Stock markets and venture capitalist endeavors are where many millions of humans make their fortune. India has huge potential, given its population, but the stock markets lie underused; a study by market regulator Sebi found that very few Indians play the stock market, dropping to as little as 1% where rural Indians are concerned. One of the key reasons for this? Lack of awareness. 95% of those surveyed had bank accounts, but many of these people found the idea of the stock market foreboding.
The stock market can have an intimidating aura around it that prevents people from getting involved. The reality is that there are countless vehicles for investment to make it as hands-on or off as you like. Helping to bring citizens across the world out of the dark is technology; the apps and services springing up every day across India are an open door for the average man and woman. The result? Potentially, a new financial system for all of India.
Tech Helping People Get Started
The hardest part about investing, then, is taking the first step. The market is massive, and full of jargon, making it confusing to newcomers. For first time investors, a broker who can help demystify investments and make informed picks has always been crucial, according to money experts at Crediful.com. This is a task that technology takes hand in hand; the likes of the iPhone carved out the necessity for technology to be accessible, and that’s seen in how a technology works now, and to the benefit of consumers. Apps like Sqrrl are making investment straightforward, and by only working with small, ‘spare’ change, accessible to people without huge sums of money to put towards their investments.
Indians can take inspiration from these methods. In the UK and America, the idea has been trialled with primarily under-31s using Moneybox and Acorn respectively. Acorn has gathered 3m users so far, with respectable gains, demonstrating that for people who feel cash-strapped, saving and investing can be a reality.
Riding The Bigger Wave
Many of the entry-level apps that are making things easier for would-be investors peddle in small amounts that contribute to larger ‘buys’ by the broker. Taking the next step up is catered for by technology, too, and in a particularly crafty way. Most digital-savvy consumers will be aware of artificial intelligence (AI) and its expanding influence – less will be aware of an AI-powered platform hoping to bring in small-level investors, using cash in the $500 per buy range.
Services like Zambala top out at $10,000, with as little as $100 being contributed, and use sophisticated technology to make informed stock picks on major international businesses like Facebook, Twitter, and Reliance. This gives seasoned investors, or those with ambitions, the opportunity to make the step up.
What’s more, for experienced investors, there is clear interest from multinational funds in India. According to livemint, mutual funds alone blitzed the Indian market with US$49m of advertising. This clearly demonstrates the value being placed on the potential of the Indian economy and is fostering an environment in which those seeking to take adventurous steps are well supported with information.
The Future For Stock Investing
There are already numerous apps that provide real-time stock updates, with ET Markets and Moneycontrol just two of what is a competitive market. While useful, these sorts of apps aren’t necessarily innovative. The future lies in bringing in a much greater population to investing, and in the process boosting the markets. The FT suggests that 387m Indians can be reached with fintech, but work is ongoing.
A key driver of forward stock investing will be artificial intelligence. Already, stock markets are finding wins through the driving force of sophisticated technology. Concepts like machine learning will help the average Indian become involved further in the future. Currently, companies like Google use machine learning to predictively learn your preferences, and to tailor-make searches and adverts; this can be applied to stock investing, with the possibility of a perfect purchasing mix being created by computers. This will encompass your spending habits, earning potential, risk tolerance, with very little input required. Algorithmic saving apps like the UKs Chip do this already, albeit without the stock investment angle.
The Bigger Picture
There are possible much more far reaching effects associated with the movement towards fintech and ultimately the financial enfranchisement of those many millions of Indians without access. According to McKinsey & Co, banks now sit on top of US$96bn of ‘stressed’ assets without sufficient cover. With pressure already mounting on banks to provide credit solutions to boost investment in impoverished but potential-packed areas, the simplicity and disruptive nature of fintech is leaning over the shoulder of the classic industry.
Earlier this year, IMF Deputy Managing Director Tao Zhang outlined how fintech will disrupt the Indian economy by providing a huge open door to stock investing. The foundations are already in the country with what he stated to be “liquid short-term money markets and a large well-developed government bond market”. With experts deeming the background situation in India to be conducive to success further on, fintech will help to continue to bring non-investors into the market and continue boosting the economy. The example the rest of the world sets is clear as to the benefit. America, the world’s largest economy, boasts 62% of citizens invested in the markets.
Stock investment can be intimidating to the outsider, and especially so in the still-felt results of 2008’s crash. Indians were largely protected from that, however, and with technology helping to transform financial services, there’s huge opportunities to be had. The result will be wealthier Indians, a boosted stock market, and technology ever developing. In the future, artificial intelligence will help Indians to invest in the stock market while retaining a balanced budget, ultimately improving confidence and reducing personal risk. With the big banks suffering somewhat, this will help to sculpt the financial order of the future – led by the everyday Indian and their boundless potential.