[NOIDA] India's highly competitive stock broking industry has a fierce new challenger.
Paytm Money, a unit of the nation's largest digital-payments startup Paytm which is backed by Chinese billionaire Jack Ma's Ant Group, is aiming to build a top stock broker by helping local retail investors avoid the biggest investing hazard - getting burned during a down cycle and quitting for good.
The app made zero-fee stock trading available to its millions of users last month.
It plans to put algorithms to work so India's young, smartphone-savvy newbie investors can be nudged to exit loss-making trades and book profits at the right opportunity.
The newcomer is stoking competition among Indian brokerages rushing to give hungry traders the perfect platform.
Nimble, technology-focused online brokers are pulling ahead of older established rivals by offering easy-to-use platforms with minimal charges. Unable to keep up with falling prices and fast-paced online services, smaller players have been rapidly closing their doors, with about three quarters of brokers shutting shop in the last six years.
"There is a big debate about who will survive in the Indian broking industry because there is a lot of disruption," said Kranthi Bathini, a director at Mumbai-based WealthMills Securities. "Paytm is very well known, their brand has reach. They could create big awareness about stock investing in India."
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 individuals had opened trading accounts in the first seven months of this year, compared with less than three million in all of last year, according to data compiled by Central Depository Services.
Paytm, whose parent One97 Communications is valued at US$16 billion, has become a fintech leader in India. It was founded a decade ago by Vijay Shekhar Sharma to offer digital payments in a market that Credit Suisse Group forecast to reach US$1 trillion by 2023. The Ant Group has a 30.33 per cent stake in One97.
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 into the stock market, it would be massive."
While concerns are growing on the increasingly speculative nature of retail stock wagers, the surge in demand for online and mobile-based broking 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 rock bottom.
"Pricing has become commoditised, so whichever broker adds more value will prevail," said Mr Bajaj.
Some of the ways in which Paytm Money hopes to stand out include features that could allow users to automate the entry, exit and monitoring of investments in various securities, Varun Sridhar, chief executive officer, said in an interview.
Another planned innovation to lure users is to add resources for investor education.
The app currently has the ability to set up scheduled monthly investments in individual stocks - which has proved popular in mutual funds.
"In three years time, we would like to be either number one or two with a 10-15 per cent market share," said Mr Sridhar.