Rochan Pattnayak
Chief Research Officer
Today, big data has long become bulk data. If big data analytics can help win the world cup in 2014, imagine what it can achieve now. Rochan Pattnayak, Chief Research Officer, Choice Equity Broking Private Limited, is on a mission to democratize the benefits of data analytics among equity investors in the country. Having had his baby steps in investment management by keeping track of stock prices and related news for his father at a young age, Rochan today is a stellar C-Suite investment management professional with robust experience and international exposure. Through Choice one of India’s leading full-service broking firms, he guides teams to remain steadfast on core valuation principles and develop data-driven analytical investment research for clients. In an exclusive interview with CEO Insights, Rochan takes us through his journey and the latest endeavors with Choice. Below is an excerpt from the interview.
What inspired you to start your professional journey in the Research domain, and what drives you today as an industry leader?
The two most important days in your life are the day you are born, and the day you find out why-Mark Twain.
During my early teens, my father, a small businessman and an investor in equity markets, used to bring his already-read financial newspapers back home from his office. Back then, we weren’t deluged with vast information from the internet and TV channels across the media. I was often asked to keep a manual record of certain stock prices and related news items, and as time passed, I was gradually inclined to wonder what drove these stock prices. The prices used to move in a rhythm to their own, and I became unrelentingly curious to explore what drove these random movements.
Later, when I joined university, with the assistance of an able professor, I was persuaded to read the work of an economist named John Burr Williams (Theory of Investment Value) and a hugely popular author, Benjamin Graham (Intelligent Investors and Security Analysis). The newfound knowledge allowed me to learn a core underlying principle that the value of a business is the present value of the cash it can distribute to its owners, which in essence is the underlying principle of discounted cashflow valuation used by investors. In addition, this also allowed me to develop a mindset that is very different from that of a speculator, who buys stock in anticipation that it will go up without reference to its value.
Whilst many readers may think that DCF models are not relevant for reasons including high valuations for many startups and companies with negative earnings, as well as the existence of populist stocks, where gains and losses are determined by socialmedia interactions rather than fundamentals, making thinking about cash flows appear quaint.
This topic deserves attention because many practitioners use heuristics for value without recognizing its limitations. At the end of the day, the intrinsic value is determined by the present value of future cash flows, which, in turn, attracts the price like a magnetic force. This means that investors always must keep in mind the value drivers of a discounted cash flow model. It is easy to forget but useful to remember.
Much of my effort is towards guiding our teams to remain steadfast on core valuation principles and develop our data-driven analytical investment research for our clients. I have believed in the concept of harnessing all the elements to win in life, whether it is a sport or a professional endeavor. You may never know what life throws at you, and in the end, you win only by relying on your team’s combined capabilities and tenacity to create brilliance.
Since 2007, I have held several roles across the investment banking and asset management industry, from an equity derivatives analyst to a portfolio manager. Still, my latest challenge has been assisting Choice Equities in building the institutional securities and research business through my contributions as the Head of Research.
How would you define CHOICE as an organization and its position in the market?
Choice Group, listed on NSE and BSE as Choice International (Choice), is a more than a decade-old company under the leadership of CA Kamal Poddar. It is an end-to-end financial services conglomerate. Choice Group has successfully created a fintech ecosystem that combines a suite of platforms under one roof for all financial services.
Choice offers financial services across retail and institutional capital markets, wealth management, corporate and investment banking, and advisory services to state and central governments.
Choice has emerged as India’s top 16th broker on the NSE as per the active users’ list, with over a 3.7x increase in clients during the last fiscal year. AUM for the mutual fund distribution business also increased by 2.8x in the same period.
Core to Choice’s growth strategy has been its customer acquisition initiatives, wherein it has targeted the rising Millennial and GenZ customers across the country. Our transformational journey to adopt digital-first models allowed us to offer seamless online trading platforms, digital wealth management platforms, and other financial products to our clients. Our unrelenting customer service support will enable us to leverage this growth and further strengthen our position in the market.
Enumerate the technologies deployed in your services, and what are your plans to innovate your offerings further? How are you adapting new tools/technologies to revolutionize your services to be at par with current industry standards?
At Choice, as a leading financial services organization, we have embraced digitization and digital innovation as a core business imperative to address priorities across strategic business units and functions. Choice’s technology investments are driven to tap the full potential and unlockmultiple opportunities across their business models, particularly in the areas of customer acquisition, revenue enhancement, cost optimization, and operational effectiveness.
Customer Acquisition: For instance, with the right set of analytics, we are now able to offer structure defined levels of advisory services based on available consumer surpluses. Our initiatives allow us to systematically inject Choice’s research and product development capabilities into client-centric investment services in a cost effective manner and provide a compelling and smarter digital experience via our platforms.
Revenue Enhancement:Our analytics allows for precise customer targeting through both descriptive and predictive analysis. Led by a dedicated team of technology professionals, we now can use behavioral, demographic, and lifestyle data to think ahead of the client in determining the next digital offerings. Initiatives such as these lead to a combination of better digital engagement and smart analytics, which then aids in growing its revenues significantly. These initiatives allow us to develop some counterfactual thinking and prompt us to ask strategic questions such as; What other products and services could we develop? What scenarios might offer opportunities in the future?
Cost Optimization:Middle and back-office costs continue to dampen margins for investment firms across the industry. At Choice, our transformation-led technology deployments have ensured the organization efficiently serves clients across all segments at a lower cost. Furthermore, we have leveraged technology to reduce costs in portfolio management, research and product development, operations, and other support functions while ensuring timely communication and advisory offerings to enhance the offerings for HNW and UHNW clients. Choice continues to lead the way with innovative ideas in this space.
Operational Effectiveness: In my opinion, adopting digital technologies and platforms is not just another silo next to the traditional business model. Instead, when digital initiatives are effectively implemented, they provide a huge opportunity to standardize and simplify processes, identify areas to insource and outsource and work jointly with other partners to create efficiency gains, especially in the middle and back offices.
At Choice, we have deployed our technology investments with a combination of systematic process redesign and integration with legacy infrastructure. These initiatives have laid the foundation where we can truly differentiate our selves.
Going forward, what are the changes in market behavior that you anticipate, and what are the opportunities you foresee? There are majorly three aspects to it.
Navigating amidst challenging market conditions: We are living through a pivotal time in history,
Choice has emerged as India’s top 16th broker on the NSE as per the active users’ list, with over a 3.7x increase in clients during the last fiscal year. AUM for the mutual fund distribution business also increased by 2.8x in the same period.
Core to Choice’s growth strategy has been its customer acquisition initiatives, wherein it has targeted the rising Millennial and GenZ customers across the country. Our transformational journey to adopt digital-first models allowed us to offer seamless online trading platforms, digital wealth management platforms, and other financial products to our clients. Our unrelenting customer service support will enable us to leverage this growth and further strengthen our position in the market.
When digital initiatives are effectively implemented, they provide a huge opportunity to standardize and simplify processes, identify areas to insource and outsource and work jointly with other partners to create efficiency gains, especially in the middle and back offices
Enumerate the technologies deployed in your services, and what are your plans to innovate your offerings further? How are you adapting new tools/technologies to revolutionize your services to be at par with current industry standards?
At Choice, as a leading financial services organization, we have embraced digitization and digital innovation as a core business imperative to address priorities across strategic business units and functions. Choice’s technology investments are driven to tap the full potential and unlockmultiple opportunities across their business models, particularly in the areas of customer acquisition, revenue enhancement, cost optimization, and operational effectiveness.
Customer Acquisition: For instance, with the right set of analytics, we are now able to offer structure defined levels of advisory services based on available consumer surpluses. Our initiatives allow us to systematically inject Choice’s research and product development capabilities into client-centric investment services in a cost effective manner and provide a compelling and smarter digital experience via our platforms.
Revenue Enhancement:Our analytics allows for precise customer targeting through both descriptive and predictive analysis. Led by a dedicated team of technology professionals, we now can use behavioral, demographic, and lifestyle data to think ahead of the client in determining the next digital offerings. Initiatives such as these lead to a combination of better digital engagement and smart analytics, which then aids in growing its revenues significantly. These initiatives allow us to develop some counterfactual thinking and prompt us to ask strategic questions such as; What other products and services could we develop? What scenarios might offer opportunities in the future?
Cost Optimization:Middle and back-office costs continue to dampen margins for investment firms across the industry. At Choice, our transformation-led technology deployments have ensured the organization efficiently serves clients across all segments at a lower cost. Furthermore, we have leveraged technology to reduce costs in portfolio management, research and product development, operations, and other support functions while ensuring timely communication and advisory offerings to enhance the offerings for HNW and UHNW clients. Choice continues to lead the way with innovative ideas in this space.
Operational Effectiveness: In my opinion, adopting digital technologies and platforms is not just another silo next to the traditional business model. Instead, when digital initiatives are effectively implemented, they provide a huge opportunity to standardize and simplify processes, identify areas to insource and outsource and work jointly with other partners to create efficiency gains, especially in the middle and back offices.
At Choice, we have deployed our technology investments with a combination of systematic process redesign and integration with legacy infrastructure. These initiatives have laid the foundation where we can truly differentiate our selves.
Going forward, what are the changes in market behavior that you anticipate, and what are the opportunities you foresee? There are majorly three aspects to it.
Navigating amidst challenging market conditions: We are living through a pivotal time in history,
marked by geopolitical realignment, high inflation, highly volatile capital financial markets, and consequently uneven investment returns. Despite these challenges, I remain optimistic about the investing environment for several reasons. First, there are still signs of growth as the global and domestic economic recovers from the pandemic. Second, I believe corporate earnings will be the driving force of equity markets going forward, as opposed to multiple expansions - marking a return to core fundamentals. Third, I see a moderate slow-down in our economy through till the end of the year. It’s normal. It’s expected. It’s healthy.
In these less predictable times, maintaining a balanced, all-weather portfolio makes sense for investors. Over the medium term, we anticipate increasing allocations towards lower fee products such as indexing products, ETFs and etc. Earlier this year, I reminded investors to keep an eye on valuations and prepare for a market correction. Needless to say, even though market volatility has re-emerged, but that’s no reason to be discouraged. At Choice, we remain confident that we have the right people in place, making decisions based on deep, data driven backed company-specific investment research, which has always formed the basis of our long term investment orientation.
Our focus in these times, has intensified the imperative within our industry to find cost improvements despite the ongoing need to invest in innovation the latest technology, and top-quality human resources.
Innovate to exceed client expectations: With the fate of the increasing competition in the financial services marketplaces, today’s mainstream clients are increasingly seeking services historically reserved for HNI/UNHW clients, such as access to alternative products, sustainable investing, and longterm financial planning. In addition, full service investment and wealth management firms are facing new demands from the next generation of clients that are more focused on the availability and functionality of digital channels. They want much higher levels of transparency and personal involvement in investment decisions. Our focus in these times has intensified the imperative to enhance offering built around a client-centric model.
Regulatory complexity:On the regulatory front, every year seems to bring new validation steps and forms that create more complexity in processes, systems, and interactions between the front office and clients. Greater complexity also means higher costs.
To address these and other evolving challenges, industry participants must explore newer operating models that are considerably more agile and efficient than the ones existing today.
In my opinion, the first step toward developing a renewed model is to clearly define the strategic vision and roadmap for the organization. This plan should include target client segments and sources of competitive advantages – such as product portfolios, advisory capability, and digital access. Once stakeholders are aligned, a target operating model could be redesigned by involving domains such as processes, work structure, and people and organization.
In the light of your strong industry experience, what advice would you give to budding entrepreneurs in this domain?
In these challenging times, the fate of full-service broking, investment banks, wealth management firms, and asset managers has led existing managers to reinvent how they operate to remain competitive in the face of historical market disruptions and competition.
Forthcoming leaders must identify systemic flaws in the traditional operational models and design processes to drive growth by taking three core actions, including (i) aligning their business models to achieve scale via digitized indexing products, and aligning high-value products & customers, (ii) building customer-centric operating models, and (iii) creating agile and integrated teams within business units to achieve topline and productivity growth.
Rochan Pattnayak, Chief Research Officer, Choice Equity Broking
Rochan is a C-Suite investment management professional with an envious track record in (i) Leading capital market research across global markets(US & UK ECM)industry sectors, market capitalization, and asset classes, (ii) Team-building and leadership across organizations in multiple regions, (iii) Implementing data-driven research framework across asset classes, managing relationships with global data vendors, and(iv)Lead in implementing MIS, research process P&L management and leading new business initiatives.
His core achievements include building high-performance cross-functional teams, leading a team of portfolio managers and product development function, and leading the capital markets research across the NSE listed universe. Rochan’s education includes an MBA from the prestigious Indian School of Business and Advanced M&A and Strategic Marketing from Wharton Business School, University of Pennsylvania. He also holds EDP certifications from Stanford GSB.
Hobbies: Reading, Swimming, and Yoga
Favorite Cuisine: Vietnamese
Favorite Book: Good to Great by Jim Collins
Favorite Travel Destination:
London
In these less predictable times, maintaining a balanced, all-weather portfolio makes sense for investors. Over the medium term, we anticipate increasing allocations towards lower fee products such as indexing products, ETFs and etc. Earlier this year, I reminded investors to keep an eye on valuations and prepare for a market correction. Needless to say, even though market volatility has re-emerged, but that’s no reason to be discouraged. At Choice, we remain confident that we have the right people in place, making decisions based on deep, data driven backed company-specific investment research, which has always formed the basis of our long term investment orientation.
Our focus in these times, has intensified the imperative within our industry to find cost improvements despite the ongoing need to invest in innovation the latest technology, and top-quality human resources.
Innovate to exceed client expectations: With the fate of the increasing competition in the financial services marketplaces, today’s mainstream clients are increasingly seeking services historically reserved for HNI/UNHW clients, such as access to alternative products, sustainable investing, and longterm financial planning. In addition, full service investment and wealth management firms are facing new demands from the next generation of clients that are more focused on the availability and functionality of digital channels. They want much higher levels of transparency and personal involvement in investment decisions. Our focus in these times has intensified the imperative to enhance offering built around a client-centric model.
Regulatory complexity:On the regulatory front, every year seems to bring new validation steps and forms that create more complexity in processes, systems, and interactions between the front office and clients. Greater complexity also means higher costs.
To address these and other evolving challenges, industry participants must explore newer operating models that are considerably more agile and efficient than the ones existing today.
In my opinion, the first step toward developing a renewed model is to clearly define the strategic vision and roadmap for the organization. This plan should include target client segments and sources of competitive advantages – such as product portfolios, advisory capability, and digital access. Once stakeholders are aligned, a target operating model could be redesigned by involving domains such as processes, work structure, and people and organization.
In the light of your strong industry experience, what advice would you give to budding entrepreneurs in this domain?
In these challenging times, the fate of full-service broking, investment banks, wealth management firms, and asset managers has led existing managers to reinvent how they operate to remain competitive in the face of historical market disruptions and competition.
Forthcoming leaders must identify systemic flaws in the traditional operational models and design processes to drive growth by taking three core actions, including (i) aligning their business models to achieve scale via digitized indexing products, and aligning high-value products & customers, (ii) building customer-centric operating models, and (iii) creating agile and integrated teams within business units to achieve topline and productivity growth.
Rochan Pattnayak, Chief Research Officer, Choice Equity Broking
Rochan is a C-Suite investment management professional with an envious track record in (i) Leading capital market research across global markets(US & UK ECM)industry sectors, market capitalization, and asset classes, (ii) Team-building and leadership across organizations in multiple regions, (iii) Implementing data-driven research framework across asset classes, managing relationships with global data vendors, and(iv)Lead in implementing MIS, research process P&L management and leading new business initiatives.
His core achievements include building high-performance cross-functional teams, leading a team of portfolio managers and product development function, and leading the capital markets research across the NSE listed universe. Rochan’s education includes an MBA from the prestigious Indian School of Business and Advanced M&A and Strategic Marketing from Wharton Business School, University of Pennsylvania. He also holds EDP certifications from Stanford GSB.
Hobbies: Reading, Swimming, and Yoga
Favorite Cuisine: Vietnamese
Favorite Book: Good to Great by Jim Collins
Favorite Travel Destination:
London