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The increasing penetration of high-speed internet, availability of smartphones and rising digitisation have started bringing more customers from small towns and rural areas to several segments of the digital economy, including mutual funds and stock markets investing. Digital stockbroking platform Upstox is also witnessing the shift, as more than 80% of its customers are from Tier 2, 3 cities now, its cofounder Shrini Viswanath said.

Speaking at Inc42’s Fintech Summit 2022, Viswanath shared the change in the platform’s customer profiles over the last five years. In 2010-11, more than 90% of Upstox customers came from the top 7 cities in the country as compared to now, when a large number of new customers are from small towns, he added. 

Besides, the differentiation in risk aversion depending on where a customer lives is disappearing gradually, and the investing pattern, including average ticket size and age, is normalising across the board, Viswanath said.

In addition, 71% of Upstox customers are first-time investors who have never opened a brokerage account or done a KYC ever before, he added. The rise in the number of smartphones and access to the internet have also resulted in customers undertaking their independent research to make informed decisions.

“Our goal is very simple, how do we get access to a mass group of people, make it easier for them to onboard, manage their wealth and invest in the stock market, then eventually grow their wealth. That has been our mission for 5 years,” Viswanath said about the startup’s business philosophy.

Upstox is also working on increasing financial literacy among investors. Since millennial investors are seeing an economic downturn for the first time, it has become important to help them navigate through the difficult period, Viswanath pointed out.

Amid the global economic slowdown, he also acknowledged that there has been a change in investors’ sentiment in the last six months along with a drop in equity volume. Viswanath also said that more than any other macroeconomic indicator, the rise in commodity prices has hit the Indian investors the hardest.

“People are not going to pause completely, rather they are going into a wait-and-watch mode,” Viswantah said about the mindset of retail investors.

The Russia-Ukraine war, along with supply chain issues due to the Covid-19 pandemic, have led to an increase in a range of commodities from oil to metals. This has translated into higher inflation across the world, with central banks tightening their monetary policies, and fears of a recession.

The market downturn has also impacted the fintech startups in terms of fundraising. The funding raised by Indian fintech startups declined almost 45% to $1.77 Bn during January-March 2022 from $3.2 Bn in the December quarter of 2021, as per an Inc42 report.

Upstox offers online stock market investment services, advisory services, mutual fund investments. Initially, its parent company RKSV Securities, founded by Shrini Viswanath, Raghu Kumar and Ravi Kumar, started off as a proprietary trading firm. Later, it ventured into retail brokerage with the launch of Upstox in 2012. 

Last year, the startup entered the unicorn club after raising $25 Mn at a valuation of over $3 Bn from Tiger Global.