FinTapp wants to encourage more first-time investors to participate in the stock market by enabling them with the knowledge to build a diversified equity portfolio.
Did you know, more than 40 percent of the 21 million dormant investors in the country used to be active once, but stopped trading or investing due to losses and bad experiences with intermediaries?
Khaleelulla Baig and Abdul Aziz, ardent stock market investors and brokers aware of the rampant mis-selling in the stock market, decided to do something so retail investors could find genuine advice. They pondered on the idea of empowering investors with institutional-level analytics and decision support systems.
Khaleel has 15 years’ of wealth management experience and had worked for Bajaj Allianz Life and as a stock-broker. In his spare time, he developed algorithms for equity investing. He met Abdul through a common friend and both struck a chord over their love for investing. Abdul had eleven years of experience in the IT industry, having worked for Microsoft and Cisco.
So in 2017, the duo decided to combine their investing and coding skills to create FinTapp, an autopilot fund manager on your smartphone, empowering both novices and regular investors alike to make informed investments based on analytics and predictions the platform makes. Between March 2017 and April 2018, they built algorithms that could trade stocks. By correlating data, they realised the algorithm could predict how it would impact investing.
FinTapp is based in Bengaluru and is a Securities and Exchange Board of India (SEBI) approved investment adviser.
It enables users to build a diversified equity portfolio, rebalance it in real time, get a grip on financial data through rankings and ratings, and identify the healthiest and most fairly priced stocks under each sector and market cap category. Besides, it also helps users create screeners based on their investment choices. FinTapp also provides access to industry research reports, explainer videos and calculators, all in a bid to encourage first-time investors to confidently dive into the stock market.
“With advice from successful investors, economists, statisticians and technology experts, Fintapp has begun an experiment to quantify and measure the qualitative aspects of listed companies like management integrity, domestic and international policy impact, macroeconomic impact and geo political impact,” Khaleel says.
According to SEBI there are 35 million demat accounts, nine million active investors, and one million new investors flocking to the stock market every quarter. Every day, upwards of 13,000 new investors flock to the stock market at a growth rate greater than 18 percent. Hence, in just five to seven years, India will have more than 100 million stock market investors. Yet, there is no personalised advice other than apps that act as portfolio managers.
“A majority of the first-time investors get a sour experience of the stock market due to complexities in financial data, portfolio building and rebalancing. Taking advantage of this, intermediaries entice gullible investors into losses by exposing them very early into intraday and F&O trading,” Khaleel explains.
Apart from analytics and decision support challenges, investors go through a cumbersome journey of sifting through multiple vendor platforms like data providers, research analysts, advisors, brokers and other such similar tool providers to achieve their purpose.
The stock market industry is dominated by stock brokers who facilitate buying and selling of shares and provide incidental advice to retail investors. Of the 7,000 brokers on NSE and BSE the top 25 serve 90 percent of the demats and active investors in the country.
But Khaleel notes that these brokers largely depend on obsolete tech stack or outsource their tech to a few B2B middleware companies. “Over the last couple of years, there has been a surge in specialised service providers like research analysts and investment advisers thanks to SEBI. Wealth management as an industry has been very slow in adapting technology hence highly vulnerable to disruptions,” he adds.
The target for Fintapp is to help brokers get informed stock buyers. They have a couple of stock brokers who subscribe to their technology but they are primarily a B2C subscription-based business model. But with the encouraging response from intermediaries, they are now working on a B2B white labelling model too.
The founders invested $300,000 to get FinTapp up and running. Over the last 18 months, it has garnered more than 20,000 downloads, 6,000 users with $30 million worth of portfolios under advise and clocking a revenue run rate of Rs 50 lakh for FY 2018-19. The founders of Fintapp are confident of crossing one million installs and 100,000 paid users in the next 30 months.
The app lets individuals understand the dynamics of the markets before taking the risk. The company believes that its user interface and gamified UI allows customers to look at investing in markets as a viable option. Their target audience is millennials, direct equity investors, and mutual fund investors. “These are businesses that can go after the next million investors,” says Mohandas Pai, Chairman of Aarin Capital.
Globally, the best financial apps are TD Ameritrade, Robinhood, Acorns, Stash and Stockpile offering advice to investors. In India, the company competes with Investar and Equity Pandit. However, Khaleel and Aziz believe that their ability to track social and policy decisions allows their clients to understand the effect on stocks better than anyone else. They believe they can be the knowledge platform for investments.