Behavioral psychology plays a bigger role in building wealth

Lalit Keshre, Co-founder & CEO, Groww, talks to Morningstar about their online investment platform.
By Morningstar |  18-06-18 | 
 

Founded by former Flipkart employees, Groww is an online investment platform based in Bengaluru. It is backed by CureFit founders Mukesh Bansal and Ankit Nagori, and US-based seed investor and accelerator Y Combinator. Lalit Keshre, Co-founder & CEO, Groww, chats with Ravi Samalad on how they are simplifying investments for millennials.  

Ishan Bansal, Lalit Keshre, Neeraj Singh and Harsh Jain. (L to R)

Your company started operations only in April 2017. You claim to have a user base of 1 lakh. How do you acquire clients? How do you plan to grow your user base further from here?

Most of our users come through word of mouth and through educational content that we publish in our user communities. We will continue to focus on offering simple, strong, good products to delight our users. So our users will help us acquire more users. We also have over 200 WhatsApp communities with over 50,000 users that help solve each other’s investing queries. Users find this very helpful.

What have been your observations from the discussions in these WhatsApp communities?

The biggest chunk (>60%) of users are from Tier 2 and 3 cities, where aspirational motivation is a lot higher and the keenness to invest a lot stronger. Most of the new investors are coming on mobile first. Also, we found that the popularity of direct plans is rising. About 35% of users are talking about direct plans.  Debt funds have lot of interest amongst users, owing to their short-term investment horizon, liquidity and low interest rates on bank fixed deposits. Tax implications of investing in mutual funds vis-à-vis other products is another popular topic which is discussed in these communities.

Who are your ideal clients? What segment of the market are you looking to cater?

Our target user is the new investor who cares about simplicity and transparency. Most of our users are millennials in age group of 25 to 35 years and are working professionals. Average ticket size of an investor is Rs 1.5 lakhs.

Your website shows that you are an AMFI registered distributor and SEBI RIA as well. Does your platform sell both direct and regular plans? How do you generate revenues from selling direct plans?

Direct plans are our primary products. If a direct plan of a particular fund is not available and customers still want to buy that scheme, customers can buy regular funds as well. We will generate revenue by offering premium advisory services to our customers.

Could you please elaborate on the premium advisory service?

We are launching Gold subscription that will be charged. Users will be able to get access to the best financial advisers in the country.

Advisers will be your employees or independent financial advisers?

We will provide advisory services under Gold subscription. We have not yet decided if advisers will be full-time employees of the company or if we would partner with the external advisers. We will announce the same with the announcement of the subscription plan.

If both regular and direct plans are available on your site, why would investors choose to invest in regular plans which carry higher expense ratio?

Direct plans are default. Regular plans are available in case direct plan for a scheme is not available. By default, we recommend only direct plans to our users.

How do you plan to compete with players like Paytm and Flipkart which are also entering this space?

We will be offering more comprehensive services around investments. In addition, we are focusing on only one thing - making investing simple.

What would be these comprehensive services?

There will be advisory service and advanced tools for making the right investment decisions.

Besides mutual funds, which other products are you planning to offer?

We are planning to introduce other financial products like stocks, insurance, etc.

By when?

We do not prefer to commit on dates for our launch – all what I can say is that the team is working hard to bring the best investing experience for the users. Our first preference is solving the user experience in the correct way.

How are you differentiating from other robo advisory platforms?

We are not a robo adviser. Users can select any fund they are interested to buy. Under premium advisory services, we will be offering human advisory to our users.

Why do you feel the need for human advisory service is essential in an online investment platform like yours?   

While machines can do logical analysis and suggest you investment products, there are a lot of behavioural components in investing. Behavioral psychology plays a bigger role in building wealth than anything else.

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