Online bond platform Wint Wealth will offer Fincare Small Finance Bank’s fixed deposit product on its platform for retail investors, Chief Executive Officer and Co-founder Ajinkya Kulkarni told Moneycontrol in an exclusive interview on October 18.
Currently, the bond platform offers fixed deposits of Bajaj Finance, which are live on its website.
Kulkarni added that over the next 12 months, Wint Wealth will onboard all the small finance banks on its bond platform to widen the choice of fixed deposits and interest rates.
At the same time, he said, the company will still continue to offer high-quality corporate bonds, curated bond baskets, and sovereign gold bonds on its platform to help invest and create a diversified debt portfolio.
Edited excerpts:
What is your rationale for moving to FDs after starting with corporate bonds?
When retail investors consider financial planning, fixed deposits invariably feature in their scheme of things. They have different use cases for everyone. For a young urban investor, a fixed deposit could be the way to park emergency funds or hold windfall gains to meet a short-term requirement. A family in a tier 2-3 town may opt for an FD to plan their children's education.
As per RBI data, the total market size of retail fixed deposits in the country was more than Rs 51 lakh crore as of June and growing at 7-8 percent per annum. Currently, the interest rates on FDs are at the highest level in the last 10 years. Thus, the time is ripe to build a product that empowers retail investors to book FDs easily and safely.
NBFCs and small finance banks offer 1-2 percent interest arbitrage on FDs over their established banking peers. So, there is a very strong value proposition for retail investors. However, these NBFCs and small finance banks lack the digital infrastructure for distribution. We solve this problem by onboarding them on our platform and providing a seamless user experience.
How do you intend to make money selling FDs?
We will earn 50-100 basis points distribution commission from NBFCs and small finance banks. Being a mass product, we can build a sustainable revenue stream from FD distribution. Moreover, there are many opportunities to cross-sell other financial products to investors.
How has the business grown since SEBI introduced regulations for OBPPs last year?
The regulation has certainly improved the sense of trust among our investors. However, business growth has been moderate because the minimum face value of listed debt securities under private placement is still Rs 1 lakh. It means that to build a diversified bond portfolio, retail investors need a minimum of Rs 5-6 lakh. Not many retail investors can afford such hefty investments in corporate bonds.
Earlier, the SEBI Chairman indicated that the ticket size would be reduced further. We are hopeful that it will be done soon. In the meantime, we are solving the diversification problem through our basket of bonds, which allows investors to invest in bonds from 7-8 NBFCs with Rs 1 lakh investment. Having said that, the OBPP industry cannot expect any meaningful growth before the ticket size is brought down substantially.
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How do you plan to shape the business from here on? Are there any other product lines that you intend to add?
Our impetus is building Wint Wealth as the easiest and safest platform to book fixed deposits. Currently, investors can book Bajaj Finance FDs from our platform. By next week, we will also have FDs from Fincare Small Finance Bank on our platform.
Over the next 12 months, we will onboard all the small finance banks on our platform to widen the choice of FDs with the best interest rates. At the same time, we will continue to identify and bring high-quality corporate bonds, curated bond baskets, and sovereign gold bonds on our platform to help invest and create a diversified debt portfolio.
What is your outlook on funding for fintech startups? Any plans to raise Series B funding?
Apart from the ongoing funding winter, the fintech industry faces additional regulatory risks as well. So, until the regulations play out completely, investors will be cautious in taking new bets.
We have always been prudent in our operational expenditure and preferred growing organically as much as possible. We still have more funds in our bank account than we raised in the Series A round. Therefore, we are well capitalised for the next 3-4 years. We are targeting to be EBIDTA positive over the next 12-18 months. As of now, there are no plans to raise more capital. If there are any meaningful offers next year onwards, we will decide on a case-to-case basis.
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