Mumbai: Amid a market surge characterised by record volumes and the addition of over 30 million demat accounts in 2023, the majority of traditional brokerage firms saw a decline in the number of clients and market share last year.
NSE data reveal that brokerage firms, including ICICI Securities, HDFC Securities, Axis Securities, Sharekhan, IIFL Securities, Nuvama, and Geojit, among others, have observed a decline in the number of active clients.
ICICI Securities alone has lost nearly half a million clients in 2023, to 1.87 million at the end of December 2023. Once the largest brokerage in terms of the number of active clients, the share of ICICI Securities declined to 5.3% in December 2023.
IIFL Securities lost about 66,000 customers in 2023, while Sharekhan and Nuvama lost 60,000 and 45,000 clients, respectively.
“In the past, some of the traditional brokers improved their active client base by offering a few innovative marketing schemes, such as crediting a free gold ETF unit in customers’ demat accounts, which has now been discontinued, leading to a decline in active customer base,” said Deep Inder Singh, vice president, ICRA. “Further, the focus has shifted to onboarding quality customers with better revenue potential, which is also resulting in a decline in the share of traditional brokers in fresh client additions.”
Traditional brokers have attempted to tap into the retail client market by either introducing discount brokerage platforms or unveiling new pricing strategies. However, with the exception of Angel Broking, these endeavours have not seen widespread success.
HDFC Securities, for instance, entered the discount brokerage space with the launch of HDFC Sky in September, aiming to compete with established discount broking firms. Likewise, Kotak introduced its personal finance platform, Kotak Cherry, in 2022.
Sharekhan also made a foray into the discount brokerage segment by establishing a new platform named ‘Espresso’ through a separate entity. Despite these initiatives, achieving significant success has proven elusive for most traditional brokerage firms in this competitive landscape.
As of December 2023, three prominent discount broking firms – Groww, Zerodha, and Angel One – command a substantial 56% market share in terms of the number of clients.
In 2023, the standout performer was Nextbillion Technology, the company behind the Groww platform, which successfully onboarded more than 2.2 million clients. The Bengaluru-based fintech startup has notably overtaken Zerodha as the foremost discount brokerage firm in terms of active investors since September of the previous year. As of the latest data, Groww boasts 7.6 million active investors, surpassing the 6.732 million client base at Zerodha.
Another significant gainer in 2023 was Angel One, securing an impressive million-plus clients. As of December 2023, the firm’s customer base stood at 5.339 million, reflecting substantial growth over the course of the year.
“The key catalyst driving this paradigm shift is the superior customer experience offered by these new-age brokers,” said Misha Pratap, partner at Bain & Company. “Despite the surge in new clients for digital or discount brokers, bank brokers still maintain the highest average revenue per user compared with discount brokers.”
