Even as the investment and mutual funds market in India matures with the help of digital platforms attracting first-time investors, the niche segment of experienced investors is awaiting similar ease in investing for international stocks and shares. So far, these investors had to take complicated steps in making foreign stock investments, but Cube Wealth wants to simplify this by automating investments in international markets.
Backed by prominent investors from Silicon Valley, Hong Kong, Europe, Singapore and India, the Mumbai-based automated wealthtech platform is looking to get these experienced investors onboard with foreign stock investments.
Having completed a year in July this year, Cube Wealth has added this new feature to let Indians invest in stock markets in the US and other countries.
This removes a huge hurdle for investors looking to invest in foreign stocks. In the absence of such a homegrown digital platform, investors in India had to rely on offline mediums or international digital investment platforms, which were usually more expensive in terms of brokerage fees.
For instance, to invest in foreign stocks, an investor had to either open an account with an Indian broker which has a tie-up with a foreign broker, or open an account directly with a foreign broker, or invest indirectly through Indian MF/ETFs with global equities.
To solve this, Cube Wealth is offering 17 hand-picked investment options — Indian and international stocks, gold, P2P lending and various other assets — through a single window, which definitely gives it an edge in the budding investment tech sector.
Cube Wealth lets individuals make foreign stock investments up to $250K per year via the Indian government’s ‘LRS‘ (Liberalised Remittance Scheme) route. The service is launched in partnership with Stockal, a New York and Bengaluru-based platform that enables investments in a diverse set of global assets from a single account, from anywhere in the world. To invest in foreign stocks, one can submit proof of address or proof of identity online with other details, pay a small convenience fee, sign the LRS form and own their desired stocks from any of the supported markets including US.
Along with the new feature, a revamped Cube app with a new UI is also making investing easier for customers. “We’re constantly making small updates, fixing bugs, and enhancing Cube Wealth to make the user experience better. But our roadmap is filled with larger, more exciting changes as well,” founder and CEO Satyen Kothari told Inc42.
Cube Wealth: Adopting A Triangle Strategy To Solve Core Challenges
In a recent conversation with Inc42, Kothari shared how he got the initial idea for Cube Wealth, and the challenges he observed in the wealth management ecosystem. After his previous venture CitrusPay was acquired in September 2016 for a whopping $130 Mn, wealth managers started hitting him with investment options. While talking to a few of them he realised this kind of investment guidance is not available to an average working professional.
“Human-centric processes, time taken in KYC and due diligence are a few of the factors which do not allow fund houses to focus on small retail investors. At Cube Wealth, we decided to solve this with technology,” said Kothari.
He further explained Cube Wealth’s triangle strategy to solve the challenge. Here’s a glimpse of that:
The base of the triangle is Cube Wealth app, which is an automated investment platform. It helps investors get easy access and analysis to all the asset classes in their existing portfolio, at one place.
Kothari believes that despite progressing in the digital era when it comes to investment, the human element is important. This is catered through phone service teams, WhatsApp groups, as well as teams sitting in different cities — five as of now.
“This is not a food delivery order, but investment transactions that can secure one’s future. The starting investment amount can be as low as INR 15K or as high as a few crores. We need to create trust and help investors think beyond traditional asset classes such as property, gold, FDs and more.”
After adding foreign stock investments to its product portfolio, the next focus was on adding top-tier SEBI-registered advisors and RBI-registered asset providers that help guide every user on the right portfolio for their needs, cash flow, current investments and risk appetite.
“For example, our mutual fund advisor WealthFirst has a track record of beating the average mutual fund by 50% for the last 19 years. These advisors are someone who are only serving ultra HNIs and super-wealthy capital base of the country,” Kothari added.
With the data security experience gained at Citruspay, Kothari ensured that Cube Wealth app also has data protection at the device, server, and database-level and it also performs due diligence of each investment manager to minimise investor risk.
“Not Rivals, But Partners In Wealthtech Ecosystem”
The gross national income (GNI) at current prices is estimated at INR 188.17 lakh crore during 2018-19. According to reports, around INR 8.53 Lakh Cr was the value of assets held by individual investors in mutual funds in March 2018, making it around 8% of the GNI.
This has opened up a wide opportunity for investment tech or wealthtech players in India and abroad. Besides numerous horizontal players such as ScripBox, Basis, INDWealth, Groww, Zerodha, Wealthy, Scripbox, Fisdom, WealthTrust, MyUniverse, MoneyLover, MoneyView, MTrakr, IOU (I Owe You), there are major companies such as Paytm Money, Times Internet’s ETMoney and MobiKwik have also marked their entry into the Indian wealth management segment recently.
However, Kothari views this rising brigade as partners — in changing the consumer mindset and psychology — rather than competition.
“There will be a maturity stage where people will have to fight for a market share. But the retail investor in the stock market is only 5%. so changing user behaviour is most important as of now.”
Cube Wealth has also been able to create a customer base in Hong Kong, Japan, London, Singapore, the Middle East and the US in the past year. Its list of clients includes senior executives and professionals from Flipkart, Unacademy, Google, Amazon, Uber, Deloitte, EY, WeWork, Zeta, ZestMoney, JusPay, Instamojo, Cars24, Upgrad, Milkbasket and other companies.
While it currently uses commissions from fund houses as its monetisation model, Cube Wealth will be expanding to additional cities across India to provide wealth coaches this coming year. Also, with the upcoming global launch, NRIs will get access to Indian investing options just like Indian citizens. It’s all part of Cube Wealth’s vision of bringing the right options to help create wealth for professionals everywhere.