This article is the first of a two-part feature on Rakuten Trade Sdn Bhd. Stay tuned to Smart Investor for more updates!
The emergence of Rakuten Trade Sdn Bhd as a disruptive force in the Malaysian equity brokerage industry is by no means a coincidence. Its iSPEED.my online stock trading app which is modelled after Rakuten Securities, Inc. Japanese version has been an instant hit particularly among tech-savvy millennial investors given the availability of ‘straight-through access’ coupled with informative features that are deemed useful for on-the-go investors.
After all, the localised mobile app combines onto a single platform industry experience derived from the formidable tie-up of two market leaders – Rakuten Securities (in Japan) and Kenanga Investment Bank Bhd (KIBB). Both Rakuten Securities and KIBB are equal partners in Rakuten Trade.
With simplicity being the unique selling proposition of its online platform, Rakuten Trade managing director Kaoru Arai is not surprised that the app appeals to investors below 40 years old and to first-time investors.
“Buying stocks online via a mobile device is after all identical to ordering merchandise via the Lazada online platform or making a Grab Car booking which has started to appeal to individuals … I would encourage investors to try us out in a smaller trading quantity first. We are confident you will continue to trade with us thereafter.”
Since its inception in May 2017, Rakuten Trade has solidified its position as Malaysia’s only fully-digital online broker. The entire process from signing up for a new account to the commencement of active trading can be completed within two hours (provided you clear the approval process).
As part of the account opening process, applicants need to scan and upload the following documents onto the Rakuten Trade portal:
• Photocopy of identity card (front & back);
• Bank account Statement from a locally incorporated financial institution, and
• Proof of corresponding address (from utility bill, telco bill).
The final step is to deposit money into their trading account and commence trading. Typically, a process like this can take up to two weeks in the case of a conventional trading account given the need to manually filled up and submit the necessary application forms (which includes the opening of a Central Depository System account).
Even investors who open online trading accounts with investment banks are not spared the hassle of driving down to the nearest bank branch to submit documents such as application form, income evidence, utilities bill as well as other necessary documents as required by the banks.
“At the end of the day, it boils down to a volume game for us considering the cost of doing business remains the same regardless if the transaction is big or small,” said Arai. “In no way are we cannibalising the market share of investment banks with our full-fledge online platform but rather we are creating an entirely new market.”
Aside from the user experience, Arai opines that other underlying motivation to embark on mobile stock trading is cost-efficiency and convenience at their fingertips.
“There is no physical intermediaries (remisiers) or broking branches in between, thus minimising the overhead cost/commission for us to pass down to our clients,” he points out. “Our rates are both competitive and transparent … in fact, we boast the lowest brokerage fee in town for both our Cash Upfront and Contra Accounts”
The beauty of offering a completely online app platform is the agility and versatility factor in that it can be easily tweaked or modified to meet local requirements. “We are well positioned to embrace changes in line with market trends to meet our clients’ needs or feedback,” enthuses Arai.
On June 4, Rakuten Trade rolled out its second innovative product, Contra Trading, by offering investors a trading limit up to five times the value of cash and/or collateralised shares.
“Our Contra Trading complements the existing Cash Upfront facility as it gives additional leverage of up to five times to our clients – higher than what is currently offered – yet at low brokerage rates that are the lowest in town,” explains Arai.
“We are confident that this will appeal to our fast growing, digitally-savvy investors as the premise of the new platform was designed based on their feedback and with our clients in mind.”
Very broadly, iSPEED.my provides free access to stock prices (delayed for non-clients) research reports, latest news headlines and videos of investment ideas via YouTube & Facebook.
To encourage more active investors to use the iSPEED. my mobile app as their preferred trading platform, Arai stresses the need for continuous investor education. “Knowledge and trading ideas are shared through our on-site seminars, webinars, research reports and social influencers,” he confirms.
Impressive growth rate
Thanks to its absolute fintech advantage, Rakuten Trade recorded more than 13,000 accounts within the first year of its operations (in May 2018). The numbers have continued grow to more than 20,000 in October this year after the launch of Contra trading and continuously marketing efforts.
Of the existing account holders, 79% of them are below 40 years of age while 45% have no prior trading experience. In May which coincided with its first anniversary, Rakuten Trade recorded RM1 bil in trading value.
“If market conditions are good, then our client growth trajectory will be higher than our expectations, but if market is volatile, then, it will be within our expectations,” reveals Arai. “Surprisingly thus far, investors’ appetite is seen to be huge despite the less impressive equity market conditions regionally and globally.”
To keep its loyal clients a happy lot, Rakuten Trade unveiled its very own rewards eco-system – the first of its kind in Malaysia. Towards this end, the online broker has forged alliances with three leading loyalty providers, namely AirAsia BIG, B Infinite and BonusLink.
Rakuten Trade points can be earned based on broker fees as well as from various marketing exercises, i.e. account opening promotion, share transfer campaign, friend referral programme or the “TWO is Better Than ONE Promotion” (opening two trading accounts at the same time between June 1 and Dec 31 this year entitles the account holder to RM10 rebate and 2,000 Rakuten Trade points upon their first successful trade.).
For more on Rakuten Trade, please click here.