Zerodha and the zero-sum game

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Technology in the online brokerage world hints at robust architecture, the best software, sophistication, speed and ease of use. This should not be laughed at, given the difficulties encountered by some of the largest financial players in the market. HDFC Securities, for example, is constantly grappling with it, despite being run by India’s best-capitalized and best-managed bank. Therefore, today’s technology is also about content and affiliate or performance marketing programs. While PE-funded start-ups may spend money to “buy” consumer loyalty, acquiring customers is never cheap. The zero-price brokerage model can’t work forever when it costs between 900 and 1,400 yen to acquire a client, industry analysts say, and if the game involves “buying market share,” then anyone with the funds can break this pattern.

There are other obstacles. When capital markets fall, as they usually do for example, 20-30% of a client who has opened a Demat account may simply stop trading instead of rebalancing the portfolio and waiting to see. the return value. Advising clients on how to tackle this is often counterproductive to her income, but Zerodha sees it as a challenge and as a service to help clients, Nithin says. It’s not just a marketing spiel. Products like Nudge and Varsity (we’ll talk about that later) do just that.


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