Online investing platform Kuvera is among the beneficiaries of the equity markets bull run and the rising interest among tech-savvy youngsters to invest in financial instruments at the lowest possible cost.
Direct investing platforms such as Kuvera, Zerodha and Groww, which offer zero commission mutual fund investments, have seen their investor base increase rapidly. As a result, many traditional brokerages have been forced to rethink their business model.
Neelabh Sanyal, Founder and COO , Kuvera, says in 2017, his company was one of the first to offer a centralized technology platform to facilitate direct mutual fund investments and now offer a range of adjacent products and services its users.
Sanyal says that Kuvera saw phenomenal growth when it started out and continues to double its user base in less than 12 months, as a testament to the product market fit and indicating a clear gap in the market for these services.
With investments fragmented across intermediaries for most investors, Kuvera’s solution to provide a single snapshot of their portfolio resonated very strongly with investors. Users can, in real time, generate their transaction statement, add it to Kuvera, see their entire portfolio and even start transacting.
The covid pandemic saw many job losses and these individuals either withdrew their investments or stopped investing further. But those who managed to retain their jobs through this period, saw higher savings due to zero travel related expenses and even savings of rent as many moved back to their hometown. This kitty also found its way into financial investments.
Sanyal, says the company now has more than 1 million users and has crossed Rs 26,000 crores in Assets under Advisory (AUA) with the majority being mutual fund users.
Sanyal, with a long stint in financial services, felt there was a need to address the trust gap in intermediation. Kuvera offers only Direct Plans of Mutual Funds to users, which means that there are no commissions paid by the fund house to the intermediary removing one of the key conflicts in financial services intermediation. “Kuvera recently received the ISO 27001:2013 certification and this reflects our commitment to world class information security standards and controls.”, added Sanyal.
This principle has guided Kuvera’s philosophy from day one and Sanyal says they have strived to build something that they can confidently recommend to family and friends.
Passive investing has been a laggard in the Indian mutual fund industry despite being the most popular instrument in developed markets such as the US. Interestingly, post covid, the number of accounts which invested in passive investing instruments such as index-tracking or exchange-traded funds more than doubled to 5.6 million in the year to April.
However, driven by addition of millions of new young investors post covid19 pandemic, passive products now account for nearly a quarter of equity assets under management versus about 16 per cent two years ago, data from the Association of Mutual Funds in India show. The figure is more than 50% in the U.S.
Sanyal says Kuvera has championed passive investing and conducted more than 100 training sessions to educate investors and even put out a recommended model portfolio consisting largely of index funds. “So essentially you simplify that decision for the investor, you’re not choosing the fund manager, you’re just putting it in a basket, which is tracking the market,” he adds.
Another unique aspect of Kuvera’s platform is its focus towards goal-based investing. Sanyal says that even as a child he would inadvertently practice goal-based saving while putting aside money to purchase music CDs. Kuvera has created a framework for users to visualize goal-based investing by allocating investments towards financial goals such as the purchase of a house or for retirement.
Kuvera’s user base
Sanyal says Kuvera’s average user is between 30 to 35 years old. And about 60-70%, users are salaried. Fundamentally, they may not understand mutual funds so their journey starts with first learning and understanding mutual fund investments.
“Our customer interactions are around building their understanding on the basics of investing such as compounding and also around mutual funds. It helps to spend at least some time reading about and understanding what to expect from mutual fund investing.” he adds.
The other segment of users that Kuvera has are financially savvy investors who have been investing for the last seven to 10 years or longer and want to access their portfolio conveniently in one place. So they will rely on their own financial decisions and analysis to make those investment decisions and are using Kuvera primarily for investing and tracking their portfolio.
Sanyal says Kuvera is helping customers manage their finances at various life stages with services and solutions towards investing.
Kuvera’s USP is the simple and easy to use platform built by its in-house team. “We have a very deep tech talent pool. I think today, for any financial services business, fundamentally, technology is the most key element of service delivery.”
Unlike a physical asset like a mobile phone whose delivery involves logistics, financial products can be completely digital. “If we can remove the frictions around it, signing documents, sending checks and figure out compliant ways to solve these problems, then in financial services, technology is the true differentiator,” he adds.
Sanyal says the operational expenses to keep Kuvera’s infrastructure running is miniscule. Kuvera integrates with intermediaries such as exchanges and fund houses. While Kuvera does not charge customers for investing or for investment advisory services, Sanyal says they keep experimenting with services that deliver visible value to customers.
The startup, over the last two years, has made significant inroads into digital gold, digital fixed deposits, both international and domestic equities, insurance services and cross border remittances.
Kuvera is constantly evaluating financial products, differentiated models and ideas which add value to its 1 million customer base and has exciting things up its sleeve on the product side, Sanyal adds.