In future, we are planning to cross-sell services such as loan against mutual funds and loan against securities to investors on our platform and earn money
In September 2019, Paytm Money completed one year of operations. According to the company, it has added around 30 lakh users since inception till now. The firm further claims that of the total inflow into direct plans of mutual funds, around 40 per cent is contributed by it as of September 2019.
In a conversation with Hiral Thanawala, Pravin Jadhav, Managing Director & CEO of Paytm Money, talks about the important learning in the last one year, changes implemented and the investment recommendation process that it follows. He also elaborates on plans of monetising and cross-selling of products in the future. Excerpt:
Q: What were the most important takeaways in the last one year for your firm? Also, were any changes made to the Paytm Money platform from your learning in mutual fund selling?
A: When we launched Paytm Money, we were focused only on serving new investors. We offered several features for investing in systematic investment plans (that include top-up SIPs, edit SIPs, etc.) designed for new investors. These features gained the attention of existing mutual fund investors to invest with us. So, for existing investors, we recently launched the ‘switch to Paytm money’ feature. Using switch to Paytm money, investors will get to convert investments in regular mutual fund plans to direct plans.
In the last one year, we have also enabled the platform to allow investments from more than 200 banks. These have brought new investors from tier-3 and tier-4 site locations to our platform. We have now launched a website as well, which is currently a beta version and is being tested.
Q: What is the average ticket size of transactions on Paytm Money?
A: On our platform 85 per cent of the transactions in SIPs are Rs 500 and below. So, we are seeing a large volume of transactions, but by value we are very small in the market. At present we are not planning to charge from users on our platform. This is because, suppose an investor is investing Rs 10,000 on our platform on aggregate portfolio level in a year, it doesn’t make sense for us to charge 10 per cent of his investment, which will come to Rs 1,000 a year on this small investment.
Q: Since Paytm Money is a SEBI Registered RIA, do you sell all other funds or do you only sell a few schemes that you recommend to your investors? What is the process that you adopt to choose a product recommendation?
A: When we launched Paytm Money, we had mutual fund schemes only from 25 asset management companies (AMCs), but now we have all the 40 AMCs on our platform and we have all the schemes for investors to choose from.
After we offered all the mutual fund schemes on our platform, we realised that new investors didn’t know where to start investing. So, we introduced a product called investment pack, which was designed by our investment advisory team. An investor can start investing in this recommended package with Rs 1,000. Before giving recommendation, we ask users to take a risk assessment on Paytm Money, which is free of cost. Based on this risk assessment, we classify the investor into different buckets such as conservative, growth and aggressive. Then we suggest investment portfolios that are in line with the risk assessment. In case the investment philosophy of a particular AMC or a scheme changes, the advisory team will review it, recommend re-balancing and offer new schemes to the investors.
