Revenues from retail broking could more than double in five years: Bain & Company

According to the consultancy firm Bain & Company, the domestic retail brokerage industry's revenue might more than double over the next five years. The rise of India's mass-affluent and affluent segments, along with rising financial literacy, have propelled this increase.

Thanks to the increased interest sparked by the COVID-19 pandemic, the number of demat accounts has tripled since FY19 and reached an astounding tally of 115 million in FY23, according to a note from Bain & Co.

Revenues from the retail brokerage sector in India have already doubled, from Rs. 14,000 crore (US$ 2.01 billion) in FY19 to Rs. 27,000 crore (US$ 3.28 billion) in the most recent fiscal year—an annualised growth of 17%.

Retail participation in capital markets underwent a sea change during the COVID-19 pandemic, as digital-first players revolutionised the industry. The average revenue per user (ARPU) for the sector, however, decreased from about Rs. 6,000 (US$ 86.24) in FY19 to Rs. 5,000 (US$ 60.85) in FY23, the report added.

Bain & Co. further pointed out that the industry has expanded beyond the top cities as well.

A significant increase in the number of young investors has resulted from improved financial literacy, seamless customer onboarding, and the proliferation of user-friendly digital platforms. Among the 18-30 age range, these investors make up 70-80% of active clients of digital/discount brokers. In a similar vein, the report noted that 70-75% of bank brokers recently acquired clients below the age of 30, despite having lower activation rates

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.