Fintech is having a huge impact on the financial services in India. It has been largely dominated by the lending and payments companies in India. Initiatives like the India Stack [UPI, e-KYC, Aadhar] by National Payments Corporation Of India [NPCI] have been instrumental in leading the Fintech revolution.
Many of the fintech companies are leveraging Machine Learning, Artificial Intelligence, Social Data Intelligence, Blockchain, etc. in order to solve critical business problems. For example, with the help of AI, contextual data and transaction data, your wealth managers can come up with a ‘more relevant’ financial plan that suits your requirements.
When we talk about Money, the immediate thought that comes to our minds is ‘How to I multiply wealth via good investments‘. There are significant number of investment options available in the market but the option that you choose depends on factors like your age, dependencies, exisiting investment portfolio, risk apetite, etc. One good investment option is ‘Mutual Funds‘ but as per a report, India’s Assets under management (AUM) to GDP ratio is only 9 percent which is significantly lower as compared to other developed/developing contries. The bright side about this report is that there are rising number of people interested to invest in Mutual Funds given that they get proper hand-holding and guidance.
This is the problem that founders of WealthApp, a Fintech startup aim to solve by amalgamating their vast knowledge in personal finance with technologies like AI, Machine Learning, etc. Today we have a chat with Gaurav Dhawan, Co-founder & Director of WealthApp about WealthApp, Fintech, Personal Finance, etc.
How did you come up with the idea of WealthApp ?
We are ex-bankers from Citi who have decades of experience in personal financial management of individuals across net-worth segments. We understand that while people with higher net-worth have access to good quality financial advice, the middle-income groups in India experience an acute shortage of the same. There are various estimates to suggest that about 30 crore people in India have an ability to invest, a majority of which form the entire middle-income group of the pyramid. Given this huge need gap, we wanted to put in place a solution to reach sound financial advice to the market at large. The next question on our minds was to figure a solution to bridge this gap ? One thing that we realised very soon was that we needed to use technology to reach out to a larger audience.
However, using technology is one thing – but to marry that with quality advice is a totally different ball game. We then studied the entire advisor-client interaction cycle, right from the time of first interaction to the evolution of the relationship over a long term, and broke it down into steps that we could automate. We realised that most of this engagement can be automated using algorithms. Then we started picking elements of this interaction cycle to build algorithms to automate the process – that’s how WealthApp was born. We formally launched the platform in October 2016 for public at large.
Can you please give a background about the team behind WealthApp ?
The founders consist of myself, Subba Rao Telidevara, Sanjay HB and Mitesh Shah. We have a cumulative experience of 50+ years across various forms of money management. This makes us aware that the long winding process, paper work and lack of proper guidance in investment methods puts off people as prospective investors. The team is hard at work to ensure that our platform at WealthApp overcomes all of these barriers and adds value across the personal financial life of our customers.
As per a report, there is very small percentage of investors/would be investors who plan to invest in the Equity market [or MF], how does WealthApp plan to change this ‘resistant’ behaviour from investors ?
India’s AUM to GDP ratio stands at about 9 percent. In comparison, US markets boast of an AUM to GDP ratio of 70 percent. Even if we consider the global averages, 37% is the AUM to GDP ratio. While this clearly indicates the huge potential that our country has to channelize a significantly higher proportion of an individual’s savings into efficient financial products, India has been catching up very quickly.
This is due to a variety of reasons such as increase in financial awareness of the customers, efficient evolution of the regulatory framework and technology percolation across the country. WealthApp plans to use these broader trends to reach out to people and help them join the investment bandwagon. To keep the entry barriers low for our customers, we offer investment plans with as low as Rs. 100 investment minimums. We will also add more investment products in the future that we believe our customers will be able to benefit from.
Can you please talk about the funding of WealthApp ?
WealthApp raised about USD 440,000 in seed funding in December 2016. The startup’s investors include some very marque names such as NuVentures managing partner Venk Krishnan, Daksh eServices co-founder MJ Aravind, Vikram Kotak, Managing Partner at Crest Capital and Investment, Jayant Davar, Co-chairman & MD at Sandhar Group, Ramkumar Nishtala, MD & CEO at Vistaar Finance, and Arjun Sharma, chairman of the Select Group.
Can you share some insights into the customer demographics of WealthApp ?
An extremely large part of the unexposed population resides in the tier II and III towns where people have no access to professional financial advisory. WealthApp came up with the concept of Online Robo Financial Advisor for all kinds of investors ranging from youngsters or first time investors to a family man and seasoned investor. Moreover, WealthApp’s internal survey of a few remote towns in Karnataka revealed that about 80 percent of the population there spend at least 20 percent of their income on smartphones and data usage. Rest is reserved for household expenses and cash savings.
People there are actually very tech savvy, largely on mobile phones. And contrary to our belief they have a decent appetite for investment. But most invest in chit funds and other inefficient instruments since they have no one to guide them.
Once user has created an account on WealthApp [and all his investments from various AMCs are under one window], what other services does your team provide to the investors so that they can get more returns from their investments ?
WealthApp analyses an individual’s risk appetite, need to take risk and tolerance for risk based on factors such as income, assets, savings and financial goals that one may have. After an investment is made, the app tracks and monitors the complete cycle, alerting and suggesting investors on due payment, or any change in rules. The app also updates users over the need for liquid cash and provides options to obtain it. The platform is being enhanced further to accommodate more such situations that a customer may face over an investment lifecycle.
Can you give a small glimpse about the tech behind WealthApp ?
WealthApp has developed sophisticated iOS and android mobile apps to help the middle-income groups and retail investors in India simplify their financial planning and wealth management process. Sophisticated algorithms automate the entire advisory process thus ensuring top notch and timely advise for the investor. That the smaller cities and towns face data connectivity issues doesn’t deter WealthApp.
The app is built to use data efficiently. It is a light app that works on 2G bandwidth also. Currently, WealthApp’s user interface is English. There are plans to go vernacular, primarily to target the smaller towns and cities in future.
Are there any competitors of WealthApp, if so what are some of the USP’s of WealthApp vis-a-vis the competitors ?
The segment is growing as more people start looking for financial investment products to broaden their portfolio beyond traditional products such as gold and real estate. Some of the USP’s of WealthApp vis-a-vis the competitors are below:
- Prospective Clients made investment ready via KYC in a thoroughly paperless manner with a very simple and streamlined on-boarding process
- Sophisticated algorithms automate the entire advisory process thus ensuring top notch and timely advice for the investor
- Knowledge and experience of the founding team work to provide customized portfolio most suited for investors and their goals based on thorough research and strategy
- Ongoing monitoring 24/7/365
- Supported with convenience of doorstep service offered via web and mobile apps
- Equipped with a team of seasoned professionals for those that require the age old personal human touch
WealthApp is currently limited to MF’s, are there any plans/timeline on whether it would be expanded to cover other financial instruments ?
WealthApp Financial Advisors is an automated investment service, conceived over a year back. It makes use of its user friendly online platform to offer best in class investment portfolio to its clients. This is based on their financial goals and ability to take risk, and mutual funds offer various advantages to build customized investment portfolios. Having said that, the company plans to add more investment options in the near future.
What are some of the methodologies that your team plans in order to keep the investors hooked on to the platform [primary reason being investments are mostly planned by investors and most cases, they would not invest more unless required, unlike shopping which is more adhoc and also more repetitive and hence more stickiness.] ?
It’s our endeavour to engage our customers meaningfully while adding value to them. A slick and customized dashboard makes it convenient for them to see their investment status on the go and they keep coming back to it often to review their portfolios. They like the fact that we don’t use jargon and provide them all the information that they need in an easy to understand manner.
We also write articles and blogs frequently on topics that are of high relevance to our customers. Again, simplicity of conveying the messafge is the key so they keep coming back to read up and make themselves more knowledgeable on areas of personal finance. Our customers also appreciate the value in our periodic automated reports that reach their mailboxes.
There are various investor initiatives like #MFDayon7th by Reliance MF and CNBC TV18, does WealthApp have plans of starting an investor education initiative [or something else] in order to widen the horizon of passive investors [that could be an integral part of the investors eco-system, but dont know where to get started] ?
WealthApp has been at the forefront of customer education right from the start. We have conducted more than 50 roadshows [in metro cities and beyond] till date to spread awareness and provide simple solutions to people’s money problems.
Our platform is coded with complex algorithms by our engineering team and they have kept it up to date with the ongoing developments in the policies and reforms in our economy. The idea is to reduce the human intervention while we interact with our customers and be fully transparent.
With growing investor and entrepreneur interest in Fintech, many wallet companies like Paytm, FreeCharge, MobiKwik, etc. are plannig to have a boutique of finance products on their platform, does this growing competition have an impact on a startup like WealthApp and how it could result in expansion of the fintech ecosystem ?
Since the evolution of technology and start-up boom, Indian economy has been a huge market place for various types of businesses. Every entrant in the start-up space has been looking at diversifications based on their growth and funding options available around them. Also with the growing economy and huge population, fintech ecosystem has so much potential yet to be unlocked.
At WealthApp, the team comes with a tremendous domain knowledge and experience in the financial sector. We are glued on to the ongoing actions and want to be the best in the market with providing right products and offerings with a remarkable customer service. The market looks extremely responsive for WealthApp at the moment and we would like to be focused on our current service offerings instead of diversifying into many portfolios at this point of time. Currently, WealthApp deals only with mutual fund portfolios because MFs are very well regulated, are very difficult to understand, and the seed money requirement is very less.
You mentioned earlier that there is a growing demand of products like WealthApp in tier-2, tier-3 cities [and beyond], what are some of the marketing initiatives that your team has taken in order to penetrate into that particular market ?
The tier 2 towns and beyond is where the potential lies untapped. The revolution in technology and touch of power has reduced the distance between both the worlds. It has digitally enabled the end customer to gain access to the knowledge and information today. This has opened up new dimensions for them to look into new avenues of investment options.
It has created inroads for WealthApp to proceed further and we are equipped with sound knowledge on the subject. We have created a team of experts who reach out to the end customers in these markets, helping them in communicating the knowledge on investments, building portfolios and managing them. We have been working with the target audience in various parts of the country.
Along with the integrated AMC approach, building investor porfolio as per his requirements, etc. your team also provides advisory services to your customers. Are these services charged and how has been the customer response to these services [since none of the finance platform provides such tailor-made services] ?
At WealthApp, the platform is equipped to build a persona of the customer on its platform and provide advisory recommendations for investments. The automated investment service has been kept free of cost while some specific value added serives are being developed that may be on a chargeable basis. Market response to our platform has been terrific so far and we are extremely encouraged to serve our customers in the best possible manner.
What is the revenue model of WealthApp and does it follow the Freemium model ?
WealthApp does not charge its customers for the automated investment service platform. It charges the fund houses a small fee. There are a number of tools and products in various stages of development and testing that may be used by the customer for a fee.
Are there are any RBI guidelines regulating the app based businesses [P2P, Line Of Credit, etc] in India or to put it the other way round, is there a requirement to regulate them ?
The app is a channel to reach out to people conveniently. The entire advisory on our platform are fully regulated by SEBI while the payments are governed with the rules laid out by the RBI.
2016 was a tough year for startups [especially from funding point of view], how according to you should entrepreneurs deal with such adverse situations ?
Having recognized a real need gap in the market and put in place a solution that adds real value to the customer, what remains critical for an entrepreneur to tide over such times is an ability to evolve as they learn alongside persevering.
After demonetization, there has been a huge demand for payment apps [including UPI], wallet providers providing investment options like Digital Gold, etc. do you see that trend working in favour of apps like WealthApp [that makes an investor’s life smoother] ?
Absolutely. As more and more people become aware of digital platforms and become comfortable using them, it helps us explain the delivery mechanism of our service to our customers in a more contextual fashion.
As per your entrepreneurial experience, when should an entrepreneur look out for external funding ?
A couple of common circumstances when one should seek external funding could include situations when you either need funds to build/improvise your product/service or when your own revenues are not sufficient to sustain growth.
Some books that you highly recommend for entrepreneurs
Some of my recent reads that I recommend for entrepreneurs are Shoe dog by Phil Knight, Predictably irrational by Dan Ariely and The Inevitable by Kevin Kelly.
Some closing thoughts for our readers!
Effective financial management is key to meeting various life goals. This could include various aspects of our lives such as savings, expenses, investments, budgeting et al. To do any or all of this, one should seek the help of qualified financial experts to guide them through the process.
Choosing the right financial advisor is key and you must ask all questions that you need answered to make a well-informed decision. Keep in mind that the amount of wealth that we build is less a function of our income and more a function of our savings rate. And while they say money can’t buy happiness, I beg you to reconsider.
We thank Gaurav Dhawan for sharing his insights with our readers. If you are planning to put your money to work via smart investments, then you should download WealthApp. If you have any questions for Gaurav or the WealthApp Team, please email them here or share them via a comment to this article.