In future, we are planning to cross-sell services such as loan against mutual funds and loan against securities to investors on our platform and earn money
In September 2019, Paytm Money completed one year of operations. According to the company, it has added around 30 lakh users since inception till now. The firm further claims that of the total inflow into direct plans of mutual funds, around 40 per cent is contributed by it as of September 2019.
In a conversation with Hiral Thanawala, Pravin Jadhav, Managing Director & CEO of Paytm Money, talks about the important learning in the last one year, changes implemented and the investment recommendation process that it follows. He also elaborates on plans of monetising and cross-selling of products in the future. Excerpt:
Q: What were the most important takeaways in the last one year for your firm? Also, were any changes made to the Paytm Money platform from your learning in mutual fund selling?
A: When we launched Paytm Money, we were focused only on serving new investors. We offered several features for investing in systematic investment plans (that include top-up SIPs, edit SIPs, etc.) designed for new investors. These features gained the attention of existing mutual fund investors to invest with us. So, for existing investors, we recently launched the ‘switch to Paytm money’ feature. Using switch to Paytm money, investors will get to convert investments in regular mutual fund plans to direct plans.
In the last one year, we have also enabled the platform to allow investments from more than 200 banks. These have brought new investors from tier-3 and tier-4 site locations to our platform. We have now launched a website as well, which is currently a beta version and is being tested.
Q: What is the average ticket size of transactions on Paytm Money?
A: On our platform 85 per cent of the transactions in SIPs are Rs 500 and below. So, we are seeing a large volume of transactions, but by value we are very small in the market. At present we are not planning to charge from users on our platform. This is because, suppose an investor is investing Rs 10,000 on our platform on aggregate portfolio level in a year, it doesn’t make sense for us to charge 10 per cent of his investment, which will come to Rs 1,000 a year on this small investment.
Q: Since Paytm Money is a SEBI Registered RIA, do you sell all other funds or do you only sell a few schemes that you recommend to your investors? What is the process that you adopt to choose a product recommendation?
A: When we launched Paytm Money, we had mutual fund schemes only from 25 asset management companies (AMCs), but now we have all the 40 AMCs on our platform and we have all the schemes for investors to choose from.
After we offered all the mutual fund schemes on our platform, we realised that new investors didn’t know where to start investing. So, we introduced a product called investment pack, which was designed by our investment advisory team. An investor can start investing in this recommended package with Rs 1,000. Before giving recommendation, we ask users to take a risk assessment on Paytm Money, which is free of cost. Based on this risk assessment, we classify the investor into different buckets such as conservative, growth and aggressive. Then we suggest investment portfolios that are in line with the risk assessment. In case the investment philosophy of a particular AMC or a scheme changes, the advisory team will review it, recommend re-balancing and offer new schemes to the investors.
Q: On Paytm Money, we observe mutual funds in thematic schemes, global funds and pure equity funds are under placed in one basket. Why is that so? Have you not categorised the schemes as per SEBI regulations on your app?
A: This is a matter of presentation of mutual fund schemes on our app. We may look into this based on feedback and views from our users. However, in each mutual fund scheme, we have specified the category as per SEBI regulations. A user can see the category and sub-category after selecting a particular mutual fund, which helps in decision making before investing. A user can also filter the schemes with different criteria on our app while investing.
Q: Why doesn’t Paytm Money offer any human intervention with investors?
A: We don’t have human intervention with investors at this point of time nor do we plan to offer it in the near future. For those things, we need to evolve to a particular stage. These are very early days for us. We are at a stage of trying to understand user needs, goals and their aspirations when they invest. But, we will introduce features such as goal-linked investments in the future on our platform to guide investors.
Q: We understand Paytm Money does not have a toll-free customer care number. Why is that so? Users on your platform face a lot of problems in getting their queries answered. Whom should Paytm Money customers call if their payment doesn’t go through or some problem comes up while transacting?
A: We are focused on operating entirely digitally; i.e., from know your customer (KYC) process of a user to investing in a particular fund. Investors on Paytm Money have adapted to this entire digital journey of investing in mutual funds with us. So, we have a view that customer support should also be in the app, which we have provided, instead of a toll-free number.
A user can raise a query or complaint on our app. Our customer support team tracks that and resolves it. In case there are instances wherein payments don’t go through or some problem comes up while transacting and we see a customer really requires support on call, our team proactively reaches out to resolve the issue.
Q: SEBI allows RIAs to charge. Then why has Paytm Money not yet started to charge its mutual fund customers, given that you offer direct plans? How will you earn money if you offer everything for free? Also, would it not induce customers to a perpetual freebie culture or lead to a monopoly?
A: These are very early days for us to charge from users on our platform. As a start-up, we will go through different phases. At this point of time, we are at a stage of investing in products, technologies and investor experiences. We would want to look at revenue or monetisation after some amount of time. At this particular time, our focus largely remains on getting more and more investors onto our platform for investing.
In future, we are planning to cross-sell services such as loan against mutual funds and loan against securities to investors on our platform and earn money.
Today, people can invest in direct plans though asset management companies’ websites or apps or by visiting offline centres. Investors have the choice for selecting the mode of investing in direct plans. So, there is no question of inducing customers to a perpetual freebie culture or monopolising. While investing, factors that matter to investors are the features of the platform, experience of investing and services provided.
Q: What are the future expansion plans of Paytm Money?
A: In future, we are looking forward to offer new services regularly to investors. We have received approval from the Securities and Exchange Board of India (SEBI) for stock broking services and the Pension Fund Regulatory and Development Authority (PFRDA) for investing in the national pension scheme. We are planning to simplify investor experience while investing in stocks and NPS using our platform, as we did for mutual funds.Once we allow stock-broking services on our platform, initially we will offer direct equities. Then we will add fairly complex derivative products; but that will be at a later stage. We are also planning to introduce exchange-traded funds (ETFs) on our platform.Not sure which mutual funds to buy? Download moneycontrol transact app to get personalised investment recommendations.