The realisation of true power of algo-trading will create a domino effect in the market, Prabhakar Tiwari, Angel Broking

Please co-relate your experience at PayU, Marico and CEAT and your responsibilities at Angel Broking and how has your past experience helped in your achievements?
I believe that all experiences – including personal and professional ones – contribute to our performance in a way or the other. In terms of my past experiences, the activities I’ve driven at PayU and via The MargDarshak have been most relevant as a lot of them were specific to the fast-paced fintech industry. However, the handling of a diversified product portfolio at Marico and Avon has been very relevant here at Angel Broking as well. Both brands had a variety of offerings that catered to different segments having dissimilar needs. It’s the same here at Angel Broking as we engage everyone from first-time investors to prolific traders via our suite of products and services. Similarly, at CEAT, I spearheaded marketing across multiple countries, which gave a good spread across different geographies having diverse socioeconomic groups and mindsets. The experience acquired has proven itself to be useful while expanding Angel Broking across tier 2 and tier 3 cities in India. Overall, as I said, all experiences have contributed to the journey.

Please share statistics on, ‘out of the total investor subscribers of your platform, how many are active subscribers and to what extent are they actively trading?
Angel Broking has recently hit the milestone of 5 million registered clients. Out of this, approximately 1.8 million clients were active on NSE as of May 2021 while the majority of others are long-term investors. Our Average Daily Turn Over (ADTO) has consistently increased month after month. It has steadily grown to approximately Rs. 4.8 trillion in May 2021 as compared to Rs. 25 billion in Q1 FY2020, a growth of nearly 19 fold. This is a result of more people joining the digital bandwagon and learning about the art of trading with our concerted training efforts.

Are you able to quantify the active trading subscribers and directly attribute the numbers to the analytics-based recommendations / or prompts provided by your AI, ML engine?
In 2019, Angel Broking completely transitioned to the digital broking format, wherein all new clients have been on-boarded by us digitally. We have deployed Artificial Intelligence (AI) and Machine Learning (ML) engines to improve our client experience and engagement at large. Since AI and ML form the very basis of all our marketing initiatives, the entire activity is primarily driven by them.

What’s your strategy to partner with the fintech ecosystem?
India is a land of enormous opportunities. To give you a perspective, despite the stellar run of the stock market and ever-increasing participation of retail investors, the overall retail participation in India is still very low at just over 4%. This figure has considerable headroom to grow considering that developed markets have nearly 8X of this penetration. Our neighbor China has retail participation of about 3x what it is in India. So, the avenues are simply boundless.

We should capitalize on our burgeoning startup ecosystem and channelize its efforts towards more productive use cases. At the same time, we will be building solutions that could be scaled across the globe as digitization is a global phenomenon. This is the broader idea behind our collaboration. It will lead to a win-win situation for everyone and especially for the retail investors.

In which areas of the retail broking business have you partnered with the fintechs?
So far, our partnerships have ranged from curated investment portfolios to rule-based trading and foreign investments. Angel Broking has an open architecture that allows innovative fintech platforms to link with us seamlessly. It has paved the way for our partnerships with smallcase, Sensibull, Streak, and Vested. We are also expanding the scope of our fintech partnerships with Smart Store, an assortment of fintech solutions.

What kind of API infrastructure have you designed to seamlessly interact with the current fintech partners and also that you can easily onboard more fintechs without worrying about operational issues? 

We have created an open architecture wherein everyone from tech-savvy investors and traders to startups and stock advisories can use our suite of services through our SmartAPI platform. It is very easy to integrate our services into an existing platform using this API infrastructure or build entirely new ones using our historical data, services, and offerings. 

How do you see the competition from discount brokers and where can players like Angel Broking have an edge? How can technology play a role here?
If you’d have a look at the market share of traditional players, it has decreased sharply even as they ably held their fort. It can be said for sure that technological pre-eminence will be the only game-changer going forward. The reason is also clear. More people are coming from tier 2 and tier 3 cities, which typically have minimal market penetration. They prefer the easy-to-use digital ecosystem with curated services rather than the conventional approach. 

At the same time, people want to have more transparency and lower transaction costs. It is why features such as flat fee structures and discount broking have their worth weighed in gold for people. However, once that threshold is met, the differentiation for a person gets down to the very basics, i.e. “which platform offers me the broadest range of services?” In other words, people look for more value for every penny that they invest. Being a fintech broker, this has always been the edge of Angel Broking and is becoming more so as we tread on the technological path. Our client experience is aided by avant-garde technology, wherein our AI- and ML-based engine extend curated services to our clients. It includes personalized advisories and AI-driven services that help them improve their portfolio performance. Angel Broking is also available in the widest range of formats including mobile apps, web platforms, and dedicated software suites, something that adds to the overall client convenience.

How do you see the algo trading business playing out and what’s the development happening there? What are the kinds of fintech startups emerging in this area?
Algo trading has its unique advantages. You see, the market is all about finding inefficiencies and rectifying them. Now, sentiments, biases, as well as errors and omissions themselves add a lot of inefficiencies to the system. This challenge gets immediately solved with algo trading. We believe that once more people realize the true power of algo trading, it will create a domino effect in the market. 

However, the challenge is to ensure that all retail traders tap this burgeoning force in an equitable manner. This is where innovative startups step into the picture. Today, fintech startups have developed solutions such as Streak that enable clients to develop their own algorithms by using simple English as commands. Such solutions then convert the commands into codes, which can be back-tested and immediately deployed by a person. Solutions will become more diverse as more people start tapping this segment.

How do you see the NSE glitch episode and the impact on retail brokerage houses?
Rationally speaking, no system is perfect. Therefore, by extension, technology also has its own limitations. Such limitations can even be at the end of a channel partner, which is far from the control of any organization. Yet, it can have an equal impact. It was what happened with NSE. 

As of now, we are witnessing the consolidation of the digital infrastructure. We are bound to discover several fault lines that we thought never existed. So, should that stop us from innovating or adopting technology? I don’t think so. Only the tech-based systems can scale rapidly and consistently improve themselves to bring intense precision. It’s hard to imagine another system that has the capability to do it. 

However, it does not mean that we should become complacent of such limitations altogether. It’s our responsibility to pre-emptively find and rectify them.