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





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



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



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



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



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?



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?



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!



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.



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.



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.



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



“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



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.



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

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Finanicial Services in Next Decade