A familiar face to Tiger Brokers has returned to take on the top dog position in one of its key markets, Singapore. Amid the crowd of players targeting the same small retail population, new CEO Ian Leong’s challenge is to snatch market share from old and new competitors. However, he also knows the key to sustainable growth is to make the overall market pie bigger.
On Nov 27, 2023, UP Fintech, the Nasdaq-listed holding company of Tiger Brokers, reported another set of improving financial results for its 3QFY2023. Total revenue in the three months ended Sept 30, 2023, was US$70.1 million ($93.79 million), up 26.6% y-o-y, with growth from both brokerage fees it charges clients and interest-related income from holding balances. Net income in the same quarter hit US$13.2 million, up from US$3.3 million in 3QFY2022.
The company added 24,606 funded accounts in the quarter, bringing the total to around 865,000. Its new and existing clients helped result in a net inflow of US$1.5 billion, bringing the total balance to US$18.9 billion, up 45.7% y-o-y. The average net asset inflow for new clients in Singapore was around US$10,000 each.
Among the newly funded accounts in the second quarter of 2023, about 45% originated from Singapore, which shows how fast the brokerage has grown in the country since it opened in 2020.
In just two years, Tiger Brokers achieved a client acquisition of more than 380,000 individuals. In an interview with The Edge Singapore, Leong says it typically takes a broker eight to 10 years to achieve this mass.
Leong’s first stint with the firm was as a business development director of retail between April 2020 and September 2021, after which he became the CEO of competitor uSMART Singapore for two years. With more than 13 years of experience in the brokerage industry, Leong, who took over previous chief Eng Thiam Choon, describes his return to Tiger Brokers last October as a "homecoming".
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Substantial customer base
Since its launch here, Tiger Brokers has won a substantial customer base and external recognition. For example, it was named one of the three best retail brokers last November by the Securities Investors Association (Singapore). The other two winners are Maybank Securities and MooMoo. “I believe what we did right was getting our messaging across to the public, and them having to understand our strengths and what we can offer in their investment journey,” reflects Leong.
The brokerage’s success was likely a combination of factors, including riding the wave of the rise of retail trading interest following the GameStop saga in 2021 and its strategy of offering some of the lowest commission fees among brokerages.
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About 80% of Tiger Brokers’ Singapore clients are between the ages of 21 and 39, and about 80% of its revenue comes from its retail segment, which is keenly invested in US equities. In contrast, most legacy brokerages in Singapore that have been around for 20 to 30 years easily have 70% of their clientele trading in Singapore.
Leong acknowledges that when Tiger Brokers started in 2014, it had a limited product offering. That has now changed, with investors able to trade options, futures, and money market funds, among others, primarily in the US, Hong Kong, Singapore, Australia and China markets.
He says the firm’s consistent focus on deploying technology is another bright spot. Leong positions the brokerage as a “high tech, high touch” company, meaning technology is used to improve its efficiency and give investors a more fruitful investment journey.
Leong adds Tiger Brokers can operate with just a third of the manpower needed compared to other brokers. For example, new clients can be onboarded as quickly as under five minutes through localised payment methods, compared to the manual onboarding process that some legacy brokerages still count on.
Similarly, the Tiger Brokers app features a chatbot enabling customers to connect easily.
In August last year, the group introduced its AI chatbot, TigerGPT. This chatbot assists investors in researching stocks, summarising crucial insights from earning calls, and more, though it stays clear from providing investment advice.
Staying on top of the competition
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Leong believes the firm has continuously helped existing clients make the right call on investments.
But as the concept of being a tech-enabled online brokerage grows in popularity, especially among Tiger Brokers’ newer competitors who have also boasted the deployment of technology from the get-go, Leong will have to find a way to differentiate himself fast. For now, the new CEO predicts that the final differentiator will be a player’s ability to localise and relate to investors in each home market.
Then, when a competitor exited the retail market late last year — a sign of the increasingly tough operating environment for brokerages targetting retail investors — Tiger Brokers saw a “huge spike” in inquiries and balance transfers. Yet, contrary to common perception, Leong does not agree that the retail broking industry is too saturated, and he believes there is still room for growth. “Participation is good, but it can be even better.”
Leong attributes the success to the overall growth in the industry. With the entire sector raising its standards and the Singapore Exchange S68 actively promoting financial literacy, he is confident that an increasing number of individuals will join the ranks of investors, contributing to a continuously expanding market.
But perhaps the new CEO’s efforts to hone Singapore as a key market are part of a larger group strategy. Last May, Tiger Brokers’ parent company was ordered to curtail their services in China further as Beijing sharpened its focus on data security and capital outflows.
Meanwhile, Leong understands what he needs to do to stay on top of the game back home. “I need to anticipate the needs of investors and innovate on solutions and services before investors know they need it, and this is how we keep abreast and relevant in dynamic environments.”
