One of the biggest challenges that the stock market investments in India face is proper awareness of the options, followed by internet penetration. Leveraging this scope, Upstox entered the trading arena and aims at offering accessibility and simplicity through advanced charting and analysis tools for people from all walks of life. Its core philosophy is to enhance financial inclusion by increasing equity participation in India says Ravi Kumar, Co-Founder and CEO, Upstox, in conversation with Elets News Network (ENN).
1. How do you think Upstox changed the game in the broking industry when it entered, how do you manage to be ahead of the curve?
We started an online business in an offline world, where the idea of trading at a flat-fee was very new. One of our earliest goals was to create awareness about this concept and build an element of trust in the minds of people when it came to online broking firms. For a long time, investors used neighbourhood brokers with a single-terminal office where they could walk-in, submit their documents, and have their money placed by someone, recommended by word of mouth.
Initially, we offered a discounted fee and combined it with a platform that was both intuitive yet powerful. Acing technology became essential to stay ahead of others so as to enable faster-decision-making. Having good technology also made it possible to reach out to people in Tier-2 and Tier-3 cities. Our focus was to build a cutting-edge platform with a customer-first approach, and the same, till date, has remained the core of our business.
2. What were the most challenging parts in the Upstox journey and how have you overcome it?
One of the biggest challenges has been the lack of stock market awareness, followed by the problem of internet penetration in India. It is due to reasons like these that we believe there is scope as far as achieving our aim is concerned.
The Digital India initiative by the Government has helped in increasing internet penetration in the country. It has assisted to take digital-only platforms, such as ours, deeper in India. Customers are now able to access information about stock markets with ease. This is important because a large percentage of our population is intimidated by the stock markets, which has limited their ability to do more with their money.
Our objective is to make equity investments more accessible and easier by taking a customer-first approach. Offering them something that is easy to understand and is accessible.
3. What is your way forward? New products or new verticals?
Our objective is to empower our customers with the best trading platform and services, so that they can maximise the potential of their money. The idea is to provide a seamless digital platform that can be used by everyone, be it new-to-market customers or seasoned traders. We have been working on making Upstox the most intuitive and easy-to-use investment platform for everyone. We are constantly listening to our customers and will continue to upgrade our product features & services that will cater to customers’ evolving needs. We are focussing on diversifying our product portfolio and will be introducing Digital Gold and Global Investing soon.
4. Many traditional brokers are looking to open online broking segments. What are your views on the same?
India is a vast market, which means room for more players. Today, customers are very intelligent and are able to differentiate between a high-quality service that meets their needs and enhances overall user experience, to something that is not upto the mark. Our DNA is digital-first in everything we do, which helps us grow and build a rich user experience.
Upstox is a business for the masses that offers accessibility and simplicity through advanced charting and analysis tools for people from all walks of life. This is reflected in the demography of our user base where 80% of our customers are from Tier-2 and Tier-3 towns. In fact, more than 75% of our customer base is below the age of 35, while nearly 65% of the customers are first-time traders and investors.
5. What are the initiatives being planned to create more awareness and increase equity participation in India?
While we have seen a huge rise in the number of first-time investors, we have chosen to stay focussed on providing a fast, real-time online trading platform during the lockdown. At any point in time, almost 65% of our customers are new-to-market traders and investors. Keeping that in mind, we offer plans that bundle in value-added services like subscriptions to platforms that offer courses on the basics of the stock market for beginners, and stock market insights and analysis for advanced traders.
Our core philosophy at Upstox has been to enhance financial inclusion by increasing equity participation in India. We do this by removing the roadblocks that prevents most investors from entering the stock market: an intuitive-yet-simple trading platform that’s easy to navigate even for first-time investors.
6. Have you noticed any interesting trends in the industry post-lockdown?
Some of the key trends that have emerged post lockdown include the increase of women traders and millennial participation, we have also noticed increasing popularity of trading on mobile phones and equity participation from Tier-2, Tier-3 cities across India.
- We have seen 32% growth in account opening by women from April to June 2020, compared to the earlier quarter, 70% of whom are new-to-market investors. Additionally, more than 35% of our women customers are housewives.
- Another interesting trend to have emerged is the entry of new-to-market traders and investors. Nearly, 65% of our customers are people who are opening a demat account for the first time.
- More than 75% of the existing customer base is below the age of 35. The majority of Upstox’s customers are millennials and are from Tier-2 and Tier-3 cities, with around 80% of the customer base coming in from towns such as Nashik, Jaipur, Guntur, Patna, Kannur, Tiruvallur, and Nainital among others.
- Thirdly, modern technology has made trading apps extremely intuitive and user-friendly, which has driven a surge in mobile trading. Its easy-to-use app has made it possible for over 85% of customers to place daily trades on their mobiles.
A number of factors have contributed towards this trend. The customers’ have got an opportunity to analyse their current financial portfolios which have led to greater learnings due to the lockdown. There has been demand for financial independence, the increasing need to share household expenses due to rampant pay cuts and lay-offs have led to a rising number of women trading in equity markets. Other reasons like rising gold prices, low returns on bank Fixed Deposits and real-estate investments and attractive valuations since late March have also given women participation a boost.
7. Where do you see the industry in the next five years?
People have started looking for different avenues to invest and they are eyeing at equity as one of the potential investment options. While we see more players entering this space, we anticipate some consolidation in the industry in near future.
Brokerages will need to focus on creating value for customers beyond competing aggressively on price. The differentiator will lie in providing unique user experiences, service-level offerings and educational tools that the brokerages offer to their customers.