Significant growth in Indian retail investors is causing an unprecedented surge of activity, changing the status of the country’s overall finances. The number of demat accounts has skyrocketed in the last couple of years, as have the record-setting amounts of money entering through Systematic Investment Plans(SIP), and the amount of money being placed into the equity markets. This is not only an increase, but evidence of a structural change in how Indians view investing. More and more individuals have migrated away from traditional savings instruments to market-linked alternatives, indicative of a growing awareness of financial opportunity and an increased willingness to take risks.
Technology Enabling This Change
Accelerated growth of fintech has been a key driver in this change. The implementation of Aadhaar-linked e-KYC, and the introduction of mobile-first applications have made opening and managing an investment account a frictionless and rapid process; there is no longer a requirement for extensive documentation or personal appearance at a financial service provider in order to establish accounts, which greatly reduced the barriers to entry. As access improves, the emphasis of investors’ concern is switching from access (availability of investment accounts) to the quality of the financial guidance provided to investors by the various available providers.
Artificial Intelligence is Making Financial Intelligence Accessible to Everyone
AI is changing the investment ecosystem for retail investors. Technologies like predictive analytics, portfolio simulations, and real-time risk management, previously limited to institutional investors, are now available to retail investors as well. AI-powered trading and investment advisory systems are allowing retail investors to make better-informed decisions and rely less on traditional financial intermediaries. The result of this democratization of financial intelligence is redefining the way in which all individuals will engage with capital markets going forward.
Growth of Modern Robo-Advisory
The evolution of robo-advisory has shifted from providing basic SIP recommendations, to providing robust comprehensive financial institutions for all aspects of financial planning (e.g., Tax Planning, Insurance, Asset Allocation, Long-Term Wealth Creation). So through an AI (artificial intelligence) powered platform’s ability to assess consumer needs (as opposed to providing product based solutions), consumers can gain a more complete experience in dealing with their personal finances.
The Expanding Accessibility of Vernacular AI
The use of AI with multi-lingual and voice commands has created unprecedented access to financial services through digital channels for India’s non-English speaking population. The development of vernacular AI platforms to deliver financial services to those who speak regional dialects (where approximately 90 per cent of Indians do not normally communicate in English) should enable large numbers of these individuals to enter the formal financial ecosystem as investors.
Continuing Challenges and Responsible Investing
As incredible as the development of robo-advisory has been, there are still a large number of retail investors who account for significant losses (particularly in high-risk investment securities like derivatives trades). Robo-advising platforms now use behavioural analysis in order to identify high-risk behaviours (like over-trading or poor decision-making) and will implement intelligent alerts and nudges to manage behaviours with the goal of creating a habit of disciplined and responsible investing.
Platforms that utilize artificial intelligence are not simply simplifying investing, they are also changing the future of Fintech in India. The regulatory framework continues to adapt to ensure availability and accountability and as greater numbers of investors gain access to intelligent technology, the likelihood grows that the marketplace will expand to be both stronger and more stable. All of these developments lead toward creating a broader base of capital markets along with those who are financially empowered.
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