5paisa.com Founder and CEO Parkarsh Gagdani speaks about new trends in Fintech and India’s interest in investments

The global Covid-19 pandemic has impacted us in ways that we could not have imagined. With countries going under lockdown,  businesses and entrepreneurs have been among the worst hit. It was inevitable that the global markets would also follow suit. The Sensex, which peaked at 42,273.87 points in February 2020, crashed over 38 percent by March 23 to 25,638.90 points, making it one of the fastest crashes in stock market history, even worse than the 2008 market crash. While existing investors will feel the pinch, this could be a great opportunity for first-time investors. The pandemic has also resulted in a significant increase in mobile trading.  

5paisa.com, which recently became the first Indian fintech firm to go public, has been supporting its investors by focusing on customer-centricity; innovation; expansion to Tier 2 and 3 cities; and using technology to serve customers looking for a  broker-free and secure platform. The platform currently boasts a daily turnover of over Rs 30,000 crore,  over 450,000 clients, over 3.5 million downloads, over Rs 1,000 core in  Assets under Management and more than Rs 500 crore in Market Capitalisation.

As part of YourStory Medianew series, ‘Money Matters with Shradha Sharma’, we talk to experts, entrepreneurs, and investors for insights on investment opportunities, savings, spendings, and more. In this episode, YourStory Founder and CEO Shradha Sharma was joined by 5paisa.com Founder and CEO, Prakarsh Gagdani, who spoke about the changing face of broking, the new-age investor, and tapping into unchartered markets. Here are some of the highlights from that session.

Investment grew despite the dip in the market

Prakarsh says that they noticed some very surprising trends following the pandemic.  Despite the market not being favourable for nearly a year-and-a-half, retail investors were still coming to market and showing interest in Systematic Investment Plans (SIP) and mutual funds were booming. After going public, 5paisa was optimistic about retail investors coming. “But suddenly the COVID-19 outbreak happened and we thought interest would fade.  But we saw a completely reverse trend. The markets were going down, but people started approaching stocks at twice the speed.” He adds that  March, April, May, and June have been among the best in terms of people coming to capital markets and the highest number of Demat accounts were opened in the months of March and April. 

With people spending less during the lockdown, and the future being uncertain, Prakarsh says that there has been a huge shift in the mindset of the investor. “That's why they're coming more towards investment. It's a very healthy trend, and a very good trend, which I feel that it will continue for a long time,” he says.

Catering to first-time investors

“A lot of our investors are first-timers. So they come with basic queries about how to transfer funds and what documents to give,” says Prakarsh. To address these queries, 5paisa.com has created an instructional video in Hindi that they share with their introductory email. “Video consumption is high. So, we focused our entire energies on building our video inventory, training, and imparting process knowledge to people. Our YouTube channel has more than 1.1 lakh subscribers, one of the highest in the industry. We have five to six million views a month on these videos. We decided to make these videos in Hindi from the start so that subscribers from the Hindi belt should not face any barriers,” he says.

When it comes to giving investment advice, Parkarsh says, “Let me state my disclaimer that I am no expert in advising, so please ask a financial advisor.” He says a few sectors like anything agri-related are logical choices because, “People don't stop eating. In fact, they may be eating more since they are stuck at home.”  Fertiliser, which is an allied sector, private mobility, oil and natural gas and pharma are all sectors that Parkarsh believes are likely to see traction. 

Exploring new avenues

5paisa.com recently entered the peer-to-peer lending space. “This is at a very nascent stage in India. However, lending itself is age-old in India. There are businesses that require short-term loans. There are people who need three-month, six-month, one-year loans. On the other hand, there are people who want to give money. I mean, if you talk to any business guy, he must have lent money to someone as a short-term loan at some point. The entire peer-to-peer lending platform makes it organised and under the purview of the regulators, which is very stringent in India,” says Parkarsh. He acknowledges that this is a difficult time, and people are currently loan-averse. “But I think in some time it might change because the moment we go back to our normal lives, the requirement of money will come. I'm pretty optimistic about this business, and we're promoting it internally with our customers and externally as well,” he says.

5paisa.com’s objective has always been on financial products that can be digitally served end-to-end and doesn't require any human intervention or paperwork. “We started with equities, then we had mutual funds, personal loans, and now peer to peer lending. We sell gold and health insurance. Our energies are focussed on equities, which is seeing a great momentum,” says Parkarsh.

The future of Fintech

Parkarsh believes that most of the disruption in Fintech is happening in the payment space along with digital lending, banking and broking. “But because it is highly regulated, they needed to become an intermediary to come into Fintech. One interesting trend is neo-banking. There are players who are not full-service banks and or registered banks, but offering services. I think that's an interesting space. Secondly, how do you get international investment in India? It's tedious and it's highly regulated. But I think that's an interesting space,” he say