While zero brokerage has already caught on with equity and mutual funds transactions, there are companies like Finvasia Securities that have just commenced their journey here. This Chandigarh-based company provides complementary back-office services, including demat accounts access and support. It is now in the process of creating its own NBFC business, which would be another logical service extension for its retail client base. The company’s co-founder and MD, Sarvjeet Singh Virk, talks to Pankaj Joshi about the company.
What was the reason behind having Chandigarh as business headquarters from a strategic viewpoint?
Our prior connection with Chandigarh brought us to begin our journey here. Since, our fintech products are purely online hence there is no downside with geographical location. Finvasia is a one-stop shop for various hedge funds, fund of funds, and foreign portfolio investors, providing pre/post registration upto clearing, trading, advisory, compliance and accounting services. We are a depository participant with CDSL, which is a differentiator in its own way. Our vision was to build India’s first commission-free financial products platform, covering a variety of financial assets.
We have equities, future, options, currency, and commodities on NSE, BSE and MCX. Mutual funds, demat, IPO etc are currently available. We are now getting focused towards B2C (business to consumer) clients as well, both the HNI (High-net-worth individual) segment and the algo-driven user segment. For retail clients, our zero brokerage account ensures there is no cost to trade in NSE, BSE and MCX. It has benefited almost all categories of investors which have been paying massive brokerage.
Further, our digital account opening process has reduced time for on boarding new clients. Also, as said, we are a commercial clearing member providing clearing services today to institutional clients, as a convenience factor. This is a significant differentiator when you consider that there are only 11-12 members which are not of the banking fraternity. In the institutional segment, we give zero brokerage and zero clearing trading accounts for FPI and other HNI clients. If you actually look at it, for the user, our cost is just in terms of the internet data and nothing else, just like a WhatsApp or a Hotstar.
Our offerings are totally online and there is no geographical constraint, hence we the promoters decided to headquarter it out of our base location, Chandigarh. Our team size is 120 today, and we believe that the location gives us a cost advantage. With digital account opening process, we have been able to cover pan India investors. We have, since our zero-brokerage product launch in August 2016, on-boarded around 10,000 users and our data shows that 45-50 per cent of these are active with increasing volumes. The funding received from global venture funds in the pre-launch phase (we had a pre-launch valuation of Rs 150 crore) has enabled us to develop a suite of products in-house, for both the mutual funds and in equity trading categories. The whole idea of the product suite is to put the power of decision in the hands of the investor. We are very clear that product quality control is paramount for flexibility and client satisfaction.
What are the asset classes available on your platform as of date?
Our equity application, SCALPERT, has real-time charts and indicators, with around 40 different features. Users can view all holdings and all trading positions. Payment linkages exist to over 30 banks; and portfolio and positions, are instantly updated after transactions. Order placement has options relevant to trading strategies. Our mutual fund tool SMART has portfolio simulation and rebalancing facility, as well as thematic and target-based auto investment advisory. For the first time in India, investors can through this tool, buy and sell mutual funds based on the end-of-day NAV. As a backup for this, we have our own eKYC tool which enables account opening and investment in minutes. An investor who does not want asset category ‘A’ but wants asset category ‘B’ need not go to another platform, another system – he can get it all here itself. The fact that we are so far properly executing our vision is testified by our being one of the award winners at the Benzinga Global Fintech Awards at New York in May.
We plan to build retail client base for our upcoming fintech products along with clearing and technology products for institutional investors. Our expansion plans include opening an NBFC (Non-banking Finance Company), and we are waiting for our license from RBI. If you take a global view, players like Robinhood Markets in the USA, offer the zero-commission services just on the back of two things – interest earned from clients’ cash balances and income from margin lending. Our NBFC business will be taking this logically forward by offering a suite of lending products. Worldwide, brokerage is not an iota of contribution in the whole financial services revenue structure.
How has growth been across your operating period and how do you see it growing by 2020?
Finvasia envisioned creating technology driven, commission free, financial ecosystem, building all technologies in-house, including the digital eKYC account, AI-based mutual fund analysis tool and the algo-based equity trading platform. We plan to launch around 12 products over 24 months. In financial terms, we have been EBIDTA positive since day one. Today we are adding around 30 times more clients against the pre-launch days. With marketing on cards, we expect to push it to 100 times in few months. Our plan is to hit 10 million accounts by 2020. We aim for scalability with technological stability and to that end we would keep investing in that area. While we do get approached by funds who want to invest in our next round, we are right now in a good place in terms of cash flow and hence not looking out aggressively.