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Zerodha CEO says customer retention is hardest for stockbrokers

Zerodha’s internal data shows about 55% to 60% of users remain active, defined as holding investments in accounts.

Reported · Written up by our desk · India

Zerodha co-founder and CEO Nithin Kamath said one of the biggest challenges for stockbroking platforms is not winning new customers, but keeping them invested. According to Kamath, many investors eventually lose money and stop participating in the markets, a problem that can affect both derivatives traders and equities-only customers.

Kamath said the issue is not confined to high risk futures and options segments. Even equity investors, he noted, can exhaust their trading capital over time, leading to account “blow ups” and making retention difficult for brokerage firms.

He added that brokers are then forced to keep acquiring new users just to maintain the same level of active customers. Kamath cited Zerodha’s internal analysis, saying roughly 55% to 60% of its users stay active, meaning they continue to hold investments in their accounts.

LiveMint Markets reports Kamath also linked higher retention to Zerodha’s customer acquisition approach, saying the firm has largely avoided paid advertising and relied on referrals and organic growth. He argued that heavy advertising can bring in users who open accounts but remain inactive or trade only occasionally.

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