We expect our customer base to grow 3x in FY23: Upstox's Ravi Kumar

In a Q&A, the CEO of the discount broking firm says the industry is seeing huge traction from smaller cities and first-time investors

The country’s discount broking space is booming. Upstox, a leading player in this area, has seen its customer base jump 3.6x in FY22. Ravi Kumar, CEO, Upstox says he is targeting another three-fold jump this fiscal. In an interview with Sundar Sethuraman, Kumar says the industry is seeing huge traction from smaller cities and first-time investors. Edited excerpts:

How many new clients has Upstox added in FY22? What is the target for this fiscal?

From nearly 2.5 million customers at the end of FY21, Upstox boasts a customer base of over nine million. We're ecstatic to be approaching another major milestone in our company's history: breaking the 10 million customer mark. By the end of FY23, we want to have grown three times.

What is drawing so many people towards the market?

The pandemic compelled everyone across the world to reconsider their spending and investment habits. The widespread availability of smartphones and low-cost data has pushed investing and trading into the digital realm. The use of eKYC and Aadhaar eSign has made opening a demat account a paperless and simple process. Platforms like Upstox will continue to scale the financial literacy efforts. As the number of 'finfluencers' grows, this growth will continue. Currently, more than 80 per cent of our total customer base are millennials. More than 85 per cent of our customer base is from Tier 2 and Tier 3 cities. Further, 70 per cent of our customers are first-time investors.

How do new clients typically choose a broker? How is Upstox positioning itself against the competition?

There are numerous factors to consider, and the selection will most likely be based on personal preferences of the customer. Broking commissions and fees, platform and technology, range of product offerings, research and education material, account security, and customer service are some of the criteria that customers consider. It becomes important for brokers like us to constantly innovate, invest in the new-age tech stack, and continue to simplify the investment experience. Investing in new-age technology and prioritising digital adoption and our customers remain core to growth plans. We are working on building a new version of our app that will transform the way our customers invest and make it hassle-free and educational. The only way to cater to the needs of our tech-savvy customers is to offer an on-the-go, simple, intuitive, and seamless experience that helps to build their confidence in their investment decisions.

Do you think the broking industry will continue to see sharp growth in revenues in FY23? Has Upstox set any revenue growth or profitability targets?

The industry is likely to clock revenue of Rs 27,000-28,000 crore in FY22, a growth of 28-33 percent. Equity participation in India currently stands at 5-6 per cent compared to about 55 per cent in the US. We are confident that in the next few years the broking industry will see consistent growth in equity participation.

How much do the top five players account for in the broking industry? Do you expect consolidation in the broking industry?

The top five brokers in India constitute over 50 per cent of the total market share in the broking industry. The brokerage industry in India is large, aggressive, and always looking for new opportunities. In India, where equity participation is 5-6 per cent, there is still room for brokers to develop. We have a long way to go. We are striving to transform the way Indians invest.

Does the company have any plans to tap new revenue streams?

Fintech in India is still in its early stages of growth. There are numerous fresh opportunities and white spaces. We're exploring various possibilities and will bet strategically on a handful of them at the right time.

Sebi has tightened norms around margins. How has that impacted trading volumes?

Sebi’s intended goal is to reduce leverage in the market to avoid large swings that can happen in stock markets during times of extreme stress or extreme bullishness. The new margin rules may impact intraday trading volumes as brokerages would not be able to provide the same leverage as was done earlier. On the other hand, the new margin system is likely to strengthen the risk management system and make the markets more efficient in the long term.

Do you expect further regulatory changes for the broking industry? Or any relaxation that is required?

We are delighted to see the government's and regulators' innovation, creativity and forward-looking policymaking. It is thanks to their ‘financial superhighway’ that all of us in the industry have been able to thrive. Every time we have interacted with them, it has been an open dialogue keeping the customer’s best interest at heart, which inspires us to innovate more. Our request in such interactions has always been to further extend the efforts on ease of adoption and reducing friction; for example, with ideas like JanDemat accounts and one-click KYC.