Eleven months ago, India’s leading digital payments firm ventured into new territory with the launch of Paytm Money.
Owned by Paytm’s parent firm, One97 Communications, the mobile-based financial services app mainly provides a platform to invest in mutual funds. Even as it challenges heavyweights such as nationalised banks and established asset management companies (AMCs), Paytm Money is confident of its future in the segment thanks to a growing interest in mutual funds, says Pravin Jadhav, the company’s whole-time director.
“In the next two to three years, the number of investors in the country will increase by as much as 25 million,” says Jadhav.
In a conversation with Quartz, Jadhav spoke about Paytm Money’s performance so far and its plans for the future. Edited excerpts:
In less than a year, Paytm Money has gained over three million users. What is the reason for its popularity?
So far, mutual funds were mostly distributed through three channels: AMCs that set up their own distribution centres, banks, and independent financial institutions. Here, a part of the investment goes to the channel as commission fees, and the investor is not even aware of this. We offer direct plans of mutual funds and do not charge commissions. The entire benefit goes to the investor.
Also, there are a lot of people who want to invest small amounts in mutual funds. The needs of these small investors were not catered to earlier, as nobody would want to make a Re1 commission on an investment of Rs100 ($1.42). But we let people start investing as little as Rs100.
If you look at the overall number of investors out there, it’s quite huge, at around 19 million. I think we have still not done justice to the potential of an entire industry.
On the flip side, small-ticket investments could mean exposing financially uninformed investors to the risks of mutual funds. How do you protect such investors?
We realise that online platforms such as ours need to ensure full transparency and we are doing that. Our customers can compare the performance of various mutual funds, on our platform. If there’s a lesser-known AMC which is performing better, we make sure our users are aware of that, too.
We are also working on introducing users to fund managers, so that they know who exactly is managing their money. Besides, we are uploading short videos where fund managers explain the jargon of investing. We also offer pre-portfolio analysis. If someone wants to invest in a certain company, we let them know things like how that firm is performing in the market.
Do you think these innovations give you an edge over the competition?
What makes us different is our approach to mutual funds. We have consciously stayed away from market jargon, and we have tried to make a visually-enriched product. So, on Paytm Money, if you want to check how a particular mutual fund is performing, you can see it through a detailed graph which will give you the necessary information about expected returns from the investment.
We also share the details of fund managers with users. Additionally, we will get on-board CEOs of AMCs who will explain to users why investing with them will be beneficial. Usually, the risks and conditions involved in investing are listed with complicated details in 3-4 page long documents. We are trying to avoid that, and making sure we explain everything in crisp 30-40 second videos. If a user wants to know more, then he can refer to the additional information on our platform.
We are focussing on being more interactive than we are at present.
What are your plans for Paytm Money this year? What new products will be rolled out over the coming quarters?
Currently, our focus is on scaling up the business. We have also received the market regulator’s approval to start a stock-based business. We will soon offer stock market products starting with equities, and later our focus will also be on exchange-traded funds, and futures and options. Besides, we have received a nod from the Pension Fund Regulatory and Development Authority to offer the national pension scheme—a retirement product. So, our focus for the next 12-18 months will be largely on building these products and to allow more people to invest.
As you aim to grow, how many new jobs do you think Paytm Money will create?
We started with a team of five to six people. From the time we started till our launch, in September 2018, we expanded to 100 people. Today, we have over 200 employees, and since it’s a growing business and we will be investing in new products and technologies, we are looking to make sure that our team size is more than 400 in the next 12-18 months. We will hire engineers, product developers, and design and operations experts.