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By Motilal Oswal

CMD, Motilal Oswal Financial Services Ltd

Financial
Services
in the next
decade.
The Business
Challenge and
Opportunity
The 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 Big
Opportunity 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.

COUNTRY INVESTORS POPULATION %

China 152 1,325 11%

Korea 4.6 47 10%

India 16 1.190 1%

All figures in million

2
Knowledge First
Invest 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?
The Intermediation
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.


Opportunity
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 look at the broking business size; in 2009-10 ` 11700 crores of brokerage was generated. Now, the big
If you don’t like reading, then spend time with those people who are smarter and better than you. picture -10 years down the line, the annual brokerage is estimated to be ` 65000 crores. There is huge growth
Tomorrow the customer may ask you different questions which you haven’t heard of. expected in mutual funds distribution commissions and insurance distribution commissions as well. The goal
Knowledge is important. And there is no shortcut. 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!

5x

11,482

3x
55,860

6x 2219
65,000
19,502
11,728

FY10 FY20E

Equity Broking Life Insurance Mutual Fund


commission distribution
` in crores

10 3
The Market is
10 times bigger than
you think it is
We 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 big; 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 Relationships
If 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?

5
Are you actively
looking for new
clients?
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?

6
Sales, sales and
cross 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 very

fast 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!

7
Maintaining Strong
Client Relationships
From Broker If you think the current market is competitive; you haven’t seen anything yet. Everyone is looking to

to Financial Planner
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

Brokerage stand-alone is not going to add more value. So more important is value addition. investible corpus, what is their risk appetite, what are their returns expectations. Once you have this

So please, upgrade your skills, don’t think of yourself as a broker or a discounted broker. vital insight; you will be better equipped to go about fulfilling their needs. The more a customer

5 years down the line, there would be 50 lakh crores of savings every year. Right now its believes you understand his needs; the more business he will give you. Organic growth from current

20 lakh crores. Most of it goes into fixed income and small savings. What share of this wallet do we want to get? customers is one of the most efficient ways to grow your business.

Do you have an organic growth strategy?


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.

8 5
Have you invested in
people?
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.

9
Knowledge First
Invest 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.

10
Technology and
Processes
We 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.

Compliance and
Risk Management
It 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 Progress
Set 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.


er-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
ess Development

Reports (BDR) in UpperMOSt are an invaluable tool that help track business
usiness activity in

detail and help channelise your efforts better.

We get what we inspect, not just what we expect.

11
“There’s a big difference
between seeing an
opportunity 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 of
being a Motilal Oswal
Sub Broker
1. Multiple Business Partner* Models for 35. DP Slip Punching facility at the sub-broker's 77. Confirmation of Trades on Online basis
different needs end 78. Access to wide range of financial services like
2. One of India's largest networks with reach in 36. Unique Workflow Monitoring Software Investment Banking & Private Equity
over 591 cities 37. Trading Software for Technical Analysis 79. SMS Software to send Bulk SMS
3. Centralised Specialist Advisory Desk 38. Online Portfolio Tracker 80. Well Respected Brand
4. Centralised Client Reactivation Desk 39. Mini Admin Terminal 81. Knowledge Sharing Platforms
5. Dedicated Business Development Managers 40. Remote Access to Back- office Software 82. Entry to Chairmans Club for top achievers
6. Quick Account Opening with pre defined TATs 41. Access to DP Software 83. Customised Stationery
7. Research coverage of more than 240 42. Access to Wealth Manager - the one window 84. Annual Complete Health Check up**
companies view to your client's networth 85. Life Insurance Cover**
8. Unique Business Development & Loyalty 43. Single Window login to all Back-office systems 86. General Insurance Cover**
Program - Uppermost 44. Combined Money Pay-out in a single window 87. UpperMOSt BUZZar - a special magazine for
9. Pan India CMS tie-up for all segments our sub-brokers
10. Access to Expert Speakers for Seminars 45. Online Pay-out for offline clients 88. Socially Responsible Corporate Citizen
11. Promoters of MOFSL well recognised and 46. Any time Pay- out punch- in 89. Welcome Kit to clients
awarded by the industry 47. 99.9 % uptime of Orion Trading terminal 90. Human Resource Development Support
12. Multiple Financial Products like Equities & 48. State- of- the- art Data Center 91. Good Infrastructure Support
#
Derivatives, Commodities , PMS, Depository 49. Low dependency on Internet for all 92. Rated no. 1 in research in Starcom Mediavest
Services, Distribution of Mutual Funds, operations related software Survey of online users - 2007
Insurance, IPOs under one roof 50. Tie-up with VSAT vendors for preferred rates 93. Winner of CNBC-IT User Award 2008 in the
13. Received 'Best Franchisor Award' in Financial 51. Dedicated IT Helpdesk financial institutions category
Services Category for two years in a row-2007 52. Facility to map Multiple Bank Accounts in 94. Rated as the Top broking house in terms of
and 2008 Back office trading terminals as per Dun & Bradstreet
14. MOSL ranked as No.1 broker in the ET-NOW 53. Tools for tracking Employee Productivity Survey in 2008
Starmine Analyst Awards 2009 54. Regular Sales Contests 95. Ranked the Best Country Research - Local
15. Support for Arbitration & Legal Matters 55. Business Development Analysis & Reports Brokerage in Asiamoney Brokers Poll - 2007
16. Annual Conference & Business Partner* 56. Customised Business Presentations 96. Largest Dealing Room in India (opened on
Awards 57. Business Plan Preparation 11/03/08) endorsed by Limca Book of Records
17. Well Capitalised Balance Sheet 58. Revenue Trackers in 2009
18. Online Risk and Surveillance Software 59. Lead Management Tools 97. Holding Company is a Publicly owned
19. Systematic Transition & Client Migration 60. Sales Force Automation Tool company listed in both BSE & NSE
Process 61. Marketing Support through National 98. 10% of paid-up capital of holding company
20. Direct access to Senior Management Campaigns held by PE funds
21. Dedicated Local Dealer 62. Local Area Marketing & PR Support 99. Awarded by BSE as 'Major Volume Driver'
22. Money Management solutions for clients 63. Well defined and Standardised Branding consecutively for the past four years
23. Customer Profiling Tools Process 100. Cutting edge technology
24. Interaction with Research Desk 64. Unique Look & Feel defined for all outlets 101. Special Telephone Tariffs : Closed User Group
25. Subscription to special Research literature like 65. Intense Dealer Training modules Landline and Mobile
Most Wealth, India Strategy Review etc 66. Advanced Trading Terminal 102. Courier Tracking Software
26. Daily Pan-India conference call with Market 67. Regular Training Programs and Workshops 103. Highly Ethical & Transparent business
Analysts 68. Dedicated Operations Training practices
27. Advice based Online Trading Platform 69. Training & Certifications 104. Business managed by Highly Respected
28. Real time disseminations of Research and 70. One Click Access to Procedures and Circulars Capital Market Professionals
Technical Advice 71. SMS Confirmation on daily basis 105. ISO 9001: 2008 Certified Company
29. Dedicated Risk Management Desk 72. Online IPO & Mutual Funds 106. Access to unique Annual Wealth Creation
30. Dedicated Customer Service Desk 73. Business Audit Process Study done by Mr. Raamdeo Agrawal
31. Quick Query Resolution 74. Unique Business Process Excellence Team to 107. National Advisory Council for sharing best
32. Capability to handle range of customers - suggest, implement and monitor quality business practices and business development
Retail to Super HNI processes ideas
33. Online Fund Transfer 75. Well defined escalation matrix 108. MOSL has highest credit rating for 4.0 Billion
34. Pan India Funds Payout within 24 hours 76. Strong & Practical Risk Management Practices 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.
300 Clients to 19,000 Clients 18 Offices to 183 Offices
Suresh Loya - Director / Branch Manager - Prachi Investments Pvt. Ltd., Nasik Krishna Narnolia - CMD - Narnolia Securities Ltd., Ranchi

Revenue growth by 35 times Clients increased by 148%


Bhawarlal Agarwalla - Partner - Agarwalla Capitals, Guwahati Satish Mehta - Partner - Fortune Securities, Mumbai

Terminals increased fivefold Grown 10 times in 5 years


Manoj Desai - Proprietor - Mihir Investment (Sit-in Remiser), Mumbai Madan Mohan Lohiya - Dominating Partner - Investcare Securities, Jodhpur

Modest beginning with 55 Clients to 6000+ Clients 18 clients to over 4000 clients in 5 years
Vijay Patel - Partner and Business Head, MAS Consultancy, Mehsana Kavish Shah- Proprietor, KRS Investments, Kolkata

Think Big!
For more information: Call:022 – 30896680 I SMS: MOSL Info to 575753 I Email:info@motilaloswal.com I Visit us at: www.motilaloswal.com
Motilal Oswal Securities Ltd. Member of NSE and BSE
Registered Office: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai 400 064
NSE (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
29500, NCDEX CMID MS0114. FMC Unique Membership Code: MCX: MCX/TCM/CORP/0725 & NCDEX:NCDEX/TCM/CORP/0033
Sub-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-422001
4HOHYHZO[YH‹Narnolia 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):,!05:+H[LVMYLNPZ[YH[PVU! 6J[5:,!05: +H[LVMYLNPZ[YH[PVU!:LW9LNPZ[LYLKVMMPJL!Z[-SVVY/HYPIHS9V`4HYRL[(;9VHK.\^HOH[P‹Fortune Securities BSE: INS012518325/01-
+H[LVMYLNPZ[YH[PVU!1HU5:,!05:+H[LVMYLNPZ[YH[PVU!1HU9LNPZ[LYLKVMMPJL!7HY]H[P*VVW/ZN:VJ3[K.H\ZOHSH3HUL6WW9HTSLLSH4HPKHU4HSHK,4\TIHP ‹Mihir Investments BSE INS011909418/01-10412
+H[LVMYLNPZ[YH[PVU!(WY5:,!05: +H[LVMYLNPZ[YH[PVU!4HY9LNPZ[LYLKVMMPJL!+H[[HUP;YHKL*LU[LYZ[-SVVY*OHUKH]HYRHY9K)VYP]HSP>4\TIHP ‹Investcare Securities BSE INS011378226/01-10412 Date of
YLNPZ[YH[PVU!(\N5:,!05: +H[LVMYLNPZ[YH[PVU!5V]9LNPZ[LYLKVMMPJL!.VSL)SKN9VHK1HSVYP.H[L1VKOW\Y‹MAS Consultancy BSE: INS013580829/01-10412 Date of registration: 10-Apr-07 NSE: INS233737027/23-10412 Date
VMYLNPZ[YH[PVU!4H`9LNPZ[LYLKVMMPJL! <S(WVSV,UJHS]L6WW:PTHUKOHY;LTWSLOPNO^H`4VKOLYH9VHK4LOZHUH.\QHYH[‹KRS Investments BSE: INS012778218/01-10412 Date of registration: 31-Jan-06 NSE: INS232323019/23-10412 Date of
registration: 17-Nov-05. Registered office:3A, Pollock Street, 3rd Floor, Kolkata- 700001