Why first-time investors find the simplicity of the Groww app refreshing in the crowded wealth management app market
For the longest time investment was thought of as something only meant for ‘finance experts’ or for those who had ‘a substantial bank balance’. Not surprisingly you hardly saw young people ‘investing’. “The reason why they have been wary of investing is that they never had an easier way of doing it,” points out Harsh Jain, Co-Founder of Groww. And, it is here that startups like Groww have acted as disrupters.
Launched in December 2017 by former Flipkart employees Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal, Groww is India’s fastest growing investment platform. Despite heavy competition in the wealth management space, Groww has been able to differentiate itself and maintain an impressive growth trajectory. In less than two years since its launch, it has managed to garner a user base of 2 million.
‘Growwing’ their customer database with simplicity and transparency
“Financial products have not been a recent market introduction. Compared to investments in real estate, gold or bank fixed deposits, financial products like mutual funds offer good returns. Yet, many, mostly millennials stayed away from it because of its jargon-heavy nature and the lack of transparency in the traditional way of doing investments,” explains Harsh.
Groww, with its deep understanding of the consumer segment, focuses on simplicity and transparency as its key USPs. “From opening the account to investing, our processes are the best and smoothest in the industry. The process has been simplified to make investing easy for people who are investing for the first time,” says the Co-Founder.
More of a buddy than just an app
Groww is accessible via the web as well as the app, and the experience on the two platforms is similar. Yet, it is the app that contributes significantly to the business. In fact, nearly 75 percent of the user base is via the app. “Apart from shopping, people are doing various things via apps and there’s no better alternative, because that’s where most problems are being solved efficiently,” says Harsh.. He adds that the Groww app has been designed to be like a buddy who understands millennials, powered by intelligent UI and UX.
Before they launched Groww, the four co-founders invested time between 2016 and 2017 in understanding the needs of their potential users with an aim to integrate those learnings into the Groww app. “We studied how millennials use digital products, from e-commerce to food delivery apps, and used some of those learnings into the product. For instance, the investment flow is just like online shopping. And, by incorporating this simple UI we have reduced the learning curve of the Groww app.” Additionally, the learnings from this initial research also translated into more well-designed offerings. Popular Groww features such as Groww Balance (enables users to invest using UPI, in a single click), Assist (which enables users to select funds), SmartSave (a feature that enables users to get better returns compared to bank deposits) are a few examples.
Even today, the designers at Groww spend a lot of time with users understanding their likes, wants, frictions and triggers, which then translates into delivering a better product experience to customers. In fact, unlike many wealth management apps where customers are bombarded with queries on investment goals, Groww answers queries. It provides tailor-made investment options, each detailing aspects such as returns, average growth during the last few years, pros and cons, among others, helping users make an informed decision.
A journey aligned with user needs
Today, 60 percent of Groww’s user base is spread across the country, predominantly in tier 2 and 3 cities, and that percentage is only growing. “Initially, when we launched, we got a lot of traction from the metros and tier 1 cities, now the traction has shifted to beyond the top six cities in India. And, that number is only increasing. With user-friendly interfaces and product offerings, a close-knit community and a new breed of users with a thirst for content, we believe we will be able to leverage most of this momentum.”
To further catalyse growth, Groww will be launching investments in stocks. “Our journey has been aligned with the users’ journey. We have onboarded a large chunk of first-time investors and our journey ahead will factor in what this segment of users wants next. That journey is being kick-started with the launch of stocks as an investment option.”
Why Mutual funds industry is poised for big gains
In the last 10 years, India’s mutual fund industry has grown at an average rate of 12.5% which is double the growth rate clocked by developed regions – according to a report by the Association of Mutual Funds of India (AMFI) and global analytics firm CRISIL. And, the data available with AMFI not only reiterates the growth story but also reveals interesting data points. The industry’s Assets Under Management (AUM) crossed the milestone of ₹10 Trillion (₹10 Lakh Crore) for the first time in May 2014. And, within the next three years, the AUM size increased more than two folds crossing ₹ 20 trillion (₹20 Lakh Crore) in August 2017. The Industry AUM stood at ₹24.79 Trillion (₹ 24.79 Lakh Crore) as on 30th April, 2019, a landmark milestone. And, to think the seemingly large; share of mutual funds in the market capitalisation is less than 5 percent, only proves the huge market potential.
A key takeaway of this upward trajectory goes on to show how India’s new investors are no longer looking at mutual funds as an alternative investment option. Traditional options like gold, real estate or Bank Fixed Deposits, have been the norm for decades for being ‘safe bets.’ That notion is being challenged today with new age investors. These investors, who are mostly first-time investors come with an understanding that mutual funds offer benefits which is difficult to obtain through the traditional investment options. And, even with market experiencing periodical volatility and uncertainty, industry data indicates that investors have remained committed to their investments, which would have been unlikely in a similar situation five years ago.
While the industry growth and increased investor confidence has been possible because of a number of factors, a heightened awareness about mutual funds and ease of access have been key drivers. This is where wealth management platforms like Groww have played a key role and will continue to do in the growth story of the Indian mutual funds industry.