Emerging Fintech: Leveraging tech to make investment advisory accessible, understandable, and quick in India
The global wealth management market has been growing steadily, it was valued at USD 2.64 billion in 2022 and is projected to reach USD 6.29 billion by 2029, which translates to a CAGR of 13.2% over the projection period. However, this is dwarfed by the speed at which the wealth management market in India is expected to grow, projected to witness at 75% increase in number of HNIs from 2020 to 2025 and a 39% increase in the number of UHNIs during the same period.
This presents a massive opportunity for fintech players to capture a growing market that is relatively young and digital-friendly i.e., understand and prefer using web and mobile-based services, and use their agility and superior customer experience to effectively compete against the legacy and slower-moving wealth managers. I had the opportunity to have a conversation with the founder of one of India’s leading wealth tech platforms — Subramanya SV, the Co-Founder & CEO of Fisdom — an app that is blending cutting edge technology with personalized financial advice to enable people to build wealth effectively.
Tarang: Hi Subramanya, can you start by introducing yourself to our readers and sharing a bit about Fisdom?
Subramanya: Sure Tarang, I’m Subramanya SV, co-founder and CEO of Fisdom. Before founding Fisdom, I was a Managing Director at Bessemer Venture Partners, a global venture capital firm. During my time at Bessemer, I sat on the boards of several Indian internet companies such as Bharat Matrimony, TaxiForSure (which was sold to Ola), Snapdeal, and several others and also created their long-term technology investing roadmap. In fact, I was responsible for setting up the Bangalore office for Bessemer Venture Partners, and it was during my stint there that I was inspired to become an entrepreneur. My co-founder, Anand, on the other hand, was an investment banker, and he used to lead technology investment banking for UBS and later for Macquarie Group.
In 2015, we both saw the huge disruption happening on the digital side, and we realized that there were more and more opportunities being created in the financial services sector. We noticed that the retail financial services market was underpenetrated, and customers had a lack of knowledge, access, and trust in the sector, that's when we also identified four areas of retail financial services: payments, wealth, insurance, and credit. Later we decided to create something in financial services that would be simple, accessible, and trustworthy for everyone. And that’s how the idea of Fisdom was born.
The first version of Fisdom was launched in 2016, which helped customers get digital KYC and recommendations based on their risk profile in the mutual funds they needed to invest in. Fisdom also offered features like automated portfolio rebalancing, advice, and redemption. Since then, We have added several financial products & services, including pension funds, tax filing, Private Wealth, and stockbroking. Our main aim at Fisdom is to make investing simple, accessible, and trustworthy for customers across life stages. We believe that technology blended with financial wisdom can solve the problems of lack of knowledge, lack of trust, lack of time, and lack of access to financial products at scale.
Today, Fisdom offers a suite of financial products such as stocks, mutual funds, pension funds, sovereign bonds, insurance, Alternative Investment Funds, Portfolio Management Services and Income tax filing. We strive to be a one-stop-shop for all financial needs for customers through a hybrid model — digital for regular customers and an assisted model for the mass affluent customers & High Networth Individuals in India.
Tarang: That’s super interesting! Why did you choose the B2B2C distribution model? Who was your first partner bank and what was your pitch to them like?
Subramanya: At Fisdom, we innovated the way we reach our end customers for digital wealth solutions. During the initial days, we realized that trust it is important for us to be associated with brands that customers already trust. Instead of burning money on traditional marketing channels which are expensive and could prove to be ineffective at times, we decided to take the B2B2C route. Hence the idea of partnering with banks and financial institutions came about so we could leverage the trust and distribution network of our bank partners.
This branded partnership approach has proven to be successful, and we currently work with 15 small and large banks in India giving us exclusive, non-competitive, and efficient access to a customer base of over 40 crore Indians. Due to this our cost of acquiring customers is lower than that of most of our competitors.
Fisdom’s SDK (app bundle) is integrated into all our partner banks’ mobile banking and Internet banking platforms to make the user journey seamless for the customer without ever having to leave the banks’ app for investing, trading or tax-filing.
We signed up our first partner bank, Lakshmi Vilas Bank, and subsequently other banks. We started approaching these banks with a win-win proposition; where they could offer better products, engagement to their customers, and better revenues while we got access to their customer base. Our partner banks include:
- Public sector banks: Indian Bank, UCO Bank, Bank of Maharashtra, Punjab National Bank, India Post Payment Bank, Union Bank of India
- Private banks: Karnataka Bank, City Union Bank, Tamilnadu Mercantile Bank, Suryoday Small Finance Bank, State Bank of Mauritius
Tarang: Tell me, after working as a venture capitalist for Bessemer Venture Partners, what inspired you to switch to entrepreneurship? Was this transition challenging?
Subramanya: As a venture capitalist, I had the opportunity to work with some exceptional founders who inspired me with their journeys of starting and scaling businesses from scratch. Working with them made me realize the incredible potential of entrepreneurship and the long-term value it can create for customers, employees, and shareholders. I strongly believe that being a successful entrepreneur is probably the best job in the world, and in 2015, which seemed like the best time to start the business, I made the decision to trade my job as a venture capitalist for the chance to build a successful company of my own.
Having said the job as an entrepreneur is very challenging, and I was very well aware from my experience that most companies fail, even those that seem like great opportunities. But I was willing to take that risk and put in the hard work to build something meaningful and impactful with Fisdom. Market potential is huge which gives us time to make mistakes and improve over the course of time. Also, I’ve given myself a decent time length of 15 years to build a meaningful business.
Tarang: The fintech ecosystem in India has been transformed in the last 6 years. in fact Fisdom was founded before the disruption brought about by Unified Payments Interface (UPI) in India. Could you share what are some pivotal moments in the journey of Fisdom so far? How do you see the wealth tech industry evolving in India and what sets Fisdom apart?
Subramanya: When we founded Fisdom, the fintech landscape in India was very different from what it is today. This was before the adoption of UPI and the demonetization of the economy. However, we saw a huge opportunity in the market, which we felt was underpenetrated in terms of financial services. We knew that the next big technology adoption would be in retail financial services, which we identified as consisting of payments, wealth, insurance, and credit. At that time, investing in stocks or mutual funds was a cumbersome process, involving lots of paperwork and KYC forms. We wanted to make it easy and intuitive for customers to start investing and saving. This is where the whole Fisdom journey started.
We wanted to make it easy and intuitive for customers to start investing and saving. This is where we started, with our mobile app that provided digital KYC and recommendations based on a customer’s risk profile. Since then, we have added more financial products, including pension funds, tax filing, and stockbroking. We have also launched Fisdom Private Wealth to cater to mass affluent and High Networth Investors.
We signed on board our first bank partner in 2017, 24 months after we started Fisdom. It took us 18 months after that, in 2018, to sign up our second bank partner. In 2023, we have 13 more banks as a partners. Fisdom was the first fintech company in India to completely digitise the KYC process in 2019. In 2021, we launched our stock broking business and Private Wealth business. We also acquired Tax2win, India’s second largest tax filing business in the same year. In 2022, we launched One Percent Academy by Fisdom, which is an education initiative designed to help investors and traders to learn the necessary skills to succeed in investing and trading.
India’s fintech scene has been rapidly evolving and transforming the way Indians save and invest their money. The country today is experiencing a multi-decadal trend in the financialization of savings due to various long-term structural factors. The public digital identity and payments infrastructure in India has made participation in the capital market easy and quick through Aadhaar and UPI. Furthermore, the growing internet penetration in India has resulted in changing buying and investment behaviour of the population, which augurs well for the fintech ecosystem. Furthermore, traditional storage avenues of wealth in India have been gold, real estate, and bank deposits, which are becoming less viable options for investment due to their volatility, decreasing interest rates, and transactional costs. As investor awareness increases, capital markets will continue to attract capital in all forms.
Now what sets us apart from other wealth tech startups is our unique distribution model and platform approach. We offer a suite of products and services, including stocks, mutual funds, tax management, AIF, PMS, pension funds, education programs, and community programs, all on one platform. Our B2B2C distribution model gives us access to a combined customer base of 40 crores Indian across the geographies of India due to our exclusive partnership with the Banks.
Tarang: Financial market regulations in India are evolving rapidly, what has been your experience of navigating these changes and working with regulators?
Subramanya: As a market participant, I have seen the regulator in India tighten compliance norms for various market players over the last few years. SEBI’s key objective is to ensure that the interests of retail investors are protected, and I think that is a welcome step. These actions are intended to safeguard the interests of the last man standing, which is important given the information asymmetry that puts the retail investor at a disadvantage. As a responsible market participant, it is crucial to incorporate these changes into our business model and take them into account while planning and budgeting. We look at regulatory overheads as a necessary cost of running our business.
At Fisdom, we ensure that all our processes and systems are well-aligned with the current regulatory framework and that we are always compliant. We hold multiple regulatory licenses and are regulated under SEBI, PFRDA, the Income Tax Department, and more. In our industry, regulations play a key role, and we invest heavily in this area. Compliance and regulations exist to promote transparency and integrity of the financial markets and protect customers and investors from financial crime, market manipulation, ethical threats, and systemic risk. While in the short-term it adds to our cost of running the businesses and innovation, in the long-term, it paves the way for more customers to participate in capital markets, which ultimately benefits us.
Tarang: What is your vision for Fisdom over the next 5 years, what new product/service offerings are you looking at? I know you have a product for Non-Resident Indians, but do you also plan to expand beyond investing in the Indian market?
Subramanya: Our vision for Fisdom over the next 5 years is to become a profitable company that is admired by our customers. One of our main focus areas is education and we have set up One Percent Academy to create awareness and educate our users about investing in capital markets, managing their wealth and personal finances. We also plan to build a community of like-minded individuals who want to learn, invest and trade together. We have started an online and offline communities that have been well-received and we intend to scale these programs this year. Additionally, we are setting up a customer advisory board with 50 customers and ecosystem partners who will work closely with the Fisdom product and education team to co-create the product and content that is most needed by the customers.
As for new product offerings, we have plans to apply for a license to launch Asset Management Company for manufacturing Portfolio Management Services (PMS) for High Net-worth Individuals on our platform. We will set up a separate entity — Fisdom Asset Management Company — under the parent entity Finwizard Technology to apply for the license.
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References
2. How Tech Is Revolutionising India’s Wealth Management Industry (inc42.com)
3. Wealth Management Platform Market Size, Share | Growth, 2029 (fortunebusinessinsights.com)
