Rakuten Trade sees growth in their market share

By Dzof Azmi August 7, 2018

15,000 clients and a billion Ringgit in trades after a year of operations
Plans to target investors new to equity trading who see Rakuten as a lower barrier to entry

Rakuten Trade sees growth in their market share

ONLINE equity broker Rakuten Trade Sdn Bhd has garnered over 15,000 clients after a year of operations, which it says is "better than expected" despite only being a small fraction of an estimated two million stock market investors in Malaysia.

"Every month we acquire around 1,000 (new) clients," said Rakuten Trade managing director Kaoru Arai (pic) in an interview recently. He also noted that they had only recently been named the Fintech Company of the Year at the Malaysia Fintech awards 2018. Just last May, Rakuten Trade celebrated reaching a billion Ringgit in trading.

Rakuten Trade, which was established in May 2017, has a simple proposition: Let people use the Internet to execute and settle trades quickly and easily. To do this Rakuten Trade has leveraged on Rakuten's experience to develop iSPEED.my, a localised online trading mobile app originally developed for Japan.

"Our business is totally online," elaborated Arai. "Rakuten Tokyo doesn't have any sales person, doesn't have any sales branch."

Arai intends to use that same business model in Malaysia given the success borne from it in Japan. "Three hundred fifty people handling 2.5 million clients - that is Internet power!"

The democratisation of investment

Being online also seems to attract a certain kind of clientele. Forty percent of Rakuten's 15,000 customers have never traded before and 80% of them are under 40-years-old.

Arai sees them as Internet-savvy users who are new to stock trading, but never started earlier because the entry barriers were too high. He stresses that new accounts are approved within two hours, and users can then begin trading immediately. Arai calls it a "democratisation of investment".

Another advantage that Rakuten Trade pushes are competitive brokerage fees, calculated at 0.1% of trading value for trades between RM10,000 and RM100,000. (RM100 for trades above RM100,00). "We are the lowest in town," emphasised Arai, adding that they continually check rates to ensure this. "Even though on a transaction basis the margin is a very thin, but our business is a volume game."

Rakuten Trade has also recently introduced Contra Trading where investors can use their existing shares as collateral against other trades, allowing them to trade more than the money they have in their account. (Must be settled three days after a transaction.)

Given that so many of their customers are first-timers, Rakuten has taken the time to implement seminars and training, and wants to encourage more customers to peruse Rakuten's research reports to understand where their investments are going, instead of reacting to rumours in what Arai calls "social network trading".

Although Rakuten Trade will not share their projections for the near future, they did admit that they have to grow. Apart from targeting the young digerati segment that they have already identified, they also note that in Japan many seniors become interested in trading after they retire. As Arai puts it, "Current senior people are more energetic!"

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