Only 2% Indians invest in stocks at present, resulting in stock market capitalization at 76% of GDP. Comparing this with developed economies, such as the US, 55% Americans invest in stocks, resulting in stock market capitalization at ~150% of GDP. This shows a significant gap between India and developed economies, and therefore presents a significant headroom for growth.
Over the years, there has been a steady growth in the Indian equity markets, MF Folios & Demat accounts. Despite COVID-19 making a detrimental impact in March-2020, the Indian stock indices such as BSE Sensex & Nifty Fifty have been resilient and bounced back to pre-COVID levels by October-2020 and is expected to continue its bullish trend.
This strong performance of Equity & MFs has led to strengthening and entry of several Wealth management models, with ‘Wealthtech’ generating quite a buzz in the last few years. Wealthtech is defined as those Digital platforms which enable “End-To-End Digitization” of The Investment journey of a retail investor. This entails a customer self-onboarding on the app/web, investing as well as redeeming “Digitally”. While multiple cohorts have started digitally investing, Wealthtech customers primarily include Millennials who constitute 70% of the customers using these platforms.
Currently, India has ~4 Mn Wealthtech investors (FY20), who are expected to grow by ~3x to reach ~12 Mn by FY25.
This growth will be driven by:
- High awareness and usage of digital platforms across equity and mutual fund investments.
- Rise in investors from Bharat (Tier 2+ cities) driving adoption of digital platforms.
- Digital savvy Millennials with higher disposable incomes (comprise 1/3rd of population) will boost investments via digital platforms.
- Smoother & hassle-free customer journey on digital platforms leading to higher customer satisfaction, which in turn will give a strong stimulus to digital platforms.
- COVID-19 has come as a boon in disguise for digital platforms as there has been an increase in “New investors” as well as increase in average investments and usage on these platforms.
- At the same time, there is a continued interest among investor community in the Indian Insurtech sector with investments rising by 5x in last 5 years.
- On the backdrop of above drivers, the Indian Wealthtech market is expected to grow by 3x, rising from ~$20 Bn (FY20) to ~63 Bn (FY25).
Driven by the immense opportunity in Wealthtech sector, multiple business models have come up targeting various customer cohorts. While Digital brokerage models (Discount stockbrokers) majorly target Retail customers, the Traditional brokerage models (Full-service stockbrokers) target both the HNI & Retail customers.
Digital brokerage models are growing at a breathtaking pace and have gained significant market share displacing some of the leading Traditional models. This growth is driven by higher customer stickiness as Digital brokerage models charge less brokerage fees & enjoy higher customer satisfaction when compared to the Traditional models. This has led to significantly better LTV:CAC ratio for Digital brokerage models leading to higher profitability per customer. At the same time, it leads to stronger unit economics for Digital brokerage models vs. Traditional brokerage models.
Table of Contents
1.2 Drivers of growth of Indian GDP
1.3 Global benchmarking of India
1.4 Indian stock market and MF market in last 5 years
1.5 Indian stock market and MF market in last 1 year (Covid year)
2.2 Definition of wealthtech
2.3 Consumer personas & customer cohorts
2.4 Wealthtech Funnel
2.5 Growth drivers of Wealthtech market
2.6 Awareness and Usage of Wealthtech platforms
2.7 Rise in investors from Bharat
2.8 Millennials are the power cohorts
2.9 Customer Journey
2.10 Customer Satisfaction on Wealthtech and Traditional platforms
2.11 Post COVID-19 effect on Wealthtech
2.12 Investments in Wealthtech sector
2.13 Wealthtech Market Opportunity
3.2 Wealthtech models and their monetization
3.3 Wealthtech models growth and market share
3.4 Wealthtech models and their brokerage fees
3.5 LTV:CAC ratio of Wealthtech models
3.6 Unit economics of Wealthtech models
3.7 Global benchmarking of Wealthtech models
4.7 Paytm Money
4.10 Personal Capital
5.7 Paytm Money
5.8 ICICI Securities
1. Primary Research Consumers, stakeholders and industry experts are interviewed to help us validate key trends and market estimations.
While the exact figures may vary for different reports, on average, the publisher conducts:
- ~1,000+ consumer surveys
- ~30+ IDIs (in-depth interviews) with stakeholders (consumers, suppliers, distributors and delivery executives, among others)
- ~25+ detailed discussions with industry experts Depending on the report in question, consumers and stakeholders are distributed across:
- City tiers (Metros, Tier 1, Tier 2, Tier 3 & Tier 4 cities)
- Income levels
- Age groups
- Internet usage pattern
2. Secondary Research Secondary includes analysis of databases available in public domain. Information sought is cross-referenced and aligned for soundness.
Note: In order to maintain confidentiality, results and analysis of the surveys and expert interviews are presented at level of overall scenario analysis and representation only.