A bank account, disposable income and a smartphone — that’s all you might need these days to start investing, growing and managing your wealth.
Till a few years ago, this would have been an impossible feat to achieve. Investing as early as a decade ago meant endless paperwork, multiple visits to the bank, long queues and application processing that would go on for days. Add to that, the lack of information around investment products and rampant misselling by agents and the entire experience would be nothing short of a nightmare.
The tediousness of the process deterred many aspiring retail investors from wealth creation opportunities that equity markets had to offer.
Thanks to the rapid penetration of technology, wealth management now has evolved into a sophisticated yet simpler process.
Retail investors in India, have the world at their fingertips with smart investment apps such as Groww, Paytm Money, ETMONEY, Zerodha and others that lets customers invest from the comfort of home, with minimal human intervention and inconvenience. They have particularly found appeal amongst millennials who are increasingly participating in equity markets directly or via mutual funds.
In fact, mutual funds transfer agency Computer Age Management Services (CAMS) revealed that of the 3.6 Mn new mutual fund investors in its portfolio for FY 18-19, just under 50% or 1.7 Mn were from the millennial population.
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There are many factors that have contributed to this growth which cannot be ignored. For one, The Mutual Funds Sahi Hai campaign run by the Association Of Mutual Funds Of India (AMFI) has played a big role in spearheading awareness initiatives. The second reason could be the evolution of investment platforms which serve investors with user-friendly experiences, attractive UI/UX, easy onboarding, quick navigation and more.
Interactive learning or investor education initiatives have also played a huge role in dispelling any myths surrounding mutual fund investing. According to Groww, its investor base has benefitted hugely from the various content initiatives such as educational videos on its Youtube channel, which has bite-sized videos. Besides this, the startup invites industry experts to speak on important topics around investing, which make investments more engaging for customers.
The Growth Of Next-Gen Investors And Investment Platforms
It is not news that millennials are changing the face of the market for many sectors thanks to rampant tech adoption. With millennials making up over 47% of the working population in India, this segment is bound to dominate the market. Considering the fact that 91% of millennials are more comfortable with managing their own money— there is an increased need for digital platforms to cater to this cohort.
Currently offering direct mutual funds, Groww is one such investing platform that has captured the attention of this audience through its intuitive app, quick access to a host of educational content as well as jargon free in-app communication. Users can invest on Groww through their app and web properties and seamlessly track their investments as well.
Onboarding and KYC which are otherwise considered the most time-consuming aspects of investing are reduced to minutes on Groww with automated workflows and multiple API integrations. All this reduces the pain of entering the same details multiple times as well as make the experience fast and error-free.
With tech at its forefront, the investment platform relies on superior machine learning models at each user touchpoint to provide a seamless experience. With a high focus on personalisation, the users are clearly segmented and taken on unique user journeys based on their requirements — a first time investor will have a different experience on Groww compared with someone who is on the platform to track their external investments. Unique user journeys are further complemented with tailored communication so that users are not bombarded with information not suited to their needs, and are given clear information about where to invest. With these approaches, the Bengaluru-based company has streamlined and optimised multiple processes to attract millennial participation.
What Does The Future Hold For Investments In India?
If trends are to be believed, millennials are more interested in investing in equities than any other asset class and the preferred way of doing this is through fintech apps and solutions. Even among this set, the subset of older millennials is more geared towards equity investing or stock markets. While 48% of older millennials invested in equities, the figure was just 4% in younger millennials. This is attributed to two facts — the lower income of younger millennials and the tendency to save less in this subset.
According to the AMFI, the industry’s assets under management (AUM) stood at $357.8 Bn on August 31, 2019, and the total number of accounts stood at 85.3 Mn. Even though the number is on the rise, the number of young millennials in this set is still low. This is why startups have set themselves on the course to attract this section of the population.
To help retail investors get access to equity markets beyond mutual funds, many digital investment platforms are now venturing into stock market investing as well. Groww, for example, aims to differentiate itself by catering to retail investors and stock market entrants who are looking for long term wealth creation prospects in the equity markets, as opposed to traders. Other platforms are venturing into international stock trading.
Leveraging strengths in content and tech, fintech platforms are minimising many of the hurdles that retail investors have faced while placing orders, and at the same, they are providing investors with the right resources for improved decision-making.
With the prominent and distinct shift that the investment market is witnessing these days and as investors shift from traditional routes of investing to digital avenues, investment platforms are likely to get more and more diversified and specialised, but in the current state, where digital investments are starting off, startups such as Groww have become digital India’s gateway to investments.