How Shoonya Is Leveraging AI & Zero Brokerage Model To Change Investing & Trading Dynamics In India

The Indian fintech growth story needs no introduction, and neither does the fact that the country’s fintech sector has become a common destination for all investors looking for high-octane returns. It is on the back of this positive sentiment that startups operating in this space have garnered more than $28 Bn (as of February 24, 2024) in funding since 2014.

Of all the sub-sectors that operate under the larger fintech space, investment tech startups have lately started to take the world by storm. The stir in this space is the byproduct of an increasing number of individuals investing in stock markets as India continues to grow by leaps and bounds.  

According to an IBEF report, NSE retail investors saw a record 27% YoY increase in equity holdings from April to August 2023, while BSE registered a 24% YoY rise in 2023.

Despite this, concerns regarding hefty brokerage fees have impacted the investment sentiment of new or potential retail investors. 

To counter this, Tajinder and Sarvjeet Virk (brothers) launched Shoonya, a zero-brokerage platform, in 2016 to provide cost-effective trading to Indian investors.

The brother duo is also the founders of Finvasia, which houses other investment tech brands like ZuluTrade, Fxview, AAAFX, Act Trader, and Portfolios, along with healthtech brand Finvasia Health and real estate platform Finvasia Estates. Finvasia has offices in 10 countries and a presence across 190 countries.

Moving on, Shoonya, a part of Finvasia, allows ‘zero-cost trading’ across various asset classes, including stocks, mutual funds, IPOs, equities, bonds and extra-traded funds on major Indian exchanges like NSE, BSE, MCX and NCDEX. 

Additionally, it utilises AI for individual stock predictions through a partnership with I Know First, a fintech firm based in Tel Aviv renowned for its AI-driven stock market predictions. 

It also uses advanced charting and analysis tools, including technical indicators and market data, for making informed investment decisions. Shoonya claims to have amassed more than 2.6 Lakh users and currently has 100K active accounts on its website and app. 

According to Sarvjeet, the platform had more than 1.9 Lakh clients as of December 31, 2023, up 72.92% year-on-year (YoY) from 1.1 Lakh+ in 2022. By January 31, 2024, the user base grew to 2.2 Lakh+ clients.

How Shoonya Simplifies Trading With AI

According to Sarvjeet, Shoonya is a tech company that happens to be in finance. Based on this philosophy, the founders focus on building their tech in-house. 

The cofounder said that the user onboarding takes less than five minutes. Users can instantly open their accounts on the Shoonya app or website. 

To ensure user privacy, the startup follows a unique client code policy incorporating a two-factor authentication system as a mandatory login criterion. This authentication process includes biometric and TOTP (time-based one-time password) verification methods.

Upon signing up, users can start investing by using Shooya’s multi-asset platform on a single screen. They can trade and invest in a diverse range of financial instruments like stocks, derivatives (future & options), currencies, commodities, mutual funds, SIP, bonds and ETFs. 

However, Sarvjeet said that Shoonya’s USP lies in using AI to democratise trading and in helping investors make smart and informed bets.

It provides access to data-powered signals based analysis based on 1,500 Indian scripts, spanning large, mid, and small caps stocks, along with predictions for major Indian indices from NSE and BSE. 

It uses deep learning to create colour-coded signals to simplify market interpretation. For example, dark green (buy) and dark red (sell) signals indicate strong market trends, while light green and red signals show weaker trends. 

Additionally, each prediction includes a predictability indicator (confidence level), offering insights into the confidence level for every stock prediction. The platform further generates instant heatmaps (visual representation of data) for stock market forecasts across various time ranges (three days, seven days, fourteen days, one month, three months and one year). It provides portfolio monitoring, enabling investors to optimise their portfolios based on daily AI predictions. 

In terms of user acquisition strategy — it has been largely based on connecting with diverse user groups through social media, various digital platforms and word-of-mouth referrals. 

Shoonya has commercial clearing and trading member licences for the NSE and BSE. It is a trading member of MCX and a depository participant with CDSL.

Moreover, Shoonya also has a dedicated risk management team that addresses potential security issues of users, while cybersecurity measures include annual audits by certified CERT-In auditors and quarterly internal checks.

“Shoonya’s commitment to regulatory compliance, user safety and education underscores its position as a trusted player in India’s investment tech space,” Sarvjeet said.

How Shoonya Is Thriving With Zero Brokerage Fee

According to the founders, Shoonya operates on both B2B and B2C models. The startup offers a zero-clearing fee structure, enhancing the economic viability of trading for users. 

It also provides technology support and consulting services to foreign portfolio investors, earning income through subscription fees and consulting charges. Additionally, Shoonya earns interest on clients’ cash balances in their demat accounts during trade settlements.

By providing premium membership options, it charges all users for charting tools and research reports. Furthermore, retail investors are charged for depository participant fees and pledge charges. All users pay a monthly subscription fee of INR 799 (plus GST) for accessing their AI tool — I Know First. 

Shoonya’s Road Ahead

Looking forward, Shoonya is set for future developments with strategic initiatives in progress in the next two to six months. It will redesign the onboarding process to enhance user-friendliness. 

Sarvjeet revealed that the startup is actively exploring additional ways to leverage AI to enhance the user experience. For this, it has already implemented AI in various internal departments focussing on ease of onboarding, ease of compliance, ease of doing business and empowering users to make better decisions in investments. I

“We have implemented an AI model for signature integration on Shoonya. This feature now prompts users if their signature is misplaced or incorrectly uploaded and guides them through the account opening process,” he said.  

The company is also creating AI based models for sentiment analysis for retail clients on a very comprehensive level. It is in the process of creating customised chatbots that can understand the pain points of customers and create customised responses in real time to enhance customer satisfaction. Moreover, it claims to be running AI models on its entire client base to understand behaviour patterns of customers so that it can engage with them in a more personalised and customised manner.  

Further, it is building new AI-based cognitive, predictive, and generative solutions for a range of asset classes. While Sarvjeet did not divulge many, as the project is still in the development stage, he said that Shoonya holds an NBFC licence and is committed to developing new financial products and solutions that will further enhance the retailers’ experience.

Sarvjeet believes that the future of investment tech in India is set for significant evolution, driven by factors such as widespread mobile internet access, a growing interest in investments, and the rise of fintech startups leveraging rapid technological advancements like AI.

In the bigger investment tech space, Shoonya competes with the likes of juggernauts Upstox and Groww. The founders said that they are committed to staying ahead of the competition by leveraging AI and embracing emerging trends in the investment tech sector. 

While startups like Shoonya are playing an important role in democratising trading and investment to enable beginner retail investors, it’s important to be calculative about the dependency on AI when it comes to trading.