The digital arm of the Tata Group, Tata Digital, is gearing up to take on investment tech platforms Zerodha and Groww by launching stock trading and mutual fund investment offerings on its fledgling super app Tata Neu, sources told Inc42.
Tata Digital has been working on launching these offerings for the last one year, the sources said, adding that the new offerings will be launched over the next two-three months under its financial services arm, Tata Fintech Private Ltd.
Inc42’s queries to Tata Digital on the latest development remained unanswered till the time of publishing this article. The story will be updated on receiving a response from the company.
It must be noted that last year, it was reported that the Tata Group was planning to infuse $1 Bn into Tata Digital to enhance its services, tide over technical issues, and accommodate any potential new expenditure requirements. This capital infusion was supposed to be in addition to the $2 Bn already pumped into the super app over the previous year.
The latest development will pit the Tata Group against discount brokerages like Kamath brothers-owned Zerodha and Tiger Global-backed Groww. Currently, the two startups together command nearly 40% share by user base in the stock broking industry.
This also comes at a time when Reliance-owned Jio Financial Services (JFS) has formed a joint venture with investment giant BlackRock to enter into the asset management space. Earlier this month, the duo filed an application with the Securities and Exchange Board of India (SEBI) for a mutual fund licence.
Tata Digital’s Wealthtech Play
Tata Digital acquired the stock broking licence from the market regulator in September 2022. However, it deferred its plans to launch investment products as it wanted to strengthen other verticals on the Neu app.
There were also complaints about app glitches and poor customer experience on Tata Neu. Tata Digital wanted to address these concerns, along with setting up a reward system, before foraying into the investment tech space, the sources said.
Tata Neu’s current fintech offerings include cobranded credit cards (Tata Neucard), BNPL options (Tata Pay Later), digital gold investments, and personal loans offered in partnerships with various banks and NBFCs.
Tata Fintech, on the other hand, curates a weekly newsletter Market Brew, which gives detailed insights into stock markets, mutual funds, among others.
Tata Digital’s fintech arm has also been hiring product and content management teams since last year to promote its educational initiative for wealth management.
The fintech vertical is currently being headed by Modan Saha who is the CEO, Financial Services , Tata Digital and a banking veteran having worked with Axis Bank and ICICI Bank in the past.
Commenting on Tata Group’s investment tech foray, a stock broking research analyst said, “Tata Group is well placed to foray into wealthtech services as it already has a super app which offers other financial services. Besides, the group has strengthened its tech stack and already has NBFC Tata Capital and mutual fund Tata Digital India Fund. So, they are not new to financial services.”
“However, wealthtech will be a different ball game where discount broking platforms like Zerodha and Groww seem to have the first-mover advantage and have captured more than half of the retail investor user base right now. Hence, it remains to be seen what Tata Group has to offer to attract the growing investor user base in India,” the analyst added.
The Tata Group’s wealthtech play is almost akin to what Zerodha and Groww did in their formative years when they were reliant on marketing campaigns and video content to sensitise people towards asset management.
In terms of active user base, Zerodha recently lost the country’s top stock broker tag to Groww. However, analysts affirm that Zerodha still has advantage in areas like user stickiness and revenue channels.
With the Tata Group, too, foraying into the wealthtech space in the era of fintech super apps, it will be interesting to see which strategy it deploys to create a competitive user base.
With its new offerings, Tata Digital is said to be all set to foray into the investech space that is expected to grow at a CAGR of 30% between 2022 to 2030 to reach a market size of $74 Bn.
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