Finanicial Services in Next Decade
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Transcript of Finanicial Services in Next Decade
8/7/2019 Finanicial Services in Next Decade
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decade.
FinancialServices
in the next
By Motilal OswalCMD, Motilal Oswal Financial Services Ltd
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The BusinessChallenge andOpportunityThe one thing that is constant is change.In business it’s very difficult to keep up with changes.
And the pace at which things have changed is amazing.
Be it products, service or technology, ‘change’ is the name
of the game. So it’s upon us to capitalise on the changes
around us. Accept them in the right way,
and there is a definite benefit for you.
I would like to share, the opportunities which you all
could really capitalise on; and some challenges and
problems which we need to address.
First, lets talk about the opportunities.
1
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The BigOpportunity in Equity
You must've seen India and China; the global powers are shifting from developed markets to
developing markets to India. In China 11% of population invests equities and in Korea it is 10% ;
but at our end, its only slightly higher than 1%. We have only 1 crore DP accounts. These are
likely to go up to 5 crores in the upcoming years. But even then that will be only a small part of
the 120 crore bank accounts we will have in the country by 2020. In the upcoming years there is
a huge amount of new people who would be investing into equities. So my message to you?
Target the equity growth opportunity aggressively.
China 152 1,325 11%
Korea 4.6 47 10%
India 16 1.190 1%
COUNTRY INVESTORS %POPULATION
All figures in million
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3
The Intermediation
OpportunityIf you look at the broking business size; in 2009-10 ` 11700 crores of brokerage was generated. Now, the big
picture -10 years down the line, the annual brokerage is estimated to be ` 65000 crores. There is huge growth
expected in mutual funds distribution commissions and insurance distribution commissions as well. The goal
you set for yourselves in terms of share of this kitty is very critical. Even if you want to target 0.1 percent of the
brokerage kitty, it would be 65 crores! I will not be surprised if the above growth estimates are surpassed.
The equity broking business will be big business!
6x
3x
5x
Equity Broking
FY10 FY20E
Life Insurancecommission
Mutual Funddistribution
65,000
55,860
11,482
11,728
2219
19,502
` in crores
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The Market is10 times bigger thanyou think it isWe have been talking about thinking big. And it’s going to be much
bigger in future. The future will be different from the past.
If you don’t think b ig; you will be redundant. So the first thing
is to stop being pessimistic about growth prospects.
Plan and think big. Keep on thinking about growth as an opportunity.
Are you planning for the next 3-5 years when you invest
in technologies or processes? Right now, our corporate office
is 15000 sq. feet. We are talking about a 250000 sq. feet office
next year. Are you planning big too? With every opportunity comes a
challenge as well.
Now let’s outline the challenges and some proactive measures we can take.
4
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Maintaining Strong
Client RelationshipsIf you think the current market is competitive; you haven’t seen anything yet. Everyone is looking to
profit from the India growth story. Competition will intensify with new players and consolidation. Your
current customer is also someone else’s future prospect. You need to bulletproof your existing
relationships so that business from your current customers grows and thrives. Profile your existing
customers – are they Investors or Traders, find out about their financial goals - what is their
investible corpus, what is their risk appetite, what are their returns expectations. Once you have this
vital insight; you will be better equipped to go about fulfilling their needs. The more a customer
believes you understand his needs; the more business he will give you. Organic growth from current
customers is one of the most efficient ways to grow your business.
Do you have an organic growth strategy?
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Are you actively
looking for newclients?Clients have a life cycle; Old clients become inactive and will have to be
replaced by more new clients.
Brokers/Franchisees who have not acquired new clients are now nowhere.
Sales is a costly affair. Investment into having dedicated sales people
are necessary and may not show immediate results. But you can not
escape this investment if you want to grow big. You need to start understanding
the process of sales. You have to invest into generating new leads for
sales and work on the process to continuously improve the quality of leads
and conversion ratios. References from existing customers are the best way
to acquire new customers but you can not solely rely on this source to achieve
your new clients acquisition goal. You can also acquire a new customer
by selling him PMS, Mutual Funds or insurance. You have to set a goal
for achieving trail revenues from AUM based products. This goal can be a %
(say 30) of your total revenues.
Do you have a client acquisition mindset?
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Sales, sales andcross sales!!Another big challenge is dynamic change.
Margins will change. And maybe there would be some brokerage war.
But while profitability margins will SHRINK, absolute profits will RISE.
AUM based trail-fee products like PMS and Mutual Funds will grow veryfast and so will insurance product sales. Brokerage revenues are volatile
but having a large corpus in AUM based trail fee products will offer stability
to your revenues. Sales, sales and cross sales!!!! That’s the mantra.
We have to start thinking very seriously about cross selling
of products which your customers need. They are buying those products
from others. Let’s try and match our FIXED EXPENSES with FIXED INCOME.
And the last is the size, unless you have got size, you cannot invest money
on the brand, and technology.
So you have no option except to become big!
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8
From Broker
to Financial PlannerBrokerage stand-alone is not going to add more value. So more important is value addition.
So please, upgrade your skills, don’t think of yourself as a broker or a discounted broker.
5 years down the line, there would be 50 lakh crores of savings every year. Right now its
20 lakh crores. Most of it goes into fixed income and small savings. What share of this wallet do we want to get?
We have to position ourselves as a One Stop Financial Service Destination and focus on a greater
Wallet share. Standalone brokers may become defunct in the next decade. Some of us
have already passed, the CFP qualification. It is imperative that all of us do so. Not just to get
broking revenue but also to attract greater wallet share.
Not just to survive; but to thrive.
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Have you invested inpeople?How much can you do by yourself? You have to invest in employees. There is a major difficulty
in retaining and attracting new people. We have taken a project internally on helping our business
associates in this important area. How many people you have? Have you clearly defined
KRAs (expected results and behaviour) for each employee? Have you defined an incentive plan
for your revenue generating employees? How much do you know about your employees?
Only money is not really going to retain them. Groom or hire somebody who can handle the daily
operational matters. Empower this person and handhold him for developing confidence.
You need to have this critical resource with you and decide that you are not going to spend more
than 15% of your time on operational matters but still would have a complete grip on the operations.
Key is to have a good resource who is empowered and you set up a process of reviewing the work
through clear dashboards and review mechanisms.You need to spend more and more time on sales,
cross sales, meeting top clients and expansion. You need support from your employees too.
So make them your partners. Give them incentives and bonus.
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Knowledge FirstInvest in knowledge. It is the most potent and affordable nectar in the world.
Knowledge will always be yours forever. Most of us think that they are satisfied with 500 clients,
which is not good. How many people read magazines or go for some formal training?
Let me tell you, this is a knowledge economy; you have to upgrade very fast.
For a start, read at least two business papers everyday. Read a good book on investment or
management. Learn the basics of fundamental and technical research.
Learn the art of selling and of relationship management. Be prepared for the questions
that your client will ask in business. You have to generate knowledge within yourself.
If you don’t like reading, then spend time with those people who are smarter and better than you.
Tomorrow the customer may ask you different questions which you haven’t heard of.
Knowledge is important. And there is no shortcut.
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Compliance andRisk ManagementIt is going to become more stringent in the future. Please accept the fact
that compliance and risk management are very important. Believe me, it is good for business.
It is necessary to be pro-active in this rather than betting your future in not doing this.
There can’t be any gains without any pains.
Review ProgressSet GOALS for the next 5 years. But change knocks the wind out of all good plans.
Unless performance is reviewed regularly, growth becomes stunted. Your business
plan depends upon monitoring progress- whether it’s achieved or over-achieved. You
have to understand what is working for you or not. Unless you know that, you can’t
move forward. ‘UpperMOSt’, our Business Development portal, is an important tool
for monitoring your progress vis-a-vis your business plan. The Business Development
Reports (BDR) in UpperMOSt are an invaluable tool that help track business activity in
detail and help channelise your efforts better.
We get what we inspect, not just what we expect.
Technology andProcessesWe have seen drastic changes in the way we do business due to the use
of technology. Technology is the key driver for our business
and we need to learn about it and invest into it for survival as
well as growth. If you want to achieve scale, it can not be done without
establishing and following the good processes.
Process and technology are the foundations on which strong businesses are built.
ll good plans.
our business
er-achieved. You
hat, you can’t
important tool
ss Development
siness activity in
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“There’s a big differencebetween seeing anopportunity and seizing
an opportunity” – Pat Guritz
These were the few challenges, which were important. I just want to say that this business
is going to be very big and a lot tougher too. We have to take care of our customers,
people and partners. The world is very competitive. The opportunity is huge;
but it’s not for everybody. The challenges are far-far bigger than opportunities.
But at the end of the day, you have to make the effort. It’s like, unless you die,
you are not going to go to heaven! We promise our support. It is up to you to act.
We invite you to participate in the journey, and profit from it.
Thank you!
12
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108 benefits ofbeing a Motilal Oswal
Sub Broker1. Multiple Business Partner* Models for
diff erent needs
2. One of India's largest networks with reach in
over 591 cities
3. Centralised Specialist Advisory Desk
4. Centralised Client Reactivation Desk
5. Dedicated Business Development Managers
6. Quick Account Opening w ith pre defined TATs
7. Research coverage of more than 240
companies
8. Unique Business Development & Loyalty
Program - Uppermost
9. Pan India CMS tie-up
10. Access to Expert Speakers for Seminars
11. Promoters of MOFSL well recognised and
awarded by the industry
12. Mult iple Financial Products like Equit ies &
# Derivatives, Commod it ies , PMS, Depository
Services, Distribution of Mutual Funds,
Insurance, IPOs under one roof
13. Received 'Best Franchisor Award' in Financial
Services Category f or t wo years in a row-2007
and 2008
14. MOSL ranked as No.1 broker in the ET-NOW
Starmine Analyst Awards 200915. Support for Arbit ration & Legal Matters
16. Annual Conference & Business Partner*
Awards
17. Well Capit alised Balance Sheet
18. Online Risk and Surveillance Software
19. Systematic Transition & Client Migration
Process
20. Direct access to Senior Management
21. Dedicated Local Dealer
22. Money Management solutions fo r clients
23. Customer Prof iling Tools
24. Interaction wi th Research Desk
25. Subscription t o special Research lit erature li ke
Most Wealth, India Strategy Review etc
26. Daily Pan-India conference call wit h Market
Analysts
27. Advice based Online Trading Platf orm
28. Real time disseminations of Research and
Technical Advice
29. Dedicated Risk Management Desk
30. Dedicated Customer Service Desk
31. Quick Query Resolution
32. Capability to handle range of customers -
Retail to Super HNI
33. Online Fund Transfer
34. Pan India Funds Payout within 24 hours
35. DP Slip Punching f acility at the sub-broker's
end
36. Unique Workflow Monitoring Software
37. Trading Soft ware for Technical Analysis
38. Online Portfolio Tracker
39. Mini Admin Terminal
40. Remote Access to Back- office Software
41. Access to DP Software
42. Access to Wealth Manager - the one window
view t o your client's netw orth
43. Single Window login to all Back-office systems
44. Combined Money Pay-out in a single window
for all segments
45. Online Pay-out for off line clients
46. Any time Pay- out punch- in
47. 99.9 % upt ime of Orion Trading terminal
48. State- of- the- art Data Center
49. Low dependency on Int ernet for all
operations related software
50. Tie-up with VSAT vendors for preferred rates
51. Dedicated IT Helpdesk
52. Facility to map Multiple Bank Accounts in
Back off ice
53. Tools for t racking Employee Productivit y
54. Regular Sales Cont ests55. Business Development Analysis & Reports
56. Customised Business Presentations
57. Business Plan Preparat ion
58. Revenue Trackers
59. Lead Management Tools
60. Sales Force Aut omation Tool
61. Marketing Support through National
Campaigns
62. Local Area Marketing & PR Support
63. Well defined and Standardised Branding
Process
64. Unique Look & Feel defined for all outlets
65. Intense Dealer Training modules
66. Advanced Trading Terminal
67. Regular Training Programs and Workshops
68. Dedicated Operations Training69. Training & Certifications
70. One Click Access to Procedures and Circulars
71. SMS Confirmation on daily basis
72. Online IPO & Mutual Funds
73. Business Audit Process
74. Unique Business Process Excellence Team t o
suggest, implement and monito r quality
processes
75. Well defined escalation matrix
76. Strong & Practical Risk Management Practices
77. Confirmation of Trades on Online basis
78. Access to wide range of financial services like
Investment Banking & Private Equity
79. SMS Software to send Bulk SMS
80. Well Respected Brand
81. Knowledge Sharing Platforms
82. Entry to Chairmans Club for top achievers
83. Customised Stat ionery
84. Annual Complete Health Check up**
85. Life Insurance Cover**
86. General Insurance Cover**
87. UpperMOSt BUZZar - a special magazine for
our sub-brokers
88. Socially Responsible Corporate Citizen
89. Welcome Kit to clients
90. Human Resource Development Support
91. Good Infrastructure Support
92. Rated no. 1 in research in Starcom Mediavest
Survey of online users - 2007
93. Winner of CNBC-IT User Award 2008 in t he
financial instit utions category
94. Rated as the Top broking house in terms of
trading terminals as per Dun & Bradstreet
Survey in 2008
95. Ranked the Best Country Research - LocalBrokerage in Asiamoney Brokers Poll - 2007
96. Largest Dealing Room in Ind ia (opened on
11/03/08) endorsed by Limca Book of Records
in 2009
97. Holding Company is a Publicly owned
company listed in both BSE & NSE
98. 10% of paid-up capital of hold ing company
held by PE funds
99. Awarded by BSE as 'Major Volume Driver'
consecutively for the past four years
100. Cutt ing edge technology
101. Special Telephone Tarif fs : Closed User Group
Landline and Mobile
102. Courier Tracking Software
103. Highly Ethical & Transparent business
practices
104. Business managed by Highly Respected
Capital Market Professionals
105. ISO 9001: 2008 Certified Company
106. Access to un ique Annual Wealth Creation
Study done by Mr. Raamdeo Agrawal
107. National Advisory Council for sharing best
business practices and business development
ideas
108. MOSL has highest credit rating for 4.0 Billion
Short term debt Programme
Some of the features mentioned herein could be available only to Business Partners* who meet certain pre-qualifications. MOSL reserves the right to change the benefits from time to time.*Business Partner/ Business Associate/Franchisee means Sub-broker. **Available to top Sub brokers. #Through Motilal Oswal Commodities Broking Pvt. Ltd. Data as on 30th September 2010.
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Revenue growth by 35 times
Terminals increased fivefold
Clients increased by 148%
Grown 10 times in 5 years
Satish Mehta - Partner - Fortune Securities, Mumbai
Manoj Desai - Proprietor - Mihir Investment (Sit-in Remiser), Mumbai
Bhawarlal Agarwalla - Partner - Agarwalla Capitals, Guwahati
300 Clients to 19,000 Clients 18 Offices to 183 OfficesKrishna Narnolia - CMD - Narnolia Securities Ltd., RanchiSuresh Loya - Director / Branch Manager - Prachi Investments Pvt. Ltd., Nasik
Madan Mohan Lohiya - Dominating Partner - Investcare Securities, Jodhpur
Modest beginning with 55 Clients to 6000+ Clients 18 clients to over 4000 clients in 5 yearsVijay Patel - Partner and Business Head, MAS Consultancy, Mehsana Kavish Shah- Proprietor, KRS Investments, Kolkata
Think Big!
tilal Oswal Securities Ltd. Member of NSE and BSEgistered Office: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai 400 064E (Cash): INB231041238, NSE (F&O): INF231041238, BSE (Cash:) INB011041257, BSE (F&O): INF011041257, PMS: INP000000670, CDSL: IN-DP-CDSL-09-99, NSDL: IN-DP-NSDL-152-2000, AMFI:-ARN-17397 Motilal Oswal Commodities Broker Pvt. Ltd. MCX
500, NCDEX CMID MS0114. FMC Unique Membership Code: MCX: MCX/TCM/CORP/0725 & NCDEX:NCDEX/TCM/CORP/0033
For more information: Call:022 – 30896680 I SMS: MOSL Info to 575753 I Email:[email protected] I Visit us at: www.motilaloswal.com
b-brokers affiliated to Motilal Oswal Securities Ltd- Prachi Investments BSE: INS010816531/01-10412 Date of registration: 17-Nov-00 NSE: INS232889738/23-10412 Date of registration: 28-Feb-06. Registered office: 101 Sarda Sankul M. G. Road Nashik-422001Narnolia Securities (PT1200):-BSE: INS011444630/01-10412. Date of registration: 15-Nov-01 NSE: INS231462131/23-10412 Date of registration: 24-Jan-03. Registered office: 9th, India Exchange Plaza, Room No6/7A, Kolkata-700001 West Bengal.Agarwalla Capitals Fortune Securities BSE: INS012518325/01