Indian wealth-tech segment to be $60 bn opportunity by FY25: Report

Indian wealth-tech market is expected to grow three times by FY25

Indian wealth-tech market is expected to grow three times to about USD 63 billion by FY25 from USD 20 billion in FY20, driven by increasing adoption of digital platforms and growing base of investors, a report by RedSeer Consulting said on Wednesday.

The report, titled Wealthtech market in India, noted that only 2 per cent Indians invest in stocks at present, compared to developed economies like the US, where 55 per cent Americans invest in stocks.

"This shows a significant gap between India and developed economies, and therefore, presents a significant headroom for growth. Over the years, there has been a steady growth in the Indian equity markets, MF Folios and Demat accounts," it added.

The report defined wealth-tech to include digital platforms that enable 'end-to-end digitisation' of the investment journey of a retail investor. This entails a customer self-onboarding on the app/web, investing as well as redeeming digitally.

Despite COVID-19 making a detrimental impact in March-2020, the Indian stock indices such as BSE Sensex and Nifty Fifty have been resilient and bounced back to pre-COVID levels by October 2020 and are expected to continue their bullish trend, the report said.

"This strong performance of Equity and MFs have led to strengthening and entry of several Wealth management models, with 'Wealthtech' generating quite a buzz in the last few years. While multiple cohorts have started digitally investing, wealth-tech customers primarily include millennials who constitute 70 per cent of the customers using these platforms," it said.

The report estimated that currently India has about 4 million wealth-tech investors (FY20) and the number is expected to grow by 3x to reach about 12 million by FY25.

This growth will be driven by high awareness and usage of digital platforms across equity and mutual fund investments; rise in investors from 'Bharat' (tier-II cities and beyond) driving adoption of digital platforms; and digital-savvy millennials with higher disposable incomes making investments via digital platforms, it added.

The report said smoother and hassle-free customer journey on digital platforms are leading to higher customer satisfaction, which in turn will give a strong stimulus to digital platforms.

Besides, COVID-19 has come as a boon in disguise for digital platforms as there has been an increase in "new investors" as well as an increase in average investments and usage on these platforms, it said.

"Wealthtech is certainly emerging as the next big frontier for fintech in India. With Indian investors increasingly getting aware of the benefits of going digital, there is a significant action in the market both in terms of players as well as investments," RedSeer Consulting Head India Consulting Abhishek Chauhan said.

COVID-19 has further acted as a key catalyst with a significant amount of organic onboarding happening across the wealth tech platforms with investors also coming from Bharat, he added.

"All these are great signs for the continued growth of this exciting market," he noted.