Defining the Business Strategy for a Brokerage Firm

Financial Services Consulting

Client Challenge

The client was amongst the first to offer screen based trading to its sub-brokers via PSTN lines through innovative use of technology and could experience rapid growth (CAGR of 100% since inception). Though it was amongst the first broking firms in India to demonstrate their internet trading engine and obtain approval from SEBI, the company lost the opportunity due to a lack of speedy implementation and an absence of proper organisation structure. Given the fast-changing shape of the global financial services industry, increased competition and an increasing regulatory environment, the company requested UC Strategy to define a clear strategic roadmap and initiatives to sustain growth.

Our Approach

To define the business strategy, UC Strategy adopted the following approach:

  • Studied the global trends to assess the impact of the following on the financial services industry in general and the brokerage industry in particular
    • Increasing use of technology
    • Factors leading to rapid growth in popularity of internet trading in certain parts of the world and its impact on brokerage commissions
    • Regulatory changes
    • Tie-ups between global exchanges to create a global equity market place
    • Evolution of new products/ services/ business models being adopted by successful firms
  • Met over 25 people from the industry and from asset management companies, including sub-brokers and industry experts, to obtain their perspective on various trends emerging in India, such as
    • Internet Trading and its impact on the broking business
    • Emergence of financial services distribution companies
    • Role of advisory services
    • Potential of rural and semi-urban markets and markets for mutual funds and other financial products
  • Studied the internal capabilities of the company and accordingly identified a few strategic decisions and defined the new business model
    • Regional vs. national focus
    • Plain vanilla vs. full range of products and services
    • Retail investors vs traders/ day traders

Our Impact

The client received a list of strategic initiatives to migrate from the existing business model to the new business model along with the implementation plan. UC Strategy also prepared an organisation plan and the job profiles/ responsibilities to support the migrations.

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