By Motilal Oswal CMD, Motilal Oswal Financial Services Ltd. Financial. Services. in the next. decade.

Transcription

1 By Motilal Oswal CMD, Motilal Oswal Financial Services Ltd Financial Services in the next decade.

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3 The Business Challenge and Opportunity The 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

4 The Big Opportunity 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 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. COUNTRY INVESTORS POPULATION % China 152 1,325 11% Korea % India % All figures in million 2

5 3 The Intermediation Opportunity If you look at the broking business size; in ` crores of brokerage was generated. Now, the big picture -10 years down the line, the annual brokerage is estimated to be ` 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! 5x 11,482 3x 55,860 6x ,502 11,728 FY10 65,000 FY20E Equity Broking ` in crores Life Insurance commission Mutual Fund distribution

6 The Market is 10 times bigger than you think it is We 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 big; 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 sq. feet. We are talking about a 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

7 Maintaining Strong Client Relationships If 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? 5

8 Are you actively looking for new clients? 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? 6

9 Sales, sales and cross 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 very fast 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! 7

10 8 From Broker to Financial Planner Brokerage 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.

11 Have you invested in people? 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. 9

12 Knowledge First Invest 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. 10

13 Technology and Processes We 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. Compliance and Risk Management It 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 Progress Set 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. 11

14 There s a big difference between seeing an opportunity 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

15 108 benefits of being a Motilal Oswal Sub Broker 1. Multiple Business Partner* Models for different 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 with 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. Multiple Financial Products like Equities & # Derivatives, Commodities, PMS, Depository Services, Distribution of Mutual Funds, Insurance, IPOs under one roof 13. Received 'Best Franchisor Award' in Financial Services Category for two years in a row-2007 and MOSL ranked as No.1 broker in the ET-NOW Starmine Analyst Awards Support for Arbitration & Legal Matters 16. Annual Conference & Business Partner* Awards 17. Well Capitalised 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 for clients 23. Customer Profiling Tools 24. Interaction with Research Desk 25. Subscription to special Research literature like Most Wealth, India Strategy Review etc 26. Daily Pan-India conference call with Market Analysts 27. Advice based Online Trading Platform 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 facility at the sub-broker's end 36. Unique Workflow Monitoring Software 37. Trading Software 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 to your client's networth 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 offline clients 46. Any time Pay- out punch- in % uptime of Orion Trading terminal 48. State- of- the- art Data Center 49. Low dependency on Internet 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 office 53. Tools for tracking Employee Productivity 54. Regular Sales Contests 55. Business Development Analysis & Reports 56. Customised Business Presentations 57. Business Plan Preparation 58. Revenue Trackers 59. Lead Management Tools 60. Sales Force Automation 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 Training 69. 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 to suggest, implement and monitor 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 Stationery 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 Winner of CNBC-IT User Award 2008 in the financial institutions category 94. Rated as the Top broking house in terms of trading terminals as per Dun & Bradstreet Survey in Ranked the Best Country Research - Local Brokerage in Asiamoney Brokers Poll Largest Dealing Room in India (opened on 11/03/08) endorsed by Limca Book of Records in Holding Company is a Publicly owned company listed in both BSE & NSE % of paid-up capital of holding company held by PE funds 99. Awarded by BSE as 'Major Volume Driver' consecutively for the past four years 100. Cutting edge technology 101. Special Telephone Tariffs : 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 unique 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 30 th September 2010.

16 300 Clients to 19,000 Clients 18 Offices to 183 Offices Suresh Loya - Director / Branch Manager - Prachi Investments Pvt. Ltd., Nasik Krishna Narnolia - CMD - Narnolia Securities Ltd., Ranchi Revenue growth by 35 times Bhawarlal Agarwalla - Partner - Agarwalla Capitals, Guwahati Clients increased by 148% Satish Mehta - Partner - Fortune Securities, Mumbai Terminals increased fivefold Manoj Desai - Proprietor - Mihir Investment (Sit-in Remiser), Mumbai Grown 10 times in 5 years Madan Mohan Lohiya - Dominating Partner - Investcare Securities, Jodhpur Modest beginning with 55 Clients to Clients Vijay Patel - Partner and Business Head, MAS Consultancy, Mehsana 18 clients to over 4000 clients in 5 years Kavish Shah- Proprietor, KRS Investments, Kolkata Think Big! For more information: Call: I SMS: MOSL Info to I info@motilaloswal.com I Visit us at: Motilal Oswal Securities Ltd. Member of NSE and BSE Registered Office: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai NSE (Cash): INB , NSE (F&O): INF , BSE (Cash:) INB , BSE (F&O): INF , PMS: INP , CDSL: IN-DP-CDSL-09-99, NSDL: IN-DP-NSDL , AMFI:-ARN Motilal Oswal Commodities Broker Pvt. Ltd. MCX 29500, NCDEX CMID MS0114. FMC Unique Membership Code: MCX: MCX/TCM/CORP/0725 & NCDEX:NCDEX/TCM/CORP/0033 Sub-brokers affiliated to Motilal Oswal Securities Ltd-Prachi Investments BSE: INS / Date of registration: 17-Nov-00 NSE: INS / Date of registration: 28-Feb-06. Registered office: 101 Sarda Sankul M. G. Road Nashik Narnolia Securities (PT1200):-BSE: INS / Date of registration: 15-Nov-01 NSE: INS / Date of registration: 24-Jan-03. Registered office: 9th, India Exchange Plaza, Room No6/7A, Kolkata West Bengal. Agarwalla Capitals Fortune Securities BSE: INS /01- Mihir Investments BSE INS / Investcare Securities BSE INS / Date of MAS Consultancy BSE: INS / Date of registration: 10-Apr-07 NSE: INS / Date KRS Investments BSE: INS / Date of registration: 31-Jan-06 NSE: INS / Date of registration: 17-Nov-05. Registered office:3a, Pollock Street, 3rd Floor, Kolkata