Digital Transformation in the Stockbroking Industry and its Role in Strong Retail Investor Participation in the Indian Stock Market

Abstract

The Indian stock market is experiencing a dramatic change in its investor participation structure by way of increased involvement of retail investors, especially after the introduction of various technology-backed mobile investment apps. The digital transformation in the stockbroking industry paved the way for attracting more retail investors through their investment apps, reduced investment costs like commission, Demat charges, and developments in the digital payment modes in India. The total Demat account holders of CDSL and NSDL combined crossed over 90 million as of 31st March 2022. The introduction of the concept of technology-backed discount stockbroking accelerated the competition in the stockbroking industry thereby compelling the traditional full-service brokers to switch from their outdated telephone-based trading arrangement to technology-backed trading arrangements for their investors. The real-time trading opportunities by monitoring the real-time price movements of securities helped retail investors to build their investment portfolios. Even though the digital transformation in the stockbroking industry is attracting more retail investors, retail participation in the Indian stock market is still very low compared to other developed and developing economies. By overcoming the various challenges that restrict individuals from investing in securities, the Indian stock market can experience a further increase in the overall retail investor participation. Drifting the savings of retail investors to the stock market instruments will strengthen the cashflows in the stock market.