Close to 10 crore people will have access to investment products in the next 5 years, says Fisdom’s Subramanya SV

It was only after beginning his journey as an entrepreneur that Subramanya SV, Co-founder and CEO of digital financial services startup Fisdom, realised how much he underestimated the affluence, technical sophistication and risk taking ability of people from India's tier 2 and tier 3 towns.

“Over the next five years, India will have around 10 crore people who can access the financial products digitally such as wealth, insurance, gold among others. And since people in tier 2 and tier 3 towns have used Whatsapp, mobile apps, UPI, Facebook etc., they expect a similar kind of experience,” he says.

The beginning

After having worked closely with entrepreneurs as a venture investor for close to nine years, Subramanya felt a strong desire to build a business that created value for customers, shareholders and businesses. Having been in financial services for long, he was naturally inclined to start-up in the space as it was what he understood well. “From a first principles perspective, the market for financial services was secular, highly underpenetrated, and large enough to make mistakes,” he said, making it an ideal area to start a venture.

The journey to establishing differentiated offerings:

Subramanya said that when they first started Fisdom in 2016, there were hardly any players in the wealth tech space. “We developed a bunch of innovative solutions that solved problems concerning access, simplicity, and trust around financial products,” he said, recounting how Fisdom was one of the first companies to digitalise the KYC process, which later became mainstream. By then, the ‘mutual funds sahi campaign’ started and demonetisation was also launched, which spurred the trend of financialisation of physical assets, and aided Fisdom’s eventual growth.

He also explained that this was the time when unicorns started entering the space and could leverage their own customer base for their growth, which begged the question: how can Fisdom come up with its own unique distribution chain? “We partnered with tier 2 and tier 3 banks that have a large customer base, but do not work like a universal bank such as Karnataka Bank, Allahabad Bank, Oriental Bank of Commerce, Lakshmi Vilas Bank, among others,” said Subramanya, adding that they also tied up with non-banking financial companies (NBFCs) whose customers would use Fisdom through a software development kit (SDK) integrated onto the NBFC’s mobile app.

These banks and NBFCs would act as a trusted intermediary between Fisdom and its customers. Since these bank partners have a strong presence in tier 2 and tier 3 markets, they give Fisdom exclusive, non-competitive access to a cumulative customer base of around 20 crore across 20,000 branches.

Subramanya recounted how Fisdom’s early success in partnering with Laxmi Vilas Bank and Bank of Baroda was crucial to establishing future partnerships, as it provided a proof of concept of their unique business model. “It (the business model) also makes us capital efficient. We’ve raised about Rs 110 crore over the last four years and we’ve only spent around Rs 35 to 40 crore as we’re very frugal and as we don’t spend on marketing...At some stage, the unit economics have to make sense. Our objective is to create a valuable business, but also a profitable one,” he says.

Innovation a cornerstone to creating value:

Subramanya said that Fisdom aims to build India’s largest digital financial system by leveraging this unique distribution model and helping customers get access to savings, investment and protection solutions. “Our role models are HDFC Bank and Bajaj Finserv. We want to do what they are doing, but through a digital platform. We also launched pension funds and were the first fintech company to do so. We then launched gold and life insurance products and we hope to keep launching products every three to four months that will be innovative and will keep expanding the access, and we will have full bouquet products in the near future,” he says.

A market with immense potential for growth:

While the financial services market has grown much larger since they first started Fisdom, Subramanya says that the market can allow many players to co-exist and grow just because of its sheer size, under-penetration, and signs of economic recovery in the country.

“We are on a multi-year, 20 year trend of financialisation of physical assets in India...I would be very optimistic about the prospects of the market and the economy over the next 3-4 years,” he says.