Digital brokerages - capturing customer emotion and loyalty

Why does digitalisation touch almost every industry that we can think of? Why is digitalisation imperative for companies to stay ahead? The answer almost always has been because of digital disruption – the smaller and leaner and more agile startups, are leveraging digital technologies to push their way to the front in different segments, so traditional companies have to follow suit or risk being made irrelevant.

From out of the broking services industry at least, there is a slightly different rationalisation. CIO of Rakuten Trade, Sekar Jaganathan, explained, “Most customers do not have to time to trade, they don’t have enough time to watch their stocks, and they don’t have enough time to read the stock analysis and chartings and everything.

“They prefer, much more, to have information that is readily available, and this information must be straight to the point, and it should empower them to trade.”

Sekar also believed that e-trading, or electronic trading, or online trading, can capture new emotional and psychological needs of customers (from new perspectives and new operating methodologies that emerge from automation and online trading).

“Digital strategists, digital scientists or people who are running businesses with a digital mindset, are creating new areas of power.

“That means they are taking their companies to new heights, and creating new ways to influence customers, as well as create new areas of sustainability.”

Instead of waiting for customers to trade, a digital platform can enable creation of new trades for customers, Sekar opined.

Platform digitalisation to empower trade

Having over 25 years of experience managing business operations, personnel and information technology, gives Sekar unique insight into the need to achieve operational efficiency and increased business velocity.

He explained that readily available information creates a lot of simplicity to trading. “Because it is simple, they are eager to generate more trades, and more frequently as well.”

Rakuten Trade is the first virtual broker in Malaysia, where there is no customer-facing office. Everything from onboarding the customer, to set up, and the whole KYC (Know Your Customer) process, is done online. This is timely, as Sekar also revealed that local regulators allowed non-face to face onboarding, in early 2015.

The platform approach, has been a crucial element of Rakuten Trade’s strategy – there are analyst tools to generate recommendations that are aggregated, with weightage of risk and profitability over different time frames, and other financial instruments.

What the digital platform enables, is a self-serve approach for their customers; to gain financial knowledge and understanding, and to pick their own stocks to trade. Learning through gamification, is also in the pipeline from Rakuten Trade.

Digitalisation in broking services

Besides convenience and ease-of-use, something else also happens when broking services are digitised.

Sekar said, “In a digitised environment, the organisation becomes volume insensitive. The costs will run, or it will stay fixed, and that’s the opportunity for them to yield higher profitability.

“Obviously, it will reduce operational costs and make the brokerage firms, less labour intensive. These lean transaction cost coverages are further improved by business volume,” he explained.

This way, businesses need not worry about operational readiness, and focus instead, on creating volume and business velocity.

“It also creates customer stickiness, because your advisory to customers can be very much personalised. You know who the customers are on a personal level, based on their behaviour and a lot of data analytics go into this effort as well,” Sekar concluded, adding that digitisation is the only way to capture customers’ emotion within the shortest time possible, and maintain customer loyalty towards that organisation.

(This article was written based on a Market Simplified’s Webinar entitled Digital Transformation in Brokerages)