- Zerodha CEO Nithin Kamath cites user retention as a major challenge for Indian brokers
- Many investors lose money and stop participating in the markets, affecting retention, he says
- Brokers must continuously add or re-engage users to maintain active customer bases, adds Kamath
Zerodha founder and CEO Nithin Kamath has highlighted user retention as one of the biggest challenges facing India's broking industry, saying many investors eventually lose money and stop participating in the markets.
“One of the biggest challenges of the broking industry is that retaining users is really, really hard,” Kamath posted on X. He noted that the problem is not restricted to futures and options (F&O) traders but is also visible among other investors participating in the equity market.
Brokers Have To Keep Adding Users
According to Kamath, a large number of market participants eventually “blow up” their accounts, making it difficult for brokerage platforms to maintain a stable base of active customers.
As a result, brokers effectively have to keep adding or re-engaging users simply to maintain their existing active customer base and keep the business steady, he said.
The challenge is particularly significant for an industry where customer acquisition has accelerated in recent years alongside the sharp rise in demat accounts and retail participation in Indian equities.
Zerodha Sees 55-60% Users Remain Active
Kamath also shared data on Zerodha's customer base that he described as surprising. Around 55-60% of the brokerage firm's users remain active, based on the number of customers who continue to have holdings in their accounts.
“We were looking at some statistics, and one of the surprising things we found was that roughly 55-60% of our users are still active,” Kamath said.
Kamath said the best proxy available to the company for comparing this figure with the broader broking industry suggests that retention levels elsewhere are “much, much lower.”
Why Zerodha's Retention May Be Higher
Kamath attributed Zerodha's relatively high proportion of active users partly to its approach towards customer acquisition.
The brokerage has historically stayed away from advertising, which Kamath said means it does not attract as many new users who open accounts but subsequently trade or invest very little.
The comments underline a key challenge for brokerages: rapid growth in account openings does not necessarily translate into a similarly durable base of active investors, making retention an important factor in sustaining the business over the longer term.
Also Read: Zerodha's Nikhil Kamath Explains How Rs 100 In Your Bank Can Become Rs 500 In Economy
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
