Wealth management apps: Click to save, tap to invest

Got some spare cash and want to invest in mutual funds (MFs), but don’t know how to go about it? You’re in luck. In a world where there’s an app for everything, including one to remind you when to drink water, investing is just a click and tap away.

Over the past few years, a host of wealth management apps have sprung up with more young professionals discovering MFs as an attractive option to park their savings and looking for easier ways to invest and manage their money. Both established players and new entrepreneurs are tapping the growing demand for systematic investment plans (SIPs) and MFs, along with the tools to invest in them. In the past one year itself, India has witnessed a boom in this space with several apps such as ETMoney, Fund Easy, and more recently Angel Broking’s Angel Bee hitting the market.

What exactly do these wealth management apps do? Quite a lot, actually. To begin with, they help you manage your expenses, create a budget, calculate your taxes, and even pay your bills automatically. But, more importantly, they advise you on where to park your money, tell you the pros and cons of debt vs equity, track your investments, and suggest whether to buy/sell or hold your investments. All on your smartphone. And it doesn’t matter whether you’re investing just ₹5,000 or ₹5 crore. “Only 1.5% of Indians invest in MFs, the best way to build long-term wealth. Therefore, there is a need to educate individuals, especially the increasing number of young earners,” says co-founder and chief executive of Scripbox, Ashok Kumar. In mature markets such as the U.S. this figure is more than 45%.

Kumar should know. Scripbox launched its app in 2016. Already, the app has over 100,000 downloads on Google Play and is rated 4.6 stars out of 5 on Apple’s App Store. The company says it has customers across over 1,250 towns and cities with assets under management (AUM) of more than ₹850 crore. As many as 70% customers are first-time investors. He says that customers invest from ₹5,000 to ₹5 lakh and over 60% of them are SIP investors who have committed more than ₹35,000 crore.

Groww is another popular app. Launched in December 2017 by former Flipkart employees, it also has over 100,000 downloads so far on Google Play and is rated 5 stars on Apple’s App Store. Lalit Keshre, co-founder and CEO, says despite increasing competition, growth has been impressive. “We have over 200,000 active users on our platform and the number is growing at 40-50% month-on-month.” While metros and tier 1 cities drove growth initially, the focus has now shifted to tier 2 towns as there is more scope there, he adds.

It is this scope that another player, Payworld, is trying to tap through a unique retailer-focussed model: The company trains retailers who then assist customers to carry out financial trans - actions online. While Payworld began around 11 years ago, offering help with simple transactions like mobile recharges and money remittances, it forayed into the MF space this year. Payworld CEO Praveen Dadabhai says a lot of people from small towns want to invest but can’t, because they don’t know how to go about it. “People in smaller towns and rural areas are watching the same advertisements that urban citizens are watching, those that say ‘mutual funds sahi hai (MFs are the right way to invest)’,” he says. While the average ticket size from smaller areas could be as low as ₹100-1,000, they have volumes, he says. His company aims to create 100,000 portfolios a month.

Given the rising competitive intensity, most players seem to be banking on just one factor to stand out in a crowd—simplicity. While Groww says it is completely focussed on simplifying the process itself and boosting transparency, Scripbox says it hopes to make investing in MFs as easy as buying movie tickets online.

But with so many players, isn’t the market getting too crowded? Kumar doesn’t think so.

“We [Indians] save $500 billion annually which is approximately 25% of India’s gross domestic product (GDP) and most of these savings are invested in fixed income assets such as fixed deposits, gold, and real estate. Only about $15- 20 billion is invested in market-linked assets such as MFs. Thus, fixed income assets are the real competition and enabling people to invest in inflation-beating assets is the goal.”

Also there’s plenty of scope. With the average age in India expected to be 29 by 2020, it is on its way to becoming the world’s youngest country with around 64% of its population in the working age bracket. And many are convinced, according to data from the Association of Mutual Funds in India (AMFI). In August, MFs’ AUM touched a record ₹25.2 lakh crore, driven by inflows of ₹1.75 lakh crore, AMFI says. Although net equity inflows have been trending down - wards in recent months, collections through SIP schemes were robust at ₹7,654 crore in August.

If these companies are focussing on smaller towns and first-time investors, players like Cube Wealth are concentrating on the other end of the spectrum—high-income corporate warriors and entrepreneurs—to drive growth. Over two years after being carved out of mobile payments service Citrus, Satyen Kothari’s Cube Wealth re-launched itself as a wealth creation and management platform in May—one could invest in MFs, track investment, and get access to wealth advisors on its revamped mobile app.

The Citrus Pay co-founder and CEO of Cube Wealth says the app helps users manage expenses, save for particular goals and invest in MFs. “The app’s USP is that it will find the highest quality advisors who will recommend the best assets for you; do it with discipline without the emotion of fear or greed and do it with enough compounding over time,” he says. In fact, the service is so personalised that every customer gets added to a WhatsApp group with Kothari himself and some other team members from the company, who offer round-the-clock service.

The road ahead is flush with opportunities as many players are looking to diversify into other financial products and services such as insurance and small-ticket loans. With smartphone penetration rising exponentially and access to cheap data opening up several possibilities, India’s financial inclusion mission could well be realised with the help of such apps.

(This story was originally published in the October 2018 issue of the magazine)