Due to the growing adoption of digital technology and the increasing interest of investors in the wealth tech sector, the sector has experienced robust growth in India. India has more than 300 startups providing Robo-advisory services, personal finance management, investment platforms, online brokerages, and other wealth-tech services.
The wealth tech sector in India has experienced robust growth. A record amount of fintech is being developed in India, making it one of the fastest-growing fintech markets along with the US. The pandemic has resulted in an 8.2% increase in internet penetration, which has led to more digital adoption in India.
Furthermore, the increasing access to wealth tech solutions directly results from increasing disposable incomes. In addition to these factors, the wealthtech sector in India is also experiencing an increase in investor participation from Tier-II cities.
Approximately US$63 billion is expected to occur by 2025 from around US$20 billion in 2020, based on a recent report by Redseer. In addition, the report pointed out a huge market opportunity for wealthtech in Sri Lanka, the world’s largest democracy, where only 2% of the population owns stocks, compared to 55% in the United States.
Wealthtech is poised for growth, but first, let’s check out the major players.
Best 10 Wealthtech companies in India in 2022
In 2019, INDWealth enabled consumers to track, save, and grow their wealth. As a result of SuperMoneyApp, customers’ money is automatically kept organized, and a user is given suggestions on how to boost savings and earnings across investments, loans, expenses, and taxes. In contrast, INDWealth, the private wealth management platform, provides private family offices, analysts, tax planning, succession planning, and trust administration services.
Users of INDWealth’s platform can keep track of their finances, encompassing everything from loans and taxes to expenses and investments. Users can then improve cash flow and achieve financial goals through the machine-learning algorithm.
Finzoom Investment Advisors is registered with SEBI as the startup’s parent company as an investment adviser. Until now, the startup has earned more than US$58 million. Investors include Tiger Global, Steadview Capital, and Dragoneer.
In addition to being one of the first discount brokers in India, Zerodha claims to be the largest stockbroker in the country. Zerodha has over 5 million clients, and they trade and invest in a wide range of products, contributing to over 15% of all retail order volumes in India. With Zerodha, users can invest in futures, options, commodities and currency derivatives, stocks and IPOs, and mutual funds and bonds.
For intraday trading of equity, currency, and commodities, Tt charges a nominal fee of 0.03% or US$0.27 (INR 20). Interday trades with the firm are free of charge. I find it interesting that the bootstrapped startup has gained profitability since its founding. Over US$127 million in revenue was generated by the company in FY2020, an increase of 11% over FY2020. The self-evaluation of the startup is one billion dollars.
With a similar pricing model to Zerodha, Upstox is backed by Ratan Tata and Tiger Global. This SEBI-registered company was launched in 2009. Users of Upstox have the option of investing in stocks, commodities, digital gold, futures, options, mutual funds, IPOs, and new fund offerings (NFOs). Currently, 29 million dollars have been raised.
The online investment platform Groww belongs to the same family as Zerodha and Upstox. Additionally, Groww’s offering differs from similar platforms in that users can invest in US stocks, which were previously unavailable in the Indian market.
Over ten million users claim to be subscribers to Groww. Over US$142 million has been raised by the startup since its founding in 2017. Some of its investors include Y Combinator, Sequoia Capital India, and Ribbit Capital.
In the last few years, the number of companies offering robotic advice has risen rapidly in India. From around the US $ 1.6 billion in 2017 to close to US $ 8.8 billion in 2020, the Asia-Pacific region’s Robo-advisory sector’s assets under management have been steadily increasing, too. Kuvera, a fund-based Robo-advisory company, has been in business since 2013. Its assets under management (AUM) are approximately US$1.9 billion, representing a significant market share.
In addition, users can invest directly in mutual funds and cryptocurrencies, fixed deposits, gold and domestic and US stocks are offered through the company. More than 1.1 million investors have signed up with the firm. Kuvera prides itself on providing investors with valuable investment guidance and advice instead of pushing sales. Further, the startup allows users to import external transactions to view all their investments in one location.
Similarly to Kuvera, Scripbox is a dominant player in the wealth technology segment in India. Its customers can invest in mutual funds, bonds, and equity through Scripbox, founded in 2012. The company also allegedly uses proprietary algorithms and scientific research to manage its portfolios. Over 4,500 clients of Scripbox are millionaires, and the company governs over 450 million dollars of investments. Investors such as Omidyar Network, Accel, Axcel Partners, and NuVentures have raised over US$23 million for the company.
One of the fastest-growing fintech companies in the country is the company. ETMoney is a prominent player in the wealth-tech space in India and an online investment platform. ETMoney has ten years of experience in the financial industry, ETMoney offers credit cards and loans, insurance, and tools for your financial life. ETMoney’s user base has grown fivefold during the last two years, and its transaction volume has grown 11x.
Investment and technology platform WealthDesk goes from portfolio creation to turning those portfolios into investment products called WealthBaskets. It manages the entire asset management and advisory value chain. WealthDesk is a wealth tech company in India that operates in the B2B2C segment. Offering a SaaS platform for businesses and consumer-targeted platforms (B2C) for brokers and advisors, the firm provides Software-as-a-Service (SaaS) solutions. Seed funding for the company raised $3.22 million recently.
- Cube Wealth
Fintech veteran Satyen Kothari founded Cube Wealth in 2018. In 2016, Citrus Pay was acquired by PayU, the company he had previously established. The Cube Wealth platform enables busy professionals to keep track of their investments via their app and get investment advice from experts. With help from dedicated wealth advisors, investors can also develop an app’s investment portfolio. A well-diversified portfolio can be built with investment options such as domestic and US equities, mutual funds, gold, and even charitable ventures through Cube Wealth. Co-investment and peer-to-peer lending are also options available to investors.
Sqrrl was founded in 2017 and is one of the leading digital investment management platforms. By targeting GenZ and millennials, Sqrrl has cemented its market position. As little as $1.38 (INR100) can be automatically saved per transaction via Sqrrl or every time a transaction is made. Customers can also save for specific goals with the company.
To identify tax-saving investment options, users can also create monthly systematic investment plans (SIPs) with Sqrrl. Users can also apply for personal loans on the platform. India’s Association of Mutual Funds and SEBI are registered with the company.
Even though this list includes India’s most prominent wealthtech players, it is not exhaustive. More startups are likely to gain market share in India as the wealthtech sector becomes more crowded.
Indian Wealth Tech: An Investment Opportunity Unlike Any Other
Over the last five years, India’s Fintech ecosystem and its opportunities have attracted global attention. Several factors have cemented India’s position as a worldwide Fintech superpower – such as the highest adoption rate of Fintech globally, the highest number of startups in the segment, and the funding and investments the sector has received in recent years.
Several subsegments within India’s Fintech market are on the cusp of achieving almost ‘parabolic’ growth, which could provide significant opportunities for growth.
Wealth tech in India is expected to grow from its current market size of $20 billion to more than $60 billion by FY25. A Wealth Technology solution is essentially using high-end technologies (such as artificial intelligence, machine learning, big data, and advanced analytics) to offer a wealth manager and consumer more efficient and effective investment tools.
The following Wealth tech solutions are gaining popularity in India and have emerged globally:
- Robo-Advisors: Platforms and interfaces enable consumers to obtain financial advice and manage their investments with limited human involvement. Customers’ choices and variables (like risk appetite, investment horizon, expected return, objectives, etc.) are incorporated into the platforms through advanced software and algorithms.
- Digital Brokerage: Provides investors with access to the stock market and detailed investment information through online platforms and software.
- Portfolio Management Tools: Online platforms allow consumers to add investments and liabilities to a single platform for better management, analysis, and convenience.
- B2B Software Services: Innovative wealth management software and applications created using advanced technologies.
Among several segments and solutions at the forefront of this emerging category, some examples are the following. It is still only recently that India has realized the opportunity to adopt solutions and services developed in principle.
Over 2% of Indian households actively invest, compared to over 50% of households in developed markets such as the US2. This industry has typically suffered from a lack of awareness. Still, now there are several growth drivers and behavioural shifts that are expected to drive a 3X increase in revenue:
- High Awareness and Financial Literacy: There has been a rise in the number of young investors buying financial products in India because of India’s young population and rising education levels, in addition to the proliferation and access to significant financial information & Historically, this category has been considered staggering and aspirational due to the incorrect (and preexisting) perspective that this segment is ‘risky’ and requires a lot of capital. As a result, new investors better understand the associated risks, theories, and solutions for all budgets and objectives due to their higher financial literacy level.
- Higher Disposable Income: It has been well documented that India’s wealth has increased over the years. Indians are ‘better off now than they were 20 years ago due to urbanization, skilling, education, and job opportunities. Over 30%3 of India’s disposable income grew between FY15 and FY19, one of the highest rates in the world. Additionally, Tier-2 markets and regions in India have experienced even more significant growth rates in income, education, and technology penetration, creating a valuable and untapped target market that is underserved by current solutions. Indians are increasingly investing in products and services across multiple time and capital-related horizons because of higher levels of wealth, financial literacy, and awareness.
- Better and Efficient Technologies: Inaction usually results from motivation without method. Various domestic and international organizations offer sophisticated, seamless, and high-end technology solutions and products that drive the adoption of Wealth tech solutions. Platforms like these have focused on advanced algorithms and real-time big data analytics and placed a considerable emphasis on the user interface (UI) and user experience (UX) design.
- Millennialism, Media, and Mania: The Indian film and television industry has always been a key pillar of influence. Media consumption in India ranks among the highest globally, including movies, television, video games, and digital content. These sources are so important to the fabric of Indian society that many national campaigns and drives (such as tobacco campaigns, Polio drives, and Covid-19 awareness campaigns) are designed to use them for dissemination effectively and have subsequently found great success. Since the last few years, content related to investments, trade, and finance has done extremely well, causing consumer behaviour to shift.
- COVID-19 Pandemic: As a result of the pandemic, businesses encountered significant hardships and were unable to survive but had several opportunities to restructure and even thrive. In India, the Wealth tech sector also saw a strong upsurge after the first few months after the pandemic, primarily gaming and enterprise communication. In the wake of the onset of the pandemic, India’s stock market suffered significant losses. However, recent reforms, record investments and fund inflows, as well as fundamental stability, created the foundation for not just recovery but a stock-market boom, which investors (both retail and institutional) were eager to participated. Many digital platforms provided new retail investors with new options during the pandemic, such as Upstox, Sharekhan, ICICI Direct, Groww, Scripbox and Kuvera, which saw digital growth double between March and October. Also, as more people were employed from home and spent more time on screens, the user base increased, but the average investment per user also increased. Consumers are not only using wealth tech solutions while we’re still on the tail end of the pandemic but frequently referring their friends and families to them as well. As a result of this shift in behaviour, these solutions are now being adopted by the masses.
Several elements contribute towards the Indian wealth tech opportunity. It has a current user-base of about 4 million investors and can grow to a user-base of 12 million investors if it continues to innovate, increase the average size of transactions, and optimize the network effect and spillover, as well as use newer use-cases and solutions; the sector will be able to attract several times more investment than it currently receives.
Because the segment has been well funded in the last few years, the underlying infrastructure and ecosystem have also experienced rapid growth. Investments in wealth tech from global and domestic investors totalled over $100 million in 2019 and 2020.
Wealth Tech is accelerating globally and in India due to the adoption of digital platforms. Several Wealth Tech startups in India focused on retail investors before Covid. As the value chain digitizes, these startups will be able to expand. Through digital wallets, SEBI, for example, allows investors to contribute up to 714 USD per financial year. Additionally, it has become the fourth largest sector of Fintech funding.
The market also recovered quickly from the initial economic crisis. Wealth Tech is a segment poised for exponential growth, driven mainly through equities, which cause 70% of the market, and mutual funds, which operate 30%.
The Indian Wealth Tech market has the potential to boom in the next few years thanks to the increasing adoption of digital platforms and the growing investor base. This is a threefold increase from 20 billion USD in FY2020 to 63 billion USD by FY2025.
Nevertheless, Indians are not very interested in investing in stocks. Indians engage in stock trading at a rate of only two per cent, while Americans support in stores at a rate of fifty-five per cent. There is a significant disparity between developed and developing economies regarding investment choices. Nevertheless, there is still room for growth.
Demat accounts, mutual fund portfolios, and Indian equity markets have all experienced substantial growth in the past few years. Digitalizing processes end-to-end has also increased Wealth Tech adoption. Investing can almost be accessed by anyone, thanks to the ease of these digital platforms.
In March 2020, COVID-19 had a negative impact. Since then, the Indian stock market has begun to recover. Within two years of the end of the pandemic, the BSE Sensex and Nifty-50 returned to pre-pandemic levels.
Over the past few years, Wealth Tech has generated a great deal of interest. The younger generation has been the most enthusiastic adopters. More than 70 percent of users are millennials. Indians have also made significant investments in Wealth Tech. This sector will grow even more rapidly as digital platforms are adopted in Tier 2 cities.
Also, new investors have benefited from the pandemic. Investing has become more popular due to the economic crisis.