Indian wealthtech segment to become $60B opportunity by FY25: RedSeer report

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

The report titled, "Wealthtech market in India," noted that only two percent Indians invest in stocks at present, compared to developed economies like the US, where 55 percent 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 wealthtech 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 Nifty50 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, wealthtech customers primarily include millennials who constitute 70 percent of the customers using these platforms," it said.

The report estimated that currently, India has about four million wealthtech investors (FY20), and the number is expected to grow by 3X to reach about 12 million by FY25.

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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, 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 wealthtech platforms with investors also coming from Bharat, he added.

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