Zerodha, India’s largest retail broker, will disrupt the asset management industry akin to what it did in the broking business, said its founder and chief executive officer Nithin Kamath. Zerodha received a go-ahead from the market regulator to launch a mutual fund in September this year.
“Most of the fund managers today are unable to beat the benchmark indices and yet are charging steep fees,” Kamath said speaking at the tenth edition of ‘Isha Insight: The DNA of Success’ organised by the Isha Foundation on Thursday. “We will bring more transparency in terms of fees charged by mutual funds.”
Commenting on the technical glitches that Zerodha has experienced in the last few years, he pointed out that every technology platform experiences glitches and even global technology giants like Google and Facebook are no exception to this rule.
“The only problem is when platforms like Zerodha experience glitches, our clients will not be able to trade. This leads to notional profit amongst some clients while few others may make notional losses due to the inability to trade during the glitch,” he said. “The ones who make profit have nothing to complain but the clients who make losses will be irked.”
While social media has helped Zerodha significantly expand its client base, the brokerage has also been at the receiving end of trolling for technical glitches. “Social media is double-edged sword. Even if our platform is down for 30 seconds, we become a trending topic on social media.”
Speaking about the journey of Zerodha, Kamath said the brokerage went from hundred thousand clients in 2016 to 7.5 million currently. Introduction of client onboarding online was one of the major factors that allowed Zerodha to disrupt the broking industry. Until 2016, a client wanting to open a trading account had to fill a 40-page form and submit physical copies to the broker. “Those were the days when the broker with most number of physical branches would get highest number of new clients, and hence, it wasn’t a surprise that the brokerages promoted by large banks were the dominant players,” he said.
But in 2016, post demonetisation, a drive for digitalisation of financial services kick-started. “We were at the right place at the right time. We leveraged this digital push and started onboarding the clients online without the need for any physical documents.” Kamath said.
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