Sales League Table 2020 | Banking Technology Winners

Results Announced!

Stay up-to-date with the latest industry news and analysis.

Subscribe to BankTech Daily News today. Limited time offer.

The Black Swan Opportunity | Get your bank digital ready.

IBSI Special 5 Digital Report Package with Special Offer. Subscribe now

Core Banking Market Dynamics Report 2020

Global analysis of core banking system sales. Subscribe now

FinTech smallcase Technologies expects 5x growth by FY21 as markets turn volatile

Vasanth Kamath, Founder, smallcase

Global economic crises are always an opportunity to invest in stock markets. However, not many can capitalize on the falling markets as they either do not have enough understanding of how the capital markets operate or are confused on what stocks to pick. With the novel Covid19 virus creating mayhem in the global equity markets, several new investors are rushing to try their fortune in the stocks with the help of new-age FinTechs such as smallcase Technologies.

The Bengaluru -based FinTech company, is offering simple, low-cost, and transparent investment products that allow users on its platform to invest in readymade portfolios through their existing brokerage accounts.

Founded in 2015 by three IITians from Kharagpur—Vasanth Kamath, Anugrah Shrivastava, and Rohan Gupta, smallcase helps users create diversified portfolios of stocks/ETFs with an underlying idea, theme, or strategy. For example, if healthcare or banking technology as a segment is going to pick up post Covid19 crisis, or electric mobility is the next big idea, then smallcase would allow users to create a healthcare or bank tech “smallcases” or “portfolios” like those created in mutual fund investing.  smallcases holds shares in their portfolio as against units in case of mutual funds.

There is no concept of lock-in periods in smallcases, unlike mutual funds. smallcases are completely liquid as the stock and the market it trades. One can invest lumpsum or through SIP format.

Vasanth Kamath, its Co-founder, and CEO told IBS Intelligence that the recent pandemic-induced volatility in the markets had witnessed a sharp 1.5x month-on-month increase in new investors just in March. The orders have also increased about 1.6x times in March as the Sensex and Nifty crashed over 30%. The company is expecting a 5x jump in its investor base from the current 800,000 to 40, 00,000 by the end of FY 21.

“The idea is to get retail investors to take a portfolio-based approach while investing in stocks just like they invest in mutual funds. Investors do not have to worry about investing in individual stocks. During such a crisis, people resort to equity investing,” said Kamath adding that compared to single stocks, smallcases are a safer way to invest directly in the stock market since they are diversified.

He further added that compared to mutual funds, smallcases don’t have an expense ratio, which makes them cost-effective when compared to other instruments like mutual funds. Also, since the underlying securities are held in the investor’s Demat account, they have complete control and transparency into their investments.

He further added that investors are becoming more digitally-savvy and fee-conscious, which is why the advisory-based model like that of smallcase is likely to see a steady uptick as against distribution-oriented models.

“Intermediaries like brokers, advisors adding more product and asset class options to their platforms to focus on holistic financial planning for their clients,” Kamath said. The platform has over 31 brokerages, as well as Sebi-registered research analysts, investment advisors, portfolio managers, and asset management companies, create diversified portfolios or smallcases for investors. Some of the brokerages include Zerodha, HDFC Securities, Axis Direct, and Edelweiss, amongst others.

Besides the central platform, the start-up has three more products to help retail investors make their decisions. First is called Publisher Platform that enables SEBI licensed professionals (the RIAs, PMS, RAs) to productize their stock/ETF based research/advice as smallcases.  The platform currently has 45 smallcase publishers/managers, and the target is to grow up to 300 in the next three years.

The second one is Tickertape, which helps simplify stock analysis by providing users with readymade tools to screen and analyze stocks. The third product is the Market Mood Index(MMI), a real-time market sentiment indicator that describes the current mood of the overall market and time investment decisions.

The company is also adding another layer to the existing infrastructure called smallcase Gateway that allows non-brokerage platforms to offer smallcases to their base in an essential manner. Similar to a net-banking payment gateway, web and mobile apps can enable transactions on smallcases as well as single stocks, ETFs in a non-intrusive yet compliant manner.

“With all our existing products, anyone can now invest in strategies like All-Weather, Smart Beta, etc., which were previously only available to institutional investors and HNIs. We are also giving more power and control to people over their investments. Unlike MFs, investing in smallcases makes you a shareholder of the underlying companies. It allows you not only to see your portfolio anytime but also to make any changes to it as and when you want to,” Kamath said.

At a time when the mutual fund market is growing exponentially on the back of simple and straightforward investing through SIPs being offered by several FinTech platforms, smallcase is focusing on stocks.

“We feel that the market is big enough. We cater to more tech-savvy and educated to invest directly in equity stocks. smallcases serve various use-cases that can’t be captured by mutual funds structurally. It is a new type of investment instrument that provides exposure to equity/capital markets,” he added.

The company, which counts investors such as Sequoia, Beenext, and Blume Ventures amongst others, has raised $10 million (in two rounds). The startup  is developing unique investment products for different use-cases, accelerating its product expansion, partnering with more retail brokerages to bring smallcases to more investors, and also expand to global markets.

Related IBS Intelligence Research

Related Posts

BNY Mellon to boost real estate fund administration services for Deka Immobilien

BNY Mellon announced today that Deka Immobilien has selected the former’s services for the provision of global fund administration coordination and oversight for its Special Purpose Vehicles (SPVs). BNY Mellon is expected to coordinate accounting data from the SPVs around the world in which Deka funds invest, review the data, translate it into the required […]

This post is only available to members.

Read More »

PPRO study shows younger generations leading the UK alternative payment method adoption

A new study by PPRO has revealed that younger generations are spearheading the adoption of alternative payment methods (APMs), including bank transfers and e-wallets. The study showed that 42% of the Millennials and 35% of the Generation Z respondents have either used the above-mentioned methods of payments before or are confident using them. UK consumers […]

This post is only available to members.

Read More »