The year 2021 looks promising for wealth management. According to data from the Association of Mutual Funds in India, the sector added over 81 lakh investor accounts in 2020-21, taking its tally to 9.78 crore. With the major augmentation in its investor base amid the pandemic, the mutual fund industry’s total assets under management (AUM) are increasing 2.1 per cent (Rs 70,000 crore) month-on-month in May 2021 to Rs 33,10,000 crore, as per a recent report by a brokerage house.
For those interested in taking part, but not familiar, there is help on hand.
In the post-pandemic world, people are increasingly experimenting with investments, including in this sector, made easier and seamless with new-age financial apps that allow you to invest in a host of mutual funds after just a few on-boarding steps.
Ahmedabad-headquartered wealth-tech startup Tarrakki is one such comprehensive wealth management platform that is designed to make investment easy and hassle-free for first-time investors.
Founded in 2018 by Saumya Shah, Tarrakki offers solutions to both consumers and corporates – so that the SMEs and MSMEs can efficiently manage their working capital requirement and surplus cash. The new-age technology used by the personal finance platform enables its users to make regular, calculated investments in mutual funds and peer to peer lending, based on their individual life goals, in keeping with their income, age group, and risk appetite.
Tarrakki is a SEBI Registered Investment Advisor, and a BankGrade Secure Transaction portal. Incubated at Bengaluru-based incubator Afthonia Lab, it caters to tier-I, tier-II, and tier-III cities across India. The key markets include Maharashtra, West Bengal, Gujarat and Delhi.
With an undisclosed funding recently in April 2021 and previously in 2020, Tarrakki has cumulatively raised $225,000 in funding.
THE RIGHT PLAN
According to PEW Research 2020, an estimated 2 per cent of Indians actively invest, as opposed to developed markets, such as the US where over 50 per cent of the households hold investments. Even in urban India, a lot of people don’t know about personal finance or financial independence.
This is where Tarrakki seeks to create its niche.
“We see that there are a lot of personal finance and wealth management platforms in India but there are very few who provide advisory-based investments. We are augmenting this space with some really unique features; for example, Tarrakki launched an industry first initiative- Sell nudge feature which alerts users to stay away from the mutual funds which are not performing well; Tarrakki Zyaada: A MF investment linked Visa debit card that allows users to spend from their investments at any Visa POS or ATM in India and Tarrakki MF Assistant: Provides Buy/Sell/Hold recommendations on over 2,500 mutual funds to assist retail investors make an informed decision on their investments,” says Shah.
Tarrakki was built with the agenda of giving unbiased investment advice to people, providing them with different investment avenues, and keeping investment opportunities open for just about anyone, even for people who have Rs 100 to invest, he says.
Shah claims Tarrakki Zyaada is the only product in India to provide a Mutual Fund investment-linked Visa Debit card providing users instant liquidity anytime and anywhere.
“Since a lot of people aren’t aware about the investment space and hence are reluctant to invest, we at Tarrakki have launched a new category in our app called ‘Learn’ that educates people about personal finance,” he adds.
On his app’s benefits, Shah says: “Tarrakki eases the KYC (Know your customer) procedure using paperless advanced technology for its customers and lets one start his/her investment journey by creating an account in less than two minutes. It offers unbiased advisory which eases the life of any investor who is expecting decent returns on investment. We are here to end mis-selling and biased advisory leading to a negative growth in the customer’s portfolio.”
RESPONSE AND TARGET MARKET
The minimum viable product (MVP) of the Tarrakki app has seen over 26,000 downloads and over 13,000 users. In the past six months, the startup has seen a 40 per cent growth in its user base, and has already processed investments over Rs 50 crore till date.
“We have witnessed users using the Tarrakki Zyaada debit card for cash withdrawals in cities that have a population of less than 10,000 while at the same time, most of the users have also used it for online shopping,” says Shah.
As markets rebounded from the crash back in March-April 2020, investor interest in investing has also increased. “We have seen a 2X growth in SIP registrations in the quarter of April-June’21 v/s April-June’20,” he adds.
Tarrakki has a mixed demographic of customers, spanning a teenager investing his pocket money on one hand to a senior citizen investing during his retirement. “With the growing interest in retirement planning and wealth creation, we see a lot of millennials and youngsters who are getting attracted to the personal finance space,” says Shah.
Currently, the startup is targeting tech-savvy users in the age bracket of 24-40 who are looking to take up wealth creation, setting up investment goals like buying a car or house, or saving for a rainy day. The younger population is totally changing to an online mode of investments over the physical way of visiting banks or mutual fund advisors. Henceforth, fintech institutions are increasingly relying on tech firms to find disruptive trends.
With a pan-India presence, the startup has users from major metros and even small towns that have a population of less than 10,000 people. “Being an app-based product gives us the flexibility to be a national player,” says Shah.
THE OPPORTUNITY AHEAD
Indian wealth-tech market is expected to grow three times to about $63 billion by FY25 from $20 billion in FY20, driven by increasing adoption of digital platforms and growing base of investors, a report by RedSeer Consulting said.
The report estimated that currently India has about 4 million wealth-tech investors (FY20) and the number is expected to grow by 3x to reach about 12 million by FY25.
Shah says that this growth “will be driven by high awareness and usage of digital platforms across equity and mutual fund investments; rise in investors from tier-II cities and beyond, driving adoption of digital platforms; and digital-savvy millennials with higher disposable incomes making investments via digital platforms”.
He says a new market that the pandemic has opened up is non-individual investing. There are several SME/MSMEs who were looking to park surplus funds outside of traditional banking instruments as interest rates on FD were slashed, and FDs are not a liquid product.
“We see SME/MSMEs playing a big role in the growth of wealth-tech as they have started looking for smarter treasury management solutions,” he adds.
CHALLENGES
While there were a lot of challenges around onboarding and user transactions as the right digital systems were still under development earlier, Shah says with time, there have been major technological developments around KYC, payments and transactions, simplifying the user journey.
The challenges now revolve around educating the users why traditional banking products are not investment products as most of them even fail to beat inflation, or how, when, and where one can start investing.
“Financial awareness is surely one challenge most online and even offline companies face today,” he notes.
INCUBATOR SUPPORT
Fintech market in India is surging, with a lot of emerging startups offering new and unique propositions like buying mutual funds with the help of artificial intelligence, insurtechs providing the best suitable insurance for an individual, etc. By 2025, it is predicted that India will have over 2500 early stage fintech startups with a total valuation of $150-$160 billion. Investment flows into fintechs have also been equally impressive as these have cumulatively raised more than $10 billion since 2016.
Afthonia Lab CEO Tanul Mishra finds Tarrakki a unique wealth management and investment app, that packs the power of an innovative idea in terms of the product they bring to the market and is built upon solid business principles that ensure sustainable growth in the long term.
“It also provides the right solution for India’s burgeoning investment space helping people in different strata of life participate in wealth creation on an equal footing. It was Saumya’s forward-thinking approach and fresh perspective on wealth management that really impressed us along with his goal of empowering all parts of India to become more financially literate,” says Mishra.
FUTURE PLANS
The startup aims to have 1 million users in the next 18 months.
“Our audacious goal is to have 50 million users in the next 5 years. We are also looking to not only focus on individuals, but also build a product where non-individuals like HUFs, trusts, companies, minors, and NRIs can also have a seamless digital investing experience,” says Shah.
