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“The sales department used to be overcrowded, with customers begging brokers to open accounts, but now it’s the other way around.”A senior person in the brokerage business of a securities firm told the reporter of "Vguan Financial Report". In his opinion, now is a stage where the stock competition among securities firms is quite fierce. It is not easy to maintain the operation of a business department. It is almost impossible to survive without reform and innovation.

Just recently,Everbright SecuritiesThe announcement decided to close the Beijing Xizhimen and Beijing Yonganli sales offices. According to statistics,In the past two months, it has announced the closure of 10 business departments.In addition to Everbright Securities, many other securities firms have also “slimmed down” their sales departments this year. Where will the transformation of securities firms’ sales departments go?

Everbright Securities announced the closure of 10 business offices in two months

After the announcement on August 3, "V View Financial Report" recently visited the two former locations of Everbright Securities' branches in Beijing.

The doors of the Yong'anli branch are locked. A cancellation notice posted on the glass door of the former entrance shows that the branch, which was established on December 28, 2018, had been decided to be cancelled as early as April 22 this year. The announcement stated that the customers of the branch will be transferred to the Beijing Chaoyang Road branch of Everbright Securities as a whole. If they do not agree to be transferred to the latter's customers, "they can apply to transfer to other securities branches of our company or to branches of other securities companies." The announcement reminded that from April 22 to June 3, the branch can still handle on-site services such as account cancellation, cancellation of designation, transfer of custody, and changes in customer information; from June 7, the branch will be officially closed and will no longer handle any business.

The former Yong'anli branch of Everbright Securities. V-view financial report. Photo by Ding Dan

At the Xizhimen Sales Department, "V View Financial Report" also saw a scene similar to that of the Yong'anli Sales Department. The cancellation notice of the Xizhimen Sales Department showed thatThe business department was established on July 26, 2017, and the decision to cancel it was also made on April 22 this year., all customers will be transferred to Everbright Securities’ Beijing Sijiqing Branch, etc.

Former Xizhimen Sales Department of Everbright Securities. V-view financial report Photo by Ding Dan

It is worth mentioning that Everbright Securities has issued four announcements to cancel business offices in the past two months, canceling a total of 10 business offices. The remaining eight are Guangzhou Tianhe North Road Business Office, Guangzhou Pazhou Business Office, Maoming Xiyuenan Road Business Office, Taicang Taiping Road Business Office, Jinan Longao West Road Business Office, Shenzhen Menghai Avenue Business Office, Hangzhou Xueyuan Road Business Office, and Hangzhou Xinye Road Business Office. As for the reason for the cancellation, the four announcements all stated that it was "to further optimize the layout of business outlets." In the whole year of 2023, Everbright Securities canceled a total of 4 business offices and added 1 new business office.

Everbright Securities is not the only one to "reduce" its branch offices.Hongta SecuritiesOn April 23, it announced the closure of two business departments;Caitong SecuritiesOn May 31, it was announced that one business department would be closed;Western SecuritiesOn July 11, it was announced that one business department would be closed;Tianfeng SecuritiesOn July 14, it announced the closure of three sales offices. In addition,CITIC Securities、Founder Securities, SDIC Securities, and Donghai Securities have also issued announcements of closing branches this year, of which SDIC Securities has closed 36 branches. CITIC Securities and Donghai Securities have added branches this year, with CITIC Securities' Shanghai Xinsongjiang Road branch opening on February 21 and Donghai Securities' Shaoxing Yangjiang West Road branch opening on August 5.

“I often don’t see many customers all day long.”

SouthTian Lihui, dean of the Financial Development Research Institute of Kaida University, said in an interview with "V Guan Financial Report" that many securities firms are currently withdrawing or merging their business departments, mainly based on considerations of operating costs and management efficiency, pressure from poor performance, and the requirements of digital financial development.

Zhang Chao, a front-line salesperson at a leading securities firm, told VGuan Financial Report that with the popularization of mobile Internet, except for some special matters,Almost all business operations can now be fully operated on mobile phones. Special matters include opening accounts for people over 70 years old, opening margin trading and securities lending services for accounts, etc. "I often don't see many customers all day long."

When visiting many branches, "V View Financial Report" also found that except for the staff, there were almost no investors in the brokerage branches.

In addition to the increasing online nature of C-end transactions, the continued "involution" of commission rates and the slowdown in the pace of new investors, which has led to a prominent trend of competition among existing brokerage firms, have also put the survival of some branches to the test. Tian Lihui pointed out that the commission rate in the securities market has dropped to a relatively low level, and coupled with the sluggish trading volume, some branches have had to face the reality of closure because their income cannot meet their cost requirements.

Taking Beijing and Shanghai as examples, the "2024 Beijing Securities Branch Operating Data Report (April)" released by the Beijing Securities Association on May 28 showed that in April, the average commission rate for securities trading in securities branches in the jurisdiction dropped from 0.286‰ to 0.277‰, a decrease of 3.20% from March; there were 270 profitable branches in total, 125 fewer than in March, accounting for 45.30%.

On July 30, the Shanghai Securities Association released the "Operating Overview of Securities Brokerage Business Branches in Shanghai in the First Half of 2024", showing that at the end of the first half of the year, the average commission rate of A-shares in Shanghai was 0.219‰, a year-on-year decrease of 9.5%; the Shanghai and Shenzhen A-share trading volume of branches in Shanghai was 28.34 trillion yuan, a year-on-year decrease of 9.6%; the operating income of branches in Shanghai (including commission income and interest) was 10.093 billion yuan, a year-on-year decrease of 17.4%.

Li Ying, another front-line staff of a securities firm with 10 years of experience, revealed to "V Guan Financial Report" that the survival and development of securities firm branches depend on market conditions. There is a saying that "if you don't open for three years, you can make a living for three years after you open."

"If it weren't for the customers I accumulated previously, I might have found it difficult to stick to my current position. Existing customers are also currently experiencing problems with loss and exodus. Those business departments that have been established for a shorter time are mostly making losses," said Li Ying.

More branches

Even though the number is shrinking, in Zhang Chao's opinion,The sales department still has some indispensable functions。“Some customers are more cautious and want to observe on site whether the business office is a formal place."Zhang Chao believes that the sales department actually plays a certain role in endorsing the daily business development of front-line sales staff.Li Ying said that the existence of the sales department helps to maintain customers.

Tian Lihui also believes that although the online process is more convenient, the existence of offline physical outlets plays an irreplaceable role in customer stickiness, facilitating the contact with new customers, improving service depth, and carrying out investment education. He said that the closure of outlets can optimize the layout of business outlets and strengthen resource integration, and promote the transformation and upgrading of wealth management business.

A relevant person in charge of Guolian Securities said in an interview with "V View Financial Report" that he believes that brokerage business departments are becoming increasingly "lightweight", that is, the more traditional large-client rooms, medium-client rooms, retail-client rooms, etc. are gradually withdrawing from the stage, and are being replaced by some investor education courses, customer salons and other activities, "mainly to reduce costs and increase efficiency."

It is worth noting that while the number of business departments has declined, the number of brokerage branches has increased. Huachuang Securities' report in March this year mentioned that as of the 9th of that month, the number of brokerage business departments was 9,942, a decrease of 111 from the beginning of 2023; the number of branches was 1,736, an increase of 321 from the beginning of 2023. According to data released by the China Securities Association, the number of domestic brokerage business departments has been on a downward trend since 2021. As of the end of November 2023, there were 11,757 brokerage business departments, a decrease of 26 from 11,783 at the end of 2022, and the data at the end of 2021 was 11,850. As a listed brokerage firm ranked high in brokerage business revenue, Galaxy Securities had 501 business departments at the end of 2021, which decreased to 487 at the end of 2022, and the data at the end of 2023 had dropped to 469.

The report said that compared with traditional business departments, branches can effectively integrate various resources, radiate service capabilities in key areas, reduce costs and increase efficiency. "In addition, in recent years, the channels for acquiring retail customers have gradually become online. With the rapid advancement of institutionalization, branches have more prominent advantages in investment banking and institutional customer service, which may be more conducive to adapting to the current business ecology of securities companies."

"V-View Financial Report" noted that Western Securities, which announced the closure of one branch in July, mentioned in its proposal for the 2024-2026 branch network planning plan for wealth business released in March that "new branch networks will be added in areas with strong demand for wealth management, where the company has location advantages, where the company has no branch network but has a developed economy, or where the company has no branch network but has a developed economy, or existing branch networks will be upgraded to branches according to business development needs; branches that have been losing money for three consecutive years and have no hope of turning losses around or branches with unreasonable location settings can be withdrawn or merged after the company conducts a comprehensive assessment based on actual conditions."

Huachuang Securities' report also pointed out that from a regional perspective, the number of brokerage branches in core regions continues to grow. In addition, some medium and large brokerages continue to increase their business outlets. In 2023, the largest number of new branches (including branches and business departments) will be added by Industrial Securities, Guotai Junan Securities, and GF Securities, with 27, 17, and 17 new branches, respectively.

(At the request of the interviewees, Zhang Chao and Li Ying in this article are pseudonyms)

(In the articleThe views are for reference only and do not constitute investment advice. Investment is risky and you should be cautious when entering the market.)

Cover and introduction pictures from Baotu.com