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BW Businessworld

We Aim To Be A Full Stack Wealth & Investment Management Platform: Pravin Jadhav, Paytm Money

In an interview with BW Businessworld, Pravin Jadhav- Whole-time Director, Paytm Money, talks about Assets under Management, Robo model, SIP and more

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As a business, what’s your target segment in terms of average AUM (Assets under Management)?

Today more than 80% of industry AUM is concentrated in top 30 cities, a major chunk of that in top 6 cities. Our target segment are the first-time investors from Beyond 30 (B30) towns where the average investment is expected to be Rs. 4000 to Rs. 6000 per year, this is very different from industry average of Rs. 4000 to Rs. 6000 per month.

We have made a conscious decision to focus completely in building Paytm Money to increase the market size by adding incremental investors to the Mutual Fund industry. More than 70% of investors who initiate their KYC on Paytm Money are from beyond 30 cities. For this reason our AUM is also concentrated in B30, our focus will be to introduce wealth management to more and more Indians. 

Tell us a bit about your KYC model and your tech backbone. How do you conduct risk profiling and tailor make investment recommendations? Can your clients switch and redeem money from your platform too?
We have a 100% digital and paperless KYC model which has been our USP since launch. We are able to process over 10,000 KYC applications in a day with 80% of them getting completed in less than 30 minutes! We are and will continue to focus on building a product and technology focussed platform in Paytm Money, the complete tech platform is built from scratch and most of our operations are completely automated. 

We provide a comprehensive risk profile assessment on our app and the results help our users select appropriate funds in line with their risk profile. As most of our investors are first-time investors, to assist them we will launch investment advisory services before end of this financial year, by March 2019. 

Recently we launched functionality for all users to track performance of all their mutual funds on our app, including the ones they have invested outside of Paytm Money. Switching option is in the works and will allow investors to switch from regular mutual funds to direct on Paytm Money in a single-tap.

Are Mutual Funds going to be your exclusive focus, or are you going to offer other products and services as well? If yes, please tell us a bit about them
With Paytm Money, we aim to be a full stack wealth and investment management platform. We will offer an array of products which are aimed towards helping people manage their money better and create wealth; mutual funds is the first one and we expect to introduce our next product in few months.

As a digital-only platform that offers only direct plans, are you worried about how investment behaviors of unadvised – especially first time – investors would be managed in volatile markets such as these?
While we offer only direct plans of mutual funds because they help investors get potentially higher returns, our focus is not just limited to providing ease of investing but more important aspect of our platform is enabling informed investment decisions. Investors, both new & existing today are aware of risk involved in investments than earlier due to overall increased awareness of mutual funds in India and understand these are long term investments best opted via SIPs.

We provide users free risk assessment, for every mutual scheme very detailed information and also compare risk of every mutual fund with user's risk. For new investors specifically we encourage starting small with Rs 100 to understand the product and through SIPs. 

Do you have a back-end team that offers support in terms of investment counseling and advice, or are you following a pure Robo model?
Yes, we have an investment advisory team that is building customised investment & advisory services that are aimed at both first time and existing investors of mutual funds get started. This is our first product in that direction and we expect to do more in this domain based on user insights and investor needs.

Since you offer only direct plans of Mutual Funds, how does your platform make money? If not right now – how does it intend to generate cash flows in the near future?

Mutual Funds is only the first product and there will be more that we will have on Paytm Money. Currently we are investing in building our product, technology and team; and our focus in near future remains to expand the market size. We do have plans for making revenues but none are immediate.  

You seem to be focusing on the SIP route. How do you differentiate your offering from others such as ET Wealth? How will you ensure continuity of SIP’s even in challenging markets, considering that commissions are now 100% trail based and short-term SIP’s will serve no purpose at all?
Yes, in fact more than 75% of our investors opt for investing in SIP mode which by its very nature is for an investor who wants to stay invested for a long term. Anyone starting with an SIP with us is well aware of the patience required to stay invested in mutual funds and that SIPs are the ideal way to go about with wealth creation in a disciplined manner. 

Paytm Money offers the simplest and best SIP management experience - ease of starting, editing or pause SIPs with timely reminders and alerts. We are launching feature to top-up SIPs in 2nd week of February. We offer direct mutual funds and do not make any commissions on SIP or lumpsum, so changes to its structure of payouts doesn't affect us at all.

You’ve signed up over a million users on your platform since you kicked off. How many of these have actually gone on to make the first investment?

Yes, have crossed over a million users on Paytm Money. This category requires patience and for investors it is not about buying or selling mutual funds, but all about taking informed investment decisions. Our investment flows are very healthy, we have been told that Paytm Money is now generating more SIP registrations each month than all online platforms put together. 

Lastly, tell us a bit about your business goals for 2019

Our immediate next goal is 1 Million active investors on Paytm Money. To be there, we will simplify investing further, introduce few more products and more towards our goal of being a full-stack wealth management platform.

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