Prolonged lockdowns and economic uncertainty brought on by the COVID-19 Pandemic made it imperative for people to diversify their sources of income. This lack of clarity on one’s financial future is a key reason that has led to a growth in the number of retail investors, according to a report by Benori Knowledge. They are a new-age provider of custom research and analytic solutions.
Results from the report revealed that in the last 3 years, over 81 per cent of digital investors started their investment journey. These findings from a Benori Knowledge survey were done with 1,000+ digital investors, conducted to gain a better understanding of usage patterns, preferences and trading activities on online investment platforms.
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Reports say the digital investment market is set to be worth $14.3 billion by 2025, growing from $6.4 billion in 2021 at a 5-year CAGR of 22.4 per cent backed by India’s fintech boom. According to the research company, many members of the younger generations are actually beginning their wealth management journey through digital platforms, with 93 per cent of users falling into the Millennial segment. The company claims investors are flocking to digital platforms because they find them convenient to use and they offer them a wider range of options.
The report states, that the younger crowd that these platforms attract are also increasingly diverse. It is apparent that they are boosting female presence in the investment community, with women making up almost 40 per cent of digital investment platform users. However, in terms of geographic dispersion, the investment space remains clustered amongst highly urbanised areas, with over 60 per cent of users coming from Tier 1 cities.
The company says the rise in digital wealth management platforms can be attributed to users getting a higher return on their investments. According to the report, 72 per cent state that accruing higher gains is their primary objective for investing digitally. On top of that, 42 per cent invest to attain their financial goals which include building savings for retirement (51 per cent) and reducing taxable income (25 per cent). While Mutual funds emerged as one of the most popular options for online investors, accounting for 62 per cent of their trading activities, interest in stock trading is beginning to catch up, with half of the users (51 per cent) participating in public markets.
The research report further stated, that despite the rise of digital investment solutions, investor awareness is mostly guided offline, with 36 per cent of users consulting friends and family and 17 per cent turning to a financial advisor. Other sources that people rely on for investment-related information include digital avenues like financial websites and social media (32 per cent), while only 14 per cent rely on traditional media (newspapers, TV and radio).
The company claims digital investment spaces are set to continue retaining and growing their number of users, claiming a high satisfaction rate of 87 per cent. What is spurring gratification with these platforms is the perceived higher returns they offer, accounting for 53 per cent of user satisfaction. The report states, that investors are also pleased with their ease of use and operation (68 per cent) and their quick and convenient KYC process (59 per cent), which overcomes bureaucratic delays. When considering the benefits of investing online as opposed to the traditional way, users highlighted convenience (72 per cent), access to a larger range of products (55 per cent) and lower brokerage fees (47 per cent).
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However, the research company states that digital investment platforms do come with some limitations as well. It is not yet clear how they operate in terms of data security. Those who were only moderately satisfied (9 per cent) with their platforms pointed out privacy issues (60 per cent), lack of relevant information (58 per cent) and unreliability (41 per cent) as causes for concern.
Ashish Gupta, the Co-founder and CEO of Benori, says, “The digital investment landscape has continuously evolved with the advancements in technology to provide customers with simple yet sophisticated investment processes that offer a variety of investing options. These new-age wealth management platforms have greater appeal amongst millennials, who are now increasingly participating in capital markets.”
“With an increase in the number of younger investors relying on digital avenues to grow their wealth, financial institutions will have to come up with more user-friendly technologies to encourage digital investment,” he further adds.
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Key Findings– India’s wealth management segment is expected to reach USD 14.3 Billion by 2025
– Buoyed by advancements in technology, consumer awareness, diverse offerings by investment tech startups and government support, India’s wealth management market is growing at a 5-year CAGR of 22.4 per cent
– 81 per cent started their investment journey during the last 3 years of the pandemic
– 72 per cent say they expect to receive higher returns via digital platforms
– 62 per cent prioritise investing in Mutual funds, followed by 51 per cent in stocks
– 51 per cent save for retirement, 25 per cent to reduce taxable income
– 87 per cent express high satisfaction with their digital investment platform
