Online wealth management company Fisdom said on October 20 that it was entering the online stockbroking space, seeking to seek sign up one million customers in a year. It will offer customers a choice of products including equities, derivatives, exchange-traded funds and initial public offerings as well as buybacks, sovereign gold bonds and currencies.
The company has elevated head of sales and distribution Rakesh Singh as CEO of the new venture. Singh has previously worked in the stockbroking arms of HDFC Securities, UTI Securities and Standard Chartered Bank and joined Fisdom in 2018.
Fisdom is entering the online broking business at a time when Indians are increasingly adopting new investment avenues. According to Securities and Exchange Board of India (SEBI) data, the number of new demat accounts opened until January in financial year 2021 hit a record 10.7 million, more than double the 4.7 million accounts opened in all of the previous year.
Companies such as Zerodha, Groww, Upstox and Angel Broking dominate the online broking market.
Founded in 2015 by Anand Dalmia and Subramanya SV, the company is backed by investors like Quona Capital, Saama Capital and merchant payment platform PayU. Fisdom has raised a total of $23 million, with its last funding being a $7 million infusion by PayU in December 2020.
Moneycontrol spoke to co-founder and CEO Subramanya SV to understand how Fisdom plans to navigate the already crowded online stockbroking space. Edited excerpts:
The online stockbroking space is already dominated by a few and there are many smaller players as well. What was the idea behind entering this space?
We have been in the wealth management domain since 2015 and have more than half a million customers across products. We have a partner-led solution, we work with about 12 banks for mutual funds, pension funds, tax filing etc. So, stockbroking and direct equity investing was sort of a natural evolution to add to the bouquet of products.
Now stockbroking is increasingly becoming relevant for a few reasons. One is, since COVID, the market has dramatically expanded and we believe this will continue for several years. With interest rates for deposits at 4 to 5 percent, people trying capital markets is a very secular phenomenon. Customers from Tier III, IV and V locations are experimenting with some of these things. Barriers of both age and geography have been broken.
We believe we have built a high-quality product, which has several features and will stand out from the customer's perspective. We already have built a channel; we will work with our existing bank partners for their customers. We also have a strong team with Rakesh Sinha at the helm that will build this product in nine months.
We think we have all the building blocks and necessary ingredients to become a credible player. We recognise that there is a lot of competition, but the market is large enough for us to be a significant player. We want to be in the top five players in the next one year or so.
The top players too have strong growth plans, for example, Upstox wants to become the number 1 player and have 10 million customers by the end of this financial year. Plus, many more new players like you are entering the space. So, will it not be difficult to be in the top five so soon? And what kind of investors will you be focusing on to achieve this?
The thing is, people don't get stuck to one broking account. What we have seen is people are willing to try multiple platforms because each has its own advantages. For long-term investors who are infrequent and only have a buy-and-hold strategy, the overall offerings from online platforms is the same. What these customers see is who offers good research or they choose a user interface that they are comfortable with.
As you go into the sophisticated customer base, day traders etc., there are lots of white spaces that one can cater to.... to provide features for them like option value chain, alerts that can be easily actioned upon etc.
But the reality is that regular traders is where the money is. So, any broking company has to capture a certain segment of those customers, That can be done to some product features that can be attractive to them. For example, along with the mobile app, we are also launching call and trade facility which most fintech companies don't do. We are also offering trading terminals and will also have subscription pricing for people who trade in higher volumes. We are expecting this combination to give us a boost in the market.
So, what will be your roadmap to becoming one of the top five players? How many customers are you aiming to onboard in the near future?
Our immediate target is to get to 1 million customers in the next one year. If you look at the customer base of of the top four players - Zerodha, Groww, Upstox and Angel Broking -- they have around four to six million traders. They too have seen growth over the last 1.5 years. I'm not saying we will take a share away from these players, I think will be a beneficiary of the market’s growth.
How much do you see stockbroking contributing to your overall revenue? And what sort of growth in overall revenue are you expecting for this financial year?
For stockbroking, revenues will take some time to ramp up. In the next year broking revenues will probably be 15 to 20 percent of revenues. Currently insurance is around 70 percent of our revenues and other products are 30 percent. So as we scale stockbroking, it will take a certain share of the other businesses. In FY22, we are expecting to see 4X growth in overall revenues as compared to FY21.