Upstox, a discount stock broker that started back in 2012, now has one million customers using its platform to trade in stock markets.
With the advent of technology and the rapid digitisation of India, the young Indian now has tools at her/his disposal that were unimaginable a decade ago. With this, now even the financial world is just a click away. Evidently, Upstox, a discount stock broker that started back in 2012, now has one million customers using its platform to trade in stock markets. Ravi Kumar, co-founder and CEO, Upstox tells Kshitij Bhargava of Financial Express Online that he is aiming for a deeper penetration into Indian cities with which the new-age investment platform will double its current customer base by the end of this year. Here are the edited excerpts.
How would you define Upstox to those who haven’t heard of it so far and what kind of customers do you cater to?
Upstox is today a 100% retail category business, which we started in 2012. Our entire business is dedicated to serving a large number of retail customers across the country, and just on June 17, we hit a huge milestone, crossing 1 million users. We had onboarded 1 lakh customers in June 2018 and now we’ve crossed a million. That is the pace at which we are growing and in the next six months, we plan to add another million. What is interesting is that a lot of these accounts are from tier-2 and tier-3 cities and 65% of our customers are opening a Demat account for the very first time, helping us become their point of entry.
If you have so many customers coming in as first-time users of not just your service but of equity markets as well, do you provide investment advice as well?
No, not really, we steer clear of that. Our view is that the moment you start getting into the advisory role there’s a conflict of interest. We might make money by doing that, say incentivise somebody to trade more but we don’t do that because we would like to stay on the right side of the customer. So we do not give advice. There are a lot of places on the internet to get good research and advice. You are free to get that and then come to our platform and execute your trade and manage your wealth. So our business purposefully is not into advising which is different from what many brokerage firms do, they do make money off advising and transactions.
So a large number of users on Upstox are from Tier-2 and Tier-3 cities, can you shed some light on which cities are these and what’s your strategy going forward?
Cities like Nasik, Guntur, and Patna are the cities where we are getting our customers from and these are different from your traditional big cities like Mumbai and Delhi and I think as we proceed with our growth plan we will see even more small cities come on our map, which is very exciting for us. These are less penetrated so far with either one broker in the entire town or not even that so now that changes with mobile penetration which allows digital onboarding. What has happened in India in the past few years is miraculous and we at Upstox are looking to grow and that can be done only when we reach out deeper within India.
What investment options do users get on Upstox?
We are fully licensed on all segments; you can buy stocks, futures and options, currency, commodities, mutual funds as well. In fact, we will soon launch a Global Investments service, that introduces Indian investors to invest in 60 exchanges across 25 countries on a single platform. With the new Global Investments platform, Indian investors can invest in any global exchange such as the NASDAQ, Dow Jones or the Hang Seng. They can own shares of the world’s biggest companies like Apple, Google, Mercedes-Benz, or Teva, among others.
How have the past few months been for Upstox, what kind of user activity have you seen?
Talking about the number of transactions, in terms of orders, our flow has doubled in the last few months. A lot of that has been nudged by a rush of new customers coming in so it’s an unprecedented flow for opening up of accounts and participating in the equity market. Which is something that is great, because we were told that in an event where there is massive price reduction in markets and they tank, customers will run away and never use our services again but the exact opposite has happened. I think the Indian customer is savvy and she/he saw it as an opportunity to buy. It is a very smart and calculated move to take this time to invest. The massive account opening has made us the fourth-largest brokerage in the country and a whisker away from the third spot. Digital brokerage is the future and these exciting times for us.
How do you plan to attract users once the equity markets are back where they were and prices are up?
We don’t think that because of the current situation we are getting a lot of customers. In December 2019 we opened a record 1 lakh Demat accounts in just one month so this was pre-Covid and I think post-Covid also we will have a good response and growth will accelerate as we are giving more value to the customer and bettering our product. The story is India equity participation and that is a long-term game for us. A year down the lane the situation will be a lot better for us.
New-age investment platforms may suffer from technological glitches, what has your strategy been to tackle that?
We’ve paid particular attention to this. We have around 200 employees, and the biggest bucket of these are engineers who have worked with major companies so we have paid a lot of attention towards this. That being said I agree, we are not perfect. It takes a lot of effort and money in going from 50% up time to a 100% up time with diminishing results in the end but customers note that and that is what makes certain brokerages stand out. So we are doing everything to figure out ways for very high up time 85% of our users place orders from mobile applications, which is a pretty high number. Our tech backbone is shaped in such a way that we onboard customers digitally, the entire process is digital. So we are among the pioneers of digital onboarding, we help customers open accounts entirely on the phone with no physical exchange of paperwork.