Upstox looks to double account holders by Dec; plans to launch global investing platform soon

Interview, Ravi Kumar, co-founder and CEO of Upstox


Stockbroking platforms have seen huge growth in 2020 as a lot of first time investors have taken to equity investing. In an interview with THE WEEK, Ravi Kumar, co-founder and CEO of Upstox, an online brokerage backed by Ratan Tata, expects to double the number of accounts on its platform by December. The discount broker will soon allow investors to buy global stocks on its platform and also wants to look at a product for mutual funds investing later. Excerpts:

In the last year or so, we have seen a surge in people opening accounts with brokerages to trade directly in stocks. How has growth panned out for Upstox?

We are a digital financial services business and consumer facing business. If you overlay any digital, internet, mobile first business, you will see all these business have grown alongside penetration of Aadhar, e-KYC and alongside the mobile internet penetration.

Our retail business has been around since 2012. It was very difficult for customers to open an account with us in our earlier years, because you had to find 25-30 documents, go to the store and photocopy address proof, bank proof etc. and send us these self-attested documents. There was a high rejection ratio, as you would forget something, some signature somewhere. Ever since Aadhar came into play and internet connection really ballooned, our business started booming. In the last two years, since June 2018, we went from one lakh accounts to one million accounts and we expect to open the next one million before December.

People from smaller towns also seem to be taking to equity in a big way...

Lot of our customers now are not coming from the big metro cities, but are from tier 2 and tier 3 towns; 75 per cent of our customers come from these much smaller parts of India. The vast majority of our customers are placing orders through the mobile app; 85 per cent of our orders are from mobile phones, 65 per cent of them have opened their first demat account. So, we are onboarding first time investors and first time traders at Upstox, which means we are increasing equity market participation in a very significant way.

Indians were typically averse to equity investing, given the risks involved. What has changed now that so many people have now begun investing in stocks?

India is a high savings country. Interest rates are dropping. When other asset classes are not doing well, it makes more sense to invest in the equity market where the returns, at least, in the longer period have shown to be better.

There is also a trend of savings moving from physical to financial assets. Especially during the lockdown, a lot of people realised that they all of a sudden couldn’t sell their gold, or their land quickly in this environment to meet their short-term financial needs. So, they realised that they should be keeping their savings instead in financial assets, which are more liquid in nature and you could have access to that money on a rainy day.

Around 75 per cent of our accounts are under the age of 35. The internet penetration visible today, was not there a few years ago. The price of broadband is among the lowest in the world. All these things were not there in the past, which is why you are seeing this story play out today.

What are the new opportunities that are you exploring on Upstox?

Right now, we are about to launch global investing on our platform. You can buy stocks from 60 different stock exchanges worldwide. So, you can open up an account and buy shares of Apple, Google, Tesla, or Toyota or Mercedes and all these companies around the world and we are making that very seamless. This is going to be one lever of growth for us, alongside everything else we are doing.

Is a mutual fund platform also in the works?

Definitely...You can actually buy mutual funds on Upstox, but that’s not something we had focused on in a big way. That is definitely an area of interest for us. We have a product pipeline in mind and all of these products will be there at some point or the other. But we will proritise based on the feedback, where we see peculiar market needs, where we think we can build something that is better than anybody else has built and its the next product we would like to work on and launch.

How is the platform being scaled up given the exponential user growth you are seeing?

We are a lean team, about 200 people, majority of them engineers. We are not a financial services company that happens to be in technology, but we are a tech company that happens to be in financial services; we are product makers. So, everything we do is through the lens of technology.

Software development will be our focus area, that is the biggest investment that we make.

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