End-to-end digital experience drives rapid expansion
Tier 3 markets offer high growth opportunities:
Upstox is India’s new-age online broking firm that pushes the limits of digital financial investing with innovative technology, intuitive user experience and unbeatable pricing. The firm claims it is the first discount broker to introduce commission-free trading in the country. Founded as a proprietary trading firm in 2008, it entered the retail brokerage space in 2012 and today ranks among India’s high-growth online brokerage firms and is a leading contributor to the country’s top equity and commodity exchanges. Upstox is now backed by Ratan Tata and venture capital firms like Kalaari Capital and GVK Davix.
PLATFORMS FOR WEB, MOBILE
Upstox’s digital strategy has always been to use its technological expertise to make investing and trading in the capital markets accessible and easy for all. Looking at the way digital economies are growing, Upstox realized that online was the way forward for the fintech space in India. Moreover, its low-cost brokerage advantage model makes capital market investing affordable for all. Upstox is a unique broker with no physical branches.
Ravi Kumar, co-founder & CEO of the company, says: “Our trading suite was created keeping in mind the wide spectrum of traders and investors in India. From the new trader to a veteran and experienced day trader, the Upstox Pro platforms cater to them all. Both web and mobile based trading platforms make it easy for traders to place orders in real time. Upstox Pro mobile platform is available on both an Android and iOS. It is one of the best rated apps on Playstore. Over the last financial year, we launched the Upstox Mutual Funds Platform in order to cater to the growing market of mutual fund investors in India. Upstox has also been the first broker to introduce selling of shares without the need to submit a physical POA (Power of Attorney) form.”
There has been notable rise in the number of traders and investors using Upstox Pro mobile trading app to place orders. Ravi Kumar says back in 2016, the number of app downloads was around 10,000. That number has increased to about 136,000 as of mid-2018. Almost 70% of daily orders are placed through Upstox mobile app, he adds.
ONLINE A/C OPENING, ORDERS
A big part of the Upstox’s digital strategy is easy onboarding of clients. The account opening experience is completely online and paperless. Moreover, modifying any details related to a trading and/or demat accounts can be done online. That is why people in remote areas can easily download Upstox Pro app to keep tab on market movements. Explains Ravi Kumar: “An end-to-end online method of account opening has paved the way for anyone with a smartphone and even a 2G or more connection to download the app, monitor the markets and start trading. Today, tier 3 cities contribute more than one-third to our revenues. A big reason for the growing interest from customers even in tier 2 cities is our Aadhaar-based account opening system that allows opening a demat and trading account without having to submit even a single piece of physical paper. About 80% of the total accounts opened are done using our online portal and Aadhaar-based account opening.”
About 98.5% of the total orders on Upstox during the FY 2017-18 were placed online and only 1.5% orders were placed using its ‘call-and-trade’ facility. Its ‘zero brokerage’ model, which is the most competitive, is gaining popularity with investors even in smaller towns and cities.
Technology plays a big role behind Upstox’s ability to offer cost benefits to its customers. It charges `20 per intraday order or 0.01% (whichever is lower) for all segments irrespective of the order size. Ravi Kumar says with a traditional broker one might end up paying `10,000 in brokerage for an investment of `100,000. However, with Upstox one would just be paying Rs20 per intraday order. Moreover, one can trade with better leverage in the derivatives segment as well, he adds.
CUSTOMERS, REVENUES UP
The cost benefit that Upstox offers has helped it in witnessing at least a 3-fold increase in client participation and turnover within a year. The number of trades placed through the Upstox platforms has also increased 3X. Its revenues have also increased 200% during the same period.
“Our pan-India client base increased from 25,000 to 100,000 in the last one year. Our contribution to daily notional turnover of exchanges increased to a range of `140180 billion per day from around `50-60 billion per day last year. We are one of those few venture capital-funded start-ups in India that turned profitable at an early stage. About 42% of revenue comes from tier 1 cities. However, about 33% of total
revenue is generated from tier 3 cities. This goes to show that tier 3 cities are a growing market,” says Ravi Kumar.
CRM BY ANALYTICS
Data analysis has helped Upstox study its customers’ profiles, understand user behavior, learn their trading habits and implement changes in its products accordingly. Using data from surveys and behavior patterns has helped its developers to build software that directly cater to the user.
Ravi Kumar claims that after streamlining and processing data with the help of analytics, the firm’s customer base grew by 2X between FY 2017 and FY 2018. “Now, we have deployed analytics at every step of the way – from lead generation to customer retention and support. Analytics has helped us not only increase our business but also build better and user-friendly products,” says he.
With the e-DIS (Electronic Delivery Instruction Slip), traders can sell their shares without even having to submit a physical POA (Power of Attorney) form to Upstox. Upstox Pro trading platform provides for real-time chat support embedded within the interface. A robust help centre is designed to provide answers to questions that a trader or an investor might have. Adding and changing details associated with a trading account such as a customer’s mobile number, email ID, address etc. can be done online without having to submit even a single piece of paper or document.
SKILLED FORCE, LOW OPEX
Upstox’s digital initiatives stem from a reliable team of software developers, designers and business development executives. “We invest in our people. Upstox’s beliefs in hiring highly skilled and driven individuals to create a scalable and seamless trading experience, has been successful. The overall number of employees working with the company stands at 110 as of now with number of software and network engineers in the company being 40. The reality is that thanks to our tech, we are able to reach customers without having to rely on the brick-and-mortar setup,” he says.
PARTNERS, FINTECH EXPERTS
The business of Upstox is essentially based on a partner model. Its partners act as its ambassadors who create awareness about low cost trading and investing among the members of their community. The technology is robust enough to give the partners a platform wherein they can track their performance and make sure that their customers get the support they need.
Says Ravi Kumar: “Upstox is on its way to build a robust network of partners across the country. Prior to June 2017, Upstox had about 150 partners. Within the last one year, there are more than 400 partners spread across 125 cities in India. In addition, our team of fintech experts conducts weekly webinars covering a variety of topics in trading and investing for our customers, who can just register for free and learn from industry experts directly. As for our own employees, more than half our staff members are developers. Designers, back office executives, risk management team, mutual funds’ team, communication department – work together to combine our financial prowess and sophisticated tech and become a pioneering force in the fintech space.”
One can access through Upstox tech, smart desktop trading apps such as Fox Trader and Dartstock, backtest one’s trading strategies, use real time trend scanners to analyze markets and study the market closely with powerful tools. Ravi gives an example: “One can analyze markets and build unique trading strategies by using our AmiBroker - the most famous charting software in the industry. One can trade seamlessly through Upstox as soon as your trading signals are triggered.”
Upstox has been able to bring in partners on-board because of its easy account opening process and intuitive trading software. Even when an account is opened, Upstox continues to provide hi-tech services to its customers - be it through charting tools, easy interface, efficient reports from the back office or by introducing special dashboards for customers and partners.
Ravi Kumar reveals: “We work extensively with Amazon Web Services (AWS). A lot of our client facing technology is hosted on the cloud and AWS is great at scaling services. This is critical when you are in an industry that experiences sudden spikes and drops. During times when the markets move quick and a lot of traders want to get in, our tech and internet have to be ready to handle that load. That’s where AWS comes in and scales automatically to handle high load.”
BOOST EqUITY PARTICIPATION
A major target for Upstox for the ongoing year is to build a strong network of traders and investors across the country. A team of relationship managers, a few developers and executives will solely work on building a robust network for partners to enable them to unleash their entrepreneurial spirit. Ravi concludes: “Our goal is to create reliable and fast trading products that helps boost equity market participation in the country. Our business plan includes building intuitive solutions that will equip partners to help customers in a better way. It is also a part of Upstox’s larger goal to make trading and investing in the stock markets affordable and accessible for all. Moreover, we also want to empower longterm investors with a strong tech stack and intuitive UI so that they can concentrate on building their portfolio.”
Ravi Kumar feels analytics have helped to increase the business and also build userfriendly products