Only about two percent of equity investments in India generate returns, and that is because of the way traditional brokers manage people’s finances. Wealth management startup Monitree is out to change that.
Monitree Founder-CEO Sumit Chanda is a BFSI insider. In his last role, he was managing business insurance models at PNB MetLife India. Prior to that, he worked at ICICI Prudential, Reliance Nippon Life Insurance, and Bajaj Allianz. It is his 15-year-rich experience in equities, insurance and mutual funds that led him to identify a pain point in the way financial products were bought and sold in India.
“A lot of mis-selling happens and the utility of the product is not clear. Customers are either not aware or not happy,” Sumit tells YourStory. “I have come across instances where a retirement plan was sold as a child plan, or an insurance policy was sold as a fixed deposit. So, when a customer was expecting money, he ended up getting an FD renewal notice instead,” he says.
It is this broken financial retail chain that he set out to fix with Monitree, a Mumbai-based portfolio and wealth management startup that wants people to be their own fund managers.
Founded in 2016 by Sumit and Pankaj Patel (a financial sector veteran), Monitree has in two years serviced about 50 individual retail investors (whose investment limit ranged from Rs 50,000 to Rs 1 crore), tested PoCs with a few banks and is on the verge of finalising commercial partnerships with them.
Earlier in December, it was one of the 10 fintech startups roped in by the Government of Maharashtra in its FinTech Accelerator Programme – a three-month programme focusing on startup innovation that enables financial empowerment and advancement in the BFSI sector. The programme is a public-private partnership between the Maharashtra government, NPCI, PayU and a consortium of banks and industry bodies.
“Through this programme, we get an immediate opportunity for business integrations with partner institutions,” Sumit says. Additionally, the government is offering Monitree (and other startups in the cohort) GST waivers, innovation grants, a 10,000 sq ft co-working space in Mumbai’s business district of Lower Parel, and networking opportunities, he reveals.
Monitree’s core product and how it works
Monitree likes to call itself a “wealth tech” startup because it has developed an artificial intelligence and machine learning-based technology platform — Jarvis — that creates customised portfolio profiles of customers based on their investment limits, patterns and preferences. And it achieves all this through simple, jargon-free interactions with customers in real time.
“We do not assume that our customers know everything about investment. Our system asks for inputs like their risk profiles, sector and cap preferences, investment limits, etc. Once these details are fed into the system, it creates a pitchbook model portfolio for the customer. And this model varies weekly/monthly because the market changes all the time.”
“Jarvis is entirely customised. So, if 1,000 customers are entering details simultaneously, it will create 1,000 different portfolio profiles in real time,” he adds.
Besides advising customers on investment strategies and financial planning, Monitree has also created a proprietary risk management tool that tracks their portfolio 24X7. It alerts customers of changes in the stock market, creates action triggers to buy or sell stocks, and works to ensure they get returns on investments.
Monitree’s focus is on equities because that is where maximum transactions happen, Sumit notes. “Maximum money can be made here but less than two percent of equity investments generate returns simply because of the way they are managed. That is what we want to change so that people can make money,” he says.
According to National Securities Depository (NSDL) data, India had 17.9 million demat accounts at the end of November 2018. In the financial year ended March 31, 2018, a record 3.76 million fresh demat accounts were opened, higher than the previous record of 3 million in 2007-08. Hence, there is a lot of action in equities, and there is money to be made.
Learnings, biz model, and future plans
Monitree admits that scaling up has been a challenge primarily because the equity market is dominated by traditional brokers who are unorganised and not tech-savvy. Sumit says, “These brokers control close to two million demat accounts. But their systems don’t allow our APIs to be integrated. So, we’ve been unable to scale it up at a mass retail level.”
Hence, Monitree has now turned its attention towards enterprise customers i.e. banks and financial institutions to increase its reach. It looks to offer Jarvis as a white label solution through the SaaS model. The startup has held talks with multiple banks and even tech-led brokerage platforms like Zerodha. “Due diligence is on and we will soon finalise partnerships,” Sumit states.
For now, Monitree is not promoting its service for individual investors. But anyone with an investment limit of Rs 50,000 can visit its website and get a customised portfolio created.
Sumit says his 12-member team is busy innovating until February 2019. They are using advanced deep learning techniques to increase the system’s interactivity, reduce lags, and improve overall accuracy. Consultations with regulators are on as well. And funding opportunities are also being explored.
While the wealth management and financial advisory space has several other startups — Mymoneysage, Orowealth, Minance, ArthaYantra, Scripbox, etc. which are competitors at one level or the other — Jarvis, Monitree’s advanced AI and ML platform, could emerge as the differentiator in the long run.
The startup has run on its founders’ finances so far. While revenues are steady, it is yet to turn a profit. “But people are investing and we want them to make money. That’s all,” Sumit states.