Shruthi Cauvery Iyer, who was recently crowned Mrs India 2021, stood out as the perfect candidate from the get-go. This Bengaluru-based 39-year-old mother of two had a knockout physique with looks to match, an elegance that set her apart in a crowd, a charming manner, an ivy league education – with degrees from both Wharton and Harvard – and intelligent and relevant responses to every query sent her way.
However, what marked her off from her co-participants was the influence she held as the co-founder of the global impact investment firm, CaHa Capital. She explains, “Many of my female friends would deliberately keep their investment portfolio small in comparison to their male peers from a similar income profile, fearing loss of money. I wanted to advise them correctly and started this firm. Fortunately, things are changing.”
Iyer’s financial acumen and influence made her an apt ambassador for the present generation, clinching her victory in the pageant this year. The tough times brought about by the pandemic necessitated young people to become financially savvy, as they began following a host of financial influencers or ‘finfluencers’.
This made them more confident about practicing a combination of smart investments and savings to help them tide over the crisis.
In the six months since India imposed its first lockdown, Central Depositories Services India Ltd, one of the country’s leading securities depositories, saw a near 20 percent rise in activation of new demat accounts, hitting more than 25 million by September 2020. The vast majority of these were opened by millennials and Gen-Zers, aged 24 to 39, according to markets regulator, the Securities and Exchange Board of India.
Further, online trading platform Zerodha recorded more daily transactions than the US’s most popular platforms, with five to seven million orders per day versus Robinhood’s reported 4.3 million. Stockal, a platform that helps Indian investors buy US stocks, saw a 50 per cent jump in millennial investors from April to September as transactions surged 300 per cent to USD 160 million.
Rise of the Finfluencer
The younger generation took lessons from the COVID crisis and began securing their financial future themselves. Social media proved a boon for many who accessed informative digital content.
The rise of finfluencers, or digital content creators, who have a strong background in finance in terms of education and experience, further attracted the youth to invest more and take on the management of their personal finances.
Through their specialised skills, finance influencers built a specific social media presence for themselves in a saturated industry.
“I think a lot of it has to do with the democratisation of financial knowledge during the pandemic. Lockdown-induced viewership coupled with the availability of cheap internet gave rise to content-based learning across the country. Also, the perception of a personal finance expert underwent a paradigm shift. Instead of the typical chartered accountant, our parents would consult for help, now people prefer to follow a ‘cool’ and ‘smart’ investor who teaches them to manage their own money,” says Mumbai-based business analyst and blogger Raghav Dudeja.
His content creation journey began when he earned a profit of 800 percent on a crypto trash coin investment. Though overjoyed, he realised that this fortuitous win had been a fluke, which led him to educate himself on blockchain and cryptocurrency through books, YouTube channels and certified courses.
Around 12 years ago, Delhi-based Priyanka Bhatia was upset to find herself left behind her male peers who had become homeowners with fat savings in their bank accounts, on the same salary. Her penchant for expensive branded goods never allowed her to create wealth the way she wanted.
Bhatia’s father pushed her towards traditional investment schemes like the Public Provident Fund and Fixed Deposits, which had pitifully low rates of returns and her broker’s ill-advised investment plan led her to lose 90 per cent of her investment amount.
Bhatia then decided to approach the situation smartly; she directly approached a woman stock investor, a property investor, a serial entrepreneur and a business coach, to learn from each of their experiences, and supplemented this knowledge with books and workshops. Before long, she made her first well-informed independent investment on which she earned Rs 70,000 in just 120 minutes.
Her success on the stock market led her to quit her job and start her own financial course called WOW (Women on Wealth), where she taught women the art of investing their money. Despite the volatility of the pandemic, her investments continued to rake in profits and her dedicated WhatsApp and Facebook community of all-women followers went through the roof.
The recent investment boom has seen a significant increment in the number of investors from Tier II and III cities. Angel Broking’s data show that more than half of its new customers in the quarter ending last December were from smaller cities and towns.
Investors from these places have been targeted through television, social media, and billboard advertising, leading to a 16 percent jump in equity investing in February 2021 from February 2020, according to the Association of Mutual Funds in India. Raj Shamani, with over a million followers on Instagram, is an apt example of this.
Originally from Indore, he moved to Mumbai last year when his business as a digital content creator, investor and podcaster picked up. He credits his popularity to the increasing awareness among people on the importance of investing their money correctly.
His own knowledge of the modern financial sphere stems from the podcast interviews he conducts of people who understand the workings of modern finance, including founders of crypto exchanges, creators, authors, investors, and others. He also reads books and websites, and watches videos that regularly update their information. However, Shamani feels ultimately the best teacher is experience. He says, “Until I got my hands dirty in the game, I was not confident to speak on this subject, but now I’ve made some money and learnt from lost opportunities, so I’m much more knowledgeable.”
Another recent trend in non-metro cities has been the increasing demand for small loans up to an amount of Rs 50,000. This is primarily due to the higher penetration of the internet and increased efforts in localisation led by personal finance apps.
While traditional institutions have higher fixed overheads, new-age lending apps can tap into this market with lesser operational costs and higher technological efficiency. Branch, a personal finance app based in Bengaluru, is one such, and according to its Head of Marketing, Edwin Daniel, the company has loaned over Rs 2,000 million in India since its launch in 2019.
The success of these apps is evident from the fact that they were installed 149 crore times by Indians from January 2019 to March 2021—the highest number around the world in this period. Data compiled by apps analytics firm AppsFlyer showed that after a brief lull when the pandemic first struck, fintech apps bounced back in demand in the country clocking 26 percent growth in 2020 compared to 2019. This data collectively represented digital payment services, as well as stock market investment apps and loan apps. In fact, a search on Google Play Store for an ‘instant loan’ serves up over 200 apps!
They particularly strike a chord with younger people who are credit-starved, and systematically overlooked by traditional banking and lending institutions. Other reasons for their popularity can be accorded to the limitation in movement of users due to the lockdowns, the ease of usage of digital apps, faster approvals and transfers, the ability to complete applications online, and a deeper internet penetration, compounded by the fact that banks and financial institutions became more stringent with lending owing to economic uncertainty during the pandemic.
Though their popularity picked up in the last two years, this trend had begun well before. In 2016, the Digital Lenders Association of India (DLAI) was formed by nine leading players – CapitalFloat, KredX, Neogrowth, LendingKart, Indifi, Zestmoney, Indialends, Moneyview and Kapitaltech – to represent, advise and consolidate the efforts of the digital lending industry.
DLAI fosters innovation in financial technology around digital lending and promotes the responsible growth of the sector. In this regard, it has also issued a mandatory code of conduct for all its members emphasising the need for responsible lending and ethical collection practices.
Anurag Jain, Founder of KredX and Executive Committee member of DLAI, highlights, “While there was already a steady increase in digital transactions post-demonetisation, we have seen a meteoric rise in the number post the pandemic. According to the latest RBI data, UPI transactions by value touched their highest ever in July at Rs 6.06 lakh crore, which was a 109 percent jump from last June. Card spending at Rs 1.36 lakh crore was the highest since April and rose from Rs 95,883 crore the previous year, as the economy recovered.”
Age No Bar
The most prominent change at a household level has been the passing of financial reigns to a tech-savvy younger generation. Most often, it is these inexperienced family members who conduct all digital transactions, even if they don’t own the accounts.
Data show that active investor accounts rose by a record 10.4 million in 2020. Angel Broking, a securities firm established in 1987, shares that 72 percent of the 510,000 customers it added from October to December last year had never traded in stocks before.
This phenomenon isn’t limited to India. The world over, a growing number of teens and young adults are turning to online investment platforms that offer the chance to make easy money with a single swipe.
This isn’t surprising in the least when one factors in soaring unemployment, particularly among newly-graduated Gen-Zers, and the easy availability of no-fee, easy-to-use brokerage apps that offer amateurs a chance to trade.
Unfortunately, this lack of experience often has negative consequences. Case in point – the now-infamous story of 20-year-old Alex Kearns, a student in the US, who committed suicide last year after he thought he had lost USD 730,000 while trading on Robinhood.
In a recently filed lawsuit, his family claims that he attempted to communicate with the company immediately after finding out but was unable to, which led him to take this extreme step.
Vijay Pravin Maharajan, Founder and CEO of Germany-based Blockchain Analytics company bitsCrunch, highlights other negative aspects of ill-educated investment transactions, especially in relatively uncharted waters like cryptocurrency.
He says that incidents of personal financial fraud have reportedly increased in the last two years. Despite the resilience of blockchain technologies, intruders have found a way to tamper with them, resulting in a serious threat to buyers and sellers in the NFT marketplace.
Bengaluru-based financial expert Shashank Udupa says, “After the pandemic, everyone has realised the importance of personal finance and passive income. The two most popular ways to create passive income are the stock market and cryptocurrency. But if you enter them without any education, you are bound to lose money or play on the luck factor. That is the reason people are looking to educate themselves through YouTube and other external sources before exploring these avenues.”
Cash Vs Crypto
Delhi-based Neha Nagar is the founder of tax consultancy firm TaxationHelp.in and a popular finfluencer, with over 748,000 followers on Instagram and over two lakh subscribers on YouTube. Originally from a middle-class family, she faced numerous financial issues growing up and decided to pursue a career in Chartered Accountancy.
She could not clear her finals but developed an interest in finance along the way, which led her to work with IIFL Securities as a wealth manager, and in 2019, start her own tax firm, Taxationhelp.in. “During lockdown, I started creating content around cryptocurrency, stocks, personal finance and blockchain technology which is making the world decentralised. The most attractive thing about cryptocurrency is that many industries are using this technology to store data, and even the Indian government is doing many projects with cryptocurrency platforms now,” she shares.
The government of India is currently in the process of drafting a cryptocurrency bill to define what it is and how it should be treated in various cases. The ultimate aim of this proposed legislation is to help authorities register cryptocurrency trade in the books of accounts and tax.
As cryptocurrency trade grows rapidly in the country, domestic cryptocurrency exchanges have reported a sharp jump in trading volumes, and have been requesting the government to regulate virtual coin trade, as this medium does not have any legal status in India.
Dudeja says, “There is a narrative in the crypto industry that revolves around decentralisation and overthrowing government intervention, but I don’t think that’s going to happen any time soon. Personally, I think cryptocurrency and DeFi are tools that can improve the existing system rather than replace it altogether. Although India has the highest number of crypto users in the world as per BrokerChoose’s annual crypto proliferation index, it has still only been adopted by 7.3 percent of our population. You have to face facts, despite all the noise around crypto, there is a long way to go yet!”
Dudeja is emphatic in his belief that positive government regulation will boost the cryptocurrency ecosystem in our country, bringing it closer to international standards. Things are certainly set to change. A leading Indian media publication reported in August 2021 that a whopping 1.5 crore Indians have invested in cryptocurrency.
Maharajan of bitsCrunch shares that recently, cryptocurrency and blockchain, which were previously believed to be exclusive to the domain of tech and finance enthusiasts, have grabbed the attention of laymen too.
In 2020 alone, Indians invested close to USD 40 billion in cryptocurrency. Maharajan puts this phenomenal growth down to the tremendously high return on investment. Further, with Bollywood and other cultural icons also entering the NFT world, common people are bound to follow.
Dabbling in new-fangled financial practices without proper education or preparation can sometimes have negative results. The app-driven microlending segment, for example, has become a nightmare for many borrowers, who started by taking small sums of Rs 500 but as their dependency rose, they ended up with multiple loans leading to major payment defaults.
While in some cases, borrowers end up dealing with aggressive app-lenders who are willing to adopt a number of humiliating means, including publicly shaming them among their personal contacts in order to recover sums; in other cases, high interest rates and costs have caused even small loans to balloon for defaulters.
In a developing economy like India, the financial crisis due to the pandemic was crucial for the widespread adoption of credit cards and the BNPL (Buy Now Pay Later) mode. Unfortunately, this also led to an increase in frauds involving personal financial transactions due to the lack of awareness about current trends in the financial world.
People experimenting with cryptocurrency trading believing it to be a ‘get-rich-quick’ scheme, also must be aware of its potential fallout. Dudeja relates a recent incident where his friend, who is a major fan of K-dramas, could not resist the urge to immediately invest in the Squid Game GameFI token, when it came out a few days after the release of the Netflix TV show of the same name.
The token price had started at $0.07 on Day 1 and rallied up to $2,300 on the third day. He invested on Day 2 and sat back comfortably, thinking he would be raking in the money. However, on Day 3, the token price plummeted to zero, and the social media handles and website of this token vanished into thin air.
Collectively, people lost Rs 25 crore in the project. “It was a classic rug pull, which is unfortunately quite common in the crypto space. One needs to do their due diligence before investing,” explains Dudeja.
Udupa warns, “The crypto market right now across the world has no regulation, which gives rise to a lot of scams in the market, and some pump and dump schemes where traditional investors lose a lot of money.”
Other disadvantages of cryptocurrency include its high volatility, an undecided nature leading to the fear that it might one day fall under the domain of a ‘black market activity’, its high propensity for cyber-hacking and lack of refunds in case one develops cold feet and wishes to withdraw their money.
Further, its relatively low percentage of adoption by the masses means it lacks scalability as a method of payment.
Delhi-based Gurleen Kaur Tikku, the Founder of Hareepatti financial advisory firm, highlights that cryptocurrency is still the domain of a very small fraction of people, though it is catching on and therefore here to stay. She believes we are heading towards a world where a mix of old and new will co-exist. “A hybrid model is likely to emerge where hard cash, digital wallets, and crypto will coexist and fulfil the financial needs of every individual,” he says.
Udupa sums it up, “I feel in the future we will see a hybrid approach where we have a regulated cryptocurrency that everyone in the ecosystem is using. I am a firm believer that one day we will have a universal token that works across borders and is recognised by everyone.” It remains to be seen if his prediction comes true.
Financial Expert and Co-Founder, Scenes by Avalon, Bengaluru
The former investment banker’s online platform teaches skills related to blockchain, coding, and more. With 100K followers on Instagram and a YouTube channel, he puts out videos simplifying topics, from stocks, mutual funds, personal finance, entrepreneurial finance, to startup.
“The two most popular ways to create passive income are the stock market and cryptocurrency. But if you enter them without any education, you are bound to lose money or play on the luck factor. That is the reason people are looking to educate themselves through YouTube and other external sources before exploring these avenues,” he said.
YouTube influencers such as Rachana Ranade, Ankur Warikoo, Tanmay Bhat, School of Intrinsic Compounding for education on financial management
Learnapp website, which constantly updates information in this field
Business Analyst, Blogger, Mumbai
He earned a profit of 800 percent on a crypto trash coin investment, which led him to educate himself on blockchain and cryptocurrency through books, YouTube channels and certified courses.
“Lockdown-induced viewership coupled with the availability of cheap internet gave rise to content-based learning… Instead of the typical chartered accountant our parents would consult for help, now people prefer to follow a ‘cool’ and ‘smart’ investor who teaches them to manage their own money,” he said.
INDMoney, for managing finances
Varsity by Zerodha and Smallcase, for dabbling in stock markets
Coinmarketcap.com, futuremoneywallet.com, pandatechie.in, to learn about blockchain and cryptocurrency
WazirX, CoinDCX and Binance, for following up on crypto investments
Gurleen Kaur Tikku
Founder, Hareepatti, financial advisory firm, Delhi
The certified financial planner has 1,500 committed investors and writes blogs about personal finance at www.hareepatti.com. “A hybrid model is likely to emerge where hard cash, digital wallets, and crypto will fulfil the financial needs of every individual,” she said.
Good Budget for tracking expenses
Zerodha, Groww for MFs and stock trading
Digital Content Creator and Founder, TaxationHelp, Delhi
During lockdown, Nagar started creating content around cryptocurrency, stocks, personal finance and blockchain technology. She has over 748k followers on Instagram and over two lakh subscribers on YouTube now. “The most attractive thing about cryptocurrency is that many industries are using this technology to store data, and even the Indian government is doing many projects with such platforms,” he said.
Investing.com, tradingview, coinmarketcap, for trading
Entrepreneur, Digital Content Creator, Investor and Podcaster, Mumbai
With over a million followers on Instagram, his own knowledge stems from the podcast interviews he conducts of founders of crypto exchanges, creators, authors, investors et al. “Until I got my hands dirty in the game, I was not confident to speak on this subject, but now I’ve made some money and learnt from lost opportunities, so I’m much more knowledgeable,” he said.
IND money for building overall investment portfolio
CoinSwitch for cryptocurrency
SmallCase for understanding stocks as a beginner
Vijay Pravin Maharajan
Founder and CEO, bitsCrunch, Germany
His company uses blockchain technology to offer solutions in the NFT space such as forgeries, wash-trading and inefficient asset valuation.
“Incidents of personal financial fraud have reportedly increased in the last two years. Despite the resilience of blockchain technologies, intruders have found a way to tamper with them, resulting in a serious threat to buyers and sellers in the NFT marketplace,” he said.
Websites such as Investopedia, Bankbazaar, PolicyBazaar, Forbes, Wall Street Journal
Apps such as MarketWatch, Investing.com