Tangaza Mobile Pay Limited managing director Oscar Ikinu addresses investors during the launch of Suntra Investment Bank’s Smartboss online trading platform early this month. Photo/FREDRICK ONYANGO
The launch of online trading systems by CFC Stanbic Financial Services and Suntra Investment Bank has triggered a race towards automated stockbrokerage, with at least three players planning to set up similar systems early next year.
It is expected that the shift by stockbrokers to internet-based trading, which allows investors to buy and sell shares on their mobile phones and computers, will shorten transaction cycles, cut operating costs and increase trade volumes by attracting more investors to the market, industry players said.
African Alliance Securities and Faida and Drummond Investment banks said they plan to launch online trading platforms early next year, terming the shift inevitable for brokers.
“Market players will have no choice but to create systems that allow clients to operate from home and offices,” said Faida Investment Bank chief executive Bob Karina, adding that online trading will save brokers the costs of opening new branches and other costs of reaching clients.
Mr Karina said they had contracted information technology company Tangaza to design an online trading system similar to Suntra’s.
Drummond Investment Bank executive director King’ori Githinji said improved internet speeds and reduced internet connection costs have catalysed this growth.
Mr Kithinji said Drummond already offers some online services such as taking client orders through e-mails linked to investors’ accounts.
“Once brokers get access to the Nairobi Stock Exchange (NSE) back office system then we’ll move to the next level,” said the African Alliance Securities managing director Lucas Otieno, referring to the ongoing effort to build a seamless online inter-connectivity between brokers and the NSE’s trading system.
Mr Otieno said access to the back office system will reduce the settlement cycle to real time trading.
It currently takes as much as seven days to complete a transaction involving buying or sale of shares and receipt of funds.
Suntra Investment Bank chief executive Michael Gichohi who is also the chairman of the Kenya Association of Stockbrokers Investment Banks said online trading may revolutionalise share trading, similar to the transformation in the mobile phone industry after the launch of the money mobile transfer service a few years ago.
“No one imagined M-Pesa would be as big when it was started,” quipped Mr Gichohi.
Kenyans are fast embracing technology. Mobile phones with applications such as money transfer services have become basic services.
The automated trading systems (ATSs) are intended to enable online trading via mobile phones.
There are an estimated 19 million mobile phone subscribers in Kenya with 13.5 million using the M-Pesa money mobile transfer service by Safaricom.
Brokerage houses tapping even a quarter of M-Pesa users would surpass the estimated 1.8 million accountholders that the Central Depository and Settlement Corporation currently has.
This potential has driven businesses to realign their strategies to harness the power of the mobile phone.
“Companies that intend to remain competitive and in business must embrace technology in their processes,” said Treasury Permanent secretary Joseph Kinyua at Suntra’s Investment Bank’s ATS launch last week.
CFC Stanbic financial services says the new systems have attracted interest from Kenyans living abroad.
“Investors both in the country and those in the diaspora have lauded the launch of the online share trading platform since it provides a convenient and innovative solution to shares trading,” CFC Stanbic Financial Services managing director Nkoregamba Mwebesa said.
He predicted that online trading will eliminate investor queues in future and all trading will be done without the need to go to brokerage offices. NSE is upgrading its back office system estimated to be complete by the end of the first quarter of 2011 at a cost Sh100 million.
Uptake of online trading will transform the role of the stockbroker, said Mr Gichohi.
