Zerodha, one of India's leading discount brokers, has unveiled a new feature on its Kite platform, allowing resident individual investors to open a secondary demat account. This innovative offering aims to provide users with greater flexibility in managing their investment portfolios.

Key Features of the Secondary Demat Account

• Account Opening: Investors can now open an additional demat account using the same mobile number through Zerodha's Console platform.
• Portfolio Segregation: The feature enables users to separate long-term holdings from short-term trades, facilitating better organization of investments.
• Visibility: Securities held in the secondary account will not appear on the Kite trading app but will remain visible on the Console platform.
• Inter-Account Transfers: Investors can transfer shares between their primary and secondary accounts online.

Fees and Charges

Availability and Limitations

• The service is currently available only to resident individual accounts.
• NRIs, corporates, partnerships, and HUF accounts are not eligible for this feature at present.

Market Position and Strategy

Zerodha, serving nearly 8 million active users, holds the position of the second-largest broker by active users in India, following Groww. The introduction of the secondary demat account feature appears to be a strategic move aimed at:

1. Enhancing user engagement by offering more account management options.
2. Generating additional revenue through transfer fees and maintenance charges.
3. Providing a competitive edge in the rapidly evolving discount brokerage market.

This new offering by Zerodha demonstrates the company's commitment to innovation and meeting the diverse needs of individual investors. As the brokerage landscape in India continues to evolve, such features may become increasingly important for attracting and retaining customers in a highly competitive market.

Nithin Kamath, founder and CEO of Zerodha, has revealed that the discount broker's impressive growth is primarily driven by customer referrals and word-of-mouth rather than traditional advertising methods. This strategy has propelled Zerodha to become India's largest stock brokerage without relying on heavy advertising expenditure.

The Power of Referrals

Zerodha launched its referral program in 2010, which has undergone several changes due to regulations set by the Securities and Exchange Board of India (SEBI). Despite these regulatory shifts, the program has continued to contribute significantly to the company's growth.

Kamath noted that even after SEBI disallowed cash-based referral incentives in 2018-19, which led to a significant drop in referrals, the company has maintained a steady influx of new accounts. Remarkably, Zerodha currently offers no referral incentives, yet continues to benefit from customer recommendations.

Invisible Growth Drivers

The CEO emphasized that a large portion of new customers come from indirect referrals, which are not captured in visible data. This hidden network effect has been crucial to Zerodha's expansion in the competitive brokerage market.

Customer Loyalty: Zerodha's 'Superpower'

Kamath attributes Zerodha's success to what he calls the company's 'real superpower' - customer loyalty. This loyalty has enabled Zerodha to achieve its market-leading position without resorting to expensive traditional advertising campaigns.

Addressing Market Share and Future Growth

While Zerodha has experienced some losses in demat market share, Kamath revealed that the company is actively addressing this issue through content creation initiatives. Despite these challenges, he noted that Zerodha's assets under management continue to grow, indicating strong customer trust and retention.

Conclusion

In an industry often dominated by aggressive marketing tactics, Zerodha's growth story stands out as a testament to the power of customer satisfaction and organic referrals. As the company continues to evolve, it appears to be maintaining its focus on customer-centric growth strategies rather than traditional advertising methods.