Paytm is backed by Chinese billionaire Jack Mas Ant Group
India’s highly competitive stock brokerage industry has a fierce new rival.
Paytm Money, a unit of Paytm, the nation’s largest digital payments startup, backed by Chinese billionaire Jack Ma’s Ant Group, aims to build a leading stockbroker by helping local retail investors avoid the biggest Investment Hazard: Getting burned during a cycle crash and quitting for good.
The app made commission-free stock trading available to its millions of users last month. He plans to put algorithms in place so that novice, young and smart phone investors from India can be pushed out of trading at a loss and make a profit at the right opportunity.
The newcomer is stoking competition among Indian brokerages who are rushing to provide hungry traders with the perfect platform. Agile, tech-focused online brokers are getting ahead of older established rivals by offering easy-to-use platforms with minimal fees. Online services at the pace, smaller players have been rapidly closing their doors, with about three-quarters of brokers closing their stores in the past six years.
“There is a lot of debate about who will survive in the Indian brokerage industry because there are so many disruptions,” said Kranthi Bathini, director of Mumbai-based WealthMills Securities Pvt. “Paytm is very well known, its brand has reach. They could create a lot of awareness about investing in stocks in India. “
A sign for the PayTM online payment method is displayed at a street stall selling accessories in Bangalore, India in 2017.
The launch of the app could hardly be better timed. Like the Robinhood craze in the US, Indians have been drawn to the stock market this year. Four and a half million people had opened business accounts in the first seven months of this year, compared to less than three million in all of last year, according to data compiled by Central Depository Services Ltd.
Paytm, whose parent company One97 Communications is valued at $ 16 billion, has become a leader in fintech in India. It was founded a decade ago by Vijay Shekhar Sharma to offer digital payments in a market that Credit Suisse Group AG forecasts will reach $ 1 trillion by 2023. Ant Group has a 30.33% stake in One97.
‘It would be huge’
Paytm has a user base of about 80 million for its payment services, according to Vivek Bajaj, co-founder of StockEdge, an education and research platform for retail investors. “If they bring 10 million of those users to the stock market, it would be huge.”
While concerns are mounting about the increasingly speculative nature of retail equity gambling, increased demand for online and mobile brokerage services has sparked innovation in India. Brokers are racing to offer new features, such as access to US markets, to stay ahead, while keeping fees to a minimum.
“Prices have become commodities, so the broker that adds the most value will prevail,” Bajaj said.
Some of the ways that Paytm Money hopes to highlight include features that could allow users to automate entry, exit and monitoring of investments in various securities, Varun Sridhar, CEO, said in an interview. Another innovation planned to attract users is adding resources for investor education. Currently the app has the ability to set up monthly scheduled investments in individual stocks, which has proven popular with mutual funds.
“In three years, we would like to be number one or two with a 10-15% market share,” said Sridhar.
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