Building for digital native investors: The rise of Angel One as an online broking company
Retail broking company Angel One has successfully transitioned from a traditional way of running its business to completely digital platforms and growing its customer base to over two crore.
In 1996, when Dinesh Thakkar started a stock broking company—Angel Broking, now known as Angel One—from a small office in Mumbai, investment in India was available to a few and was conducted via terminals located in various parts of the country.
For retail investors, this process was especially tedious since it meant going to stock broking offices and signing papers for transactions.
Today, this happens at the click of a button as the internet has democratised stock market trading, pulling in a large number of retail investors.
The rise in the number of demat accounts since the pandemic is a testimony to this change. In FY19, the number of demat accounts stood at 3.5 crore and grew to 11.4 crore in FY23. The number of demat accounts in the country as of December 2023 stands at 13.93 crore.
Angel One has not only kept up with this drastic shift but has also created a space for itself in the online stock broking market.
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The company began its digital journey in 2019. “We were ready to embrace that change and be cognizant of it culturally. The focus was how do we bring technology and product at the forefront of execution to drive business,” says Prateek Mehta, chief business officer, Angel One, in a conversation with Enterprise Story.
This shift has paid rich dividends for Angel One: its client base has increased from 1.8 million in FY19-20 to 13.8 million in FY22-23.
Today, Angel One holds the number three position—after and , both of which are digitally native platforms—in terms of active clients on NSE.
At the end of December 2023, Groww had an active customer base of 7.6 million followed by Zerodha at 6.7 million and Angel One at 5.3 million.
The data on rate of growth, in terms of active user numbers, is interesting. Until September 2023, Zerodha led the pack. However, Groww saw a 73% rise in active users between June and December 2023. For Zerodha, this number flatlined at 3% and for Angel One, it was around 32% during the same period.
Angel One went public in October 2020. For FY23, it registered a revenue of Rs 3,021 crore, a growth of 31.5% while the net profit touched Rs 890 crore, a rise of 42.4%.
In comparison, Groww’s net profit in FY23 stood at Rs 73 crore and Zerodha was at Rs 2,907 crore.
According to Mehta, a combination of factors such as penetration of broadband, Aadhaar, UPI (Unified Payments Interface), remote work due to the COVID-19 pandemic increased the number of people entering into stock market trading and mutual fund investments.
Playbook
Angel One says it aims to implement technology solutions that make the journey of the investor as smooth as possible.
“We have been building the right stuff offering convenience at the right price point solving for multiple needs of the customer,” says Mehta.
He puts the customers, especially those focused on the stock market into three buckets: trader, investor and novice. Each of these categories have their own requirements.
A trader is generally a seasoned operator in the market who looks for speed, convenience and reliability. In the case of an investor, the requirement is around information and insights about the market. For the novice, the platform guides them through the paces of investing.
“We have offerings which are relevant to all categories of customers,” remarks Mehta.
According to Mehta, even incremental improvements go a long way in retaining the customer. For example, a small improvement in the time taken for a trade to be executed makes a big difference.
And, this focus on user experience is its USP.
“These things are tech specifications and it is extremely difficult for everyone to do,” says Mehta.
The chief business officer of Angel One says its various technology solutions have brought multiple benefits, which include having a high lifetime value of the customer. Mehta says the company makes eight times more than what it spends on acquiring the customer and has strong revenue retention.
He adds that the majority of its customers remain for five years and longer. “We have perfected the art of getting the customers at the right economics,” he says.
Today, the average age of customers on Angel One’s platform is around 29 and it has a strong traction from the Tier II and beyond markets. Most importantly, more than 40% of its customers are below the age of 25, giving it the opportunity to retain them for a longer period.
Last November, Angel One acquired Bengaluru based fintech startup DStreet Finance for an undisclosed amount. The primary aim of this acquisition, the company says, was to get a deeper connection with the younger generation— specifically GenZ — through specific content and education.
The company says it charges customers under various slabs and is comparable in rates to other discount brokers in the market.
Building a super app
Today Angel One calls itself a financial super app whose activity spreads across stock markets, mutual funds, insurance and lending. The number of new SIPs in mutual funds in January 2024 was around 4,85,000 as compared to 28,000 last January.
In January 2024, Angel One had a total customer base of 20.43 million, a year-on-year growth of 58.5%.
The gross client acquisition for Angel One stood at 1.03 million in January, 2024 as compared with 0.39 million in the similar period a year ago, a rise of 162.7%.
“We will build everything because there is a space to be an integrated financial services player,” says Mehta.
“We believe that there are billion plus aspirations of Indians and we want to service via financial services using data and tech,” says Mehta.
The company has a 600-member technology team spread across Mumbai, Bengaluru and New Delhi.
Edited by Affirunisa Kankudti