The traditional way of making investments through physical mode – filling application forms and depositing with cheques – hit a major roadblock last year due to nationwide lockdown. While the government extended the compliance deadlines last year, investors are not getting any relief this year even as full lockdown is announced in many states to contain the second Covid wave.
Even as many of the older investors struggle to complete their targetted investments, tech savvy Millennials continue their investment journey uninterrupted through digital modes to grow financially.
“Younger generations are digital natives, especially millennials. They have grown up when technology was still developing and adopted it as part of their lives not only in urban parts but also tier-2/3 and rural areas of the country. Hence, they are more open to technology playing an important part in their financial journey. They are using FinTech platforms to improve their finances because FinTech companies are innovating products which suit millennials’ needs. They are offering a straightforward, easy-to-use, and mobile-first digital experience,” said Ilica Chauhan, VP, PC Financial Services.
“FinTech companies also offer the advantage of reaching out to a wider audience across emerging demographics. To engage this generation, FinTechs need to focus on financial literacy among consumers along with nurturing interest in finance. In order to become a reliable brand, they will need to provide seamless customer journeys, backed up with personal and prompt customer support,” she added.
In fact, acceleration in the digitisation process after the demonetisation has seen a surge in the number of FinTech companies in India, which has not only made the investment process fast and easy but also helps adoption of new age investments.
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“Millennials are generally comfortable using digital processes. This has made them the primary target audience for FinTech companies across multiple segments. As a result, FinTech products are deeply embedded in millennial’s financial lives, across investing, transacting, borrowing and even saving,” said Prithvi Chandrasekhar, President, Risk and Analytics.
“On investing, FinTechs have made it easy for millennials to invest in a range of equity, debt, mutual funds, insurance and hybrid instruments all at the click of a button. This makes it easy for millennials to get into the habit of investment. On transacting, it is now very normal for millennials to use payment apps from very big companies like Amazon, Google, Apple etc. or even homegrown Indian challengers to shop online or split their bills when they dine out. On borrowing, millennials have a range of digital borrowing options available to them, which allow them to buy a mobile phone, holiday, car or even a home with help from a loan. Even products that were traditionally “push-selling” rather than “pull-selling”, like insurance, have seen a boom in FinTech participation, with companies like Acko even sponsoring IPL teams,” he added.
“All these easy to use digital experiences are putting millennials in charge of their finances early in their lives. At a similar life-stage, previous generations may have relied more on family elders or trusted advisors for financial matters,” Chandrasekhar further said.
“Fintech companies have been at the forefront of making financial services more accessible to the millennials. As millennials are very adept at using technology and resort to using mobile phones for almost all their services in daily life, they are natural customers for the Fintech companies. Fintech Companies which specialise in wealth management have made investing rewarding and easy for the millennials, they worked to gamify the experience so that they inculcate positive habits. Fintech Lenders have been a boon to millennials, typically traditional banks and NBFCs would keep away from this segment as they are new to credit; but Fintech Lenders use alternate data and provide instant access to credit. In the lending space Fintechs have not just solved for speed and the ability to interact on mobile phones but more importantly they solved the basic problem of meaningful access to institutional credit. As Fintech is expected to exponentially grow over the next 5 years, millennials and gen-z will be the foundation on which this growth will happen,” said Anil Pinapala, Founder & CEO of Vivifi India Finance.
Starting with making life easy by providing digital payment options – that became hugely popular after the demonetisation – the fintech players gradually started offering digital investment options. This also helps the millennials adopt a do-it-yourself (DIY) way in their investment journey and try new investment pastures.
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“India has become a big digital transaction market with over 200 million people using digital payments but less than 15 per cent of these people invest in securities and mutual funds. Fintech players are creating an impact in this market by appealing to millennials and 60-70 per cent of their users are first time investors. A booming stock market in the last 1 year has further accelerated new people investing in the stock market and most of them are flocking to tech players offering stock broking today,” said Ashutosh Dabral, Chief Product Officer, MoneyTap.
“We have seen that the millennial population like to focus on investing as much as they like spending. There is an increased understanding of when and how to utilise credit. The emerging Fintech players have made access to loans easier, faster, and more seamless than ever. These companies are also educating this cohort on how to manage their finances better. Millennials are interested in new avenues of investments like Crypto and Fintech startups are helping them understand cryptocurrency and invest in them. The percentage of Indians with Crypto investments has increased a lot in the last 5 years,” he added.
“Fintech companies also act as digital advisories to millennials, giving them personalised recommendations, tips and suggestions to understand concepts as well as put a part of their savings into investment avenues in sync with their risks and returns. For instance, a good way to invest is diversification, that is, investing a part of income into long-term instruments such as FDs and PFs, and another part on short-term investments like intraday trading and SIPs,” Dabral further said.