Digital payments giant Paytm has now publically launched its fourth consumer brand in India— a mutual funds platform called Paytm Money.
After reeling in 500K registrations well before the launch, the company officially started its operations with 850K users. It aims to double the mutual fund investor base in India within the next three to five years.
The company claims that of these 850K users, 65% are from B15 (beyond Top 15 cities) as the platform wants to provide wealth creation opportunities to people in smaller cities and interior towns.
Paytm Money app will be available for download from September 4 on both Android and iOS. It supports investing from over 190 banks through auto-pay e-mandates, physical mandates and netbanking.
The platform, based in Bengaluru, was built from scratch and operates independently as a Paytm entity. Paytm Money will focus on building investments and wealth management products and services.
With a more-than 100-member team led by Whole-time Director Pravin Jadhav, Paytm Money has received an investment commitment of $10 Mn from its parent One97 Communications for setting up of its operations.
Vijay Shekhar Sharma, Founder and CEO of Paytm, said, “Access to wealth creation opportunities till today has been limited to a select few. With Paytm Money, we want to democratise and bring mutual fund investments to millions of Indians. We are committed to taking the mutual fund investor base in India to 50 Mn in the next five years and expect Paytm Money to be the catalyst in bringing new incremental investors to this industry.”
Here’s a quick look at the offerings of Paytm Money:
- The company will start by providing access to the platform to more than 2,500 users a day and will increase this to over 10K users daily over the next few weeks
- Users will be informed when they are given access on their registered mobile number or email address
- Paytm Money will enable users to complete their fully digital KYC and onboarding for mutual fund investments to offer faster access to its app
- Its team will closely work with its initial users to seek feedback and suggestions before opening up the service to all
- The company has partnered with 25 asset management companies (AMCs), which cover 90% of the industry assets under management (AUM). It will offer direct mutual funds plans that come with lower expense ratios due to zero distribution fee or commissions
- Users can start investing in a lump sum or via SIPs with as little as INR 100 in some of the schemes
- Paytm Money has tied up with leading rating services — MorningStar, CRISIL, and Value Research — to ease the investment decision-making process for its users
Pravin Jadhav said, “With Paytm Money, our role is to connect millions of investors to India’s trusted AMCs and fund managers while making the investing process simple, transparent, accessible to all, and offer it completely free to investors. We are building a technology based platform that offers both investment advisory and execution services, complete detailed risk profiling, and provides all possible information to users before they take any investment decision.”
The company plans to invest further in product, design, data science, and machine learning to analyse users’ risk assessment and recommend advisory portfolios and investment options that best suit individual users from time to time.
Earlier this year, the company received Sebi approval to act as an investment advisor (IA) and aims to provide both investment advisory and execution services.
Paytm Money aims to become a full-stack investment and wealth management company.
Recently, Paytm acquired Bengaluru-based smart savings management startup Balance Technology for an undisclosed sum. Balance Technology is a personal savings app that enables users to save petty change and invest in fixed deposits and mutual funds.
Mutual Funds Industry In India
According to the IBEF, the mutual funds (MF) industry in India has seen rapid growth in its total AUM.
The AUM of the industry increased 25.79% year-on-year to hit a record high of $ 342.91 Bn (INR 22 Lakh Cr) at the end of February 2018. At the same time, the number of MF equity portfolios reached a record high of 2.27 Bn in the same month.
As of April 2018, the four key metros — Delhi, Mumbai, Bengaluru, and Chennai — were expected to see revenues worth $7.2 Bn generated annually through increasing payments in the digital mode. This indicates the rising opportunity for the online wealth management industry in India.
In the mutual funds’ industry, startups such as Fisdom, a personal wealth management startup; WealthTrust, a wealth management application; Tauro Wealth, a stock market investments platform; Tipbazaar; and Scripbox have been working to tap into the growing market. Most recently, ETMoney, after operating for three years as a regular mutual funds platform, has now shifted to offering only direct mutual fund plans on its platform.
ETMoney currently offers more than 1,000 mutual funds on its platform. It has tied up with 20 asset management companies (AMCs) to offer direct mutual fund plans and has already seen more than 2 Cr transactions on its platform since it started offering mutual funds on its app in 2016.
The Indian fintech software market is forecast to cross $2.4 Bn by 2020, according to a report by KPMG India and NASSCOM. India is currently home to more than 500 fintech startups.
According to the Inc42 DataLabs Indian Startup Funding report 2017, the overall Indian fintech industry received $3.01 Bn funding across 111 deals in 2017.
The sector continues to witness aggressive growth. According to the Indian Tech Startup Funding H1 2018 report, fintech as a sector witnessed the highest funding in the first half of the year.