. While 63 per cent of Indian households are aware of capital markets, only 9.5 per cent currently invest — a gap that represents the industry’s most exciting opportunity. The awareness engine is built. Now the next 52 of the households are our growth runway,” said Kotak Securities’ Managing Director and Chief Executive Officer (MD&CEO) Shripal Shah. 

Executives emphasised that retail participation will now expand in a steadier, more predictable manner — driven by income growth, better financial literacy, and maturing investor behaviour. Unlike the Covid-era surge, the upcoming growth trajectory is expected to mirror structural patterns seen in China and other large markets.

 

According to Axis Securities’ MD&CEO Pranav Haridasan, the next challenge for the industry is to increase the penetration further from current levels. “I think in the US probably 55-60 per cent of the households have demat or a brokerage account. This figure is closer to 20 per cent in China. So, the penetration really depends on per capita gross domestic product (GDP), and penetration starts to rise as affluence and incomes move,” he said.

 

He said it’s good that the non-institutional parts of speculative activities, including derivatives trading, are getting tightened increasingly, as “we saw with some of the other areas of online gaming and so on”.

 

“The markets are perhaps moving towards a structure where people make genuinely skill-based decisions. Besides, we're all moving towards value of the transaction from just account opening. There is room to grow but it will happen in a secular and steady basis rather than in a spurt as we have seen in the past,” added Haridasan.

 

According to PL Capital Group Chairperson and MD Amisha Vora, the past two years have also brought a decisive shift towards stronger compliance, cyber-resilience, and risk controls. Brokerages are investing heavily in secure KYC (know your customer) systems, surveillance tools, and multi-layered cybersecurity — upgrades that improve trust and long-term investor confidence.

 

“Technology is now embedded across onboarding, risk management and behaviour analytics. Firms are increasingly aligning product offerings with the right customer cohorts — SIP-led beginners, midcap traders, and long-term wealth builders — supported by data-driven segmentation,” noted Vora.

 

She added that more than half of all new accounts are now opened by individuals under 30 — a demographic that is only at the beginning of its income and wealth-creation journey. As this cohort matures, its long-term equity allocation will rise sharply, fuelling growth in the industry.

 

According to Motilal Oswal Retail Wealth MD&CEO Ajay Menon, in the pre-Covid period, the primary challenge for the industry was to bring in new investors, but now that the investor base has more than quadrupled to over 20 crore, the industry has to transition them to long-term investors. “We like to position ourselves from an advisory capability, from a research capability to see that new entrants are advised to do the right things, are given the right kind of products, and are moved from trading to investment,” said Menon.

 

He added that instant gratification makes a lot of difference to young investors/traders, but the industry’s responsibility is to convince them that the journey to a sustainable long-term growth in portfolio has to be different.

 

The industry leaders observed that digital-first discount brokers reshaped the industry in recent years, but full-service players are making a quiet comeback with user-friendly apps and frictionless onboarding. The competitive edge, executives said, will come from research quality, advisory depth, and long-term relationship-building.

 

According to Kotak Securities’ Shah, margin trading funding (MTF) is one of the fastest-growing revenue pools for the full-service brokers now — valued at nearly ₹1.1 trillion and expanding steadily. “We see MTF as a responsible, equity-focused leverage product that diversifies income beyond derivatives,” he said.

 

Executives said that nearly 60 per cent of new account openings now come from North and East India — regions that previously lagged in equity participation. While trading intensity is rising with the rise in disposable incomes, the trend underscores the broadening reach of India’s capital markets.