Paytm’s Mutual Fund App Can Trigger Jio-Type Disruption In Rs 22 Trillion Mutual Fund Market!

Earlier we had predicted that Paytm wants a greater market share of the financial services market in India, and now, it is confirmed. A Jio type revolution is soon going to hit Rs 22 trillion mutual funds market in India.

Paytm’s new mutual fund app is all set to unleash this new disruption.

Paytm Mutual Fund App Coming Soon!

As per confirmed reports coming in, Paytm will soon launch a new, separate app which will only cater to buying of mutual funds, the direct way.

This would be powered by Paytm Money, which is their new wealth management unit under One97 Communications Ltd. Paytm and Paytm Mall are the other units of One97.

As of now, there are 25 Asset Management Companies or AMC, which sells mutual funds to Indian investors. Now, Paytm wants to become one their direct distributors, the one which can directly sell mutual funds to investors.

Why This Will Work?

There are 16 million mutual fund investors in India right now, and Paytm boasts of a userbase of 300 million.

Now, these 300 million users of Paytm are involved in digital money and are open to investment ideas. Even if Paytm targets a spending of Rs 1000 per user, per year, then the overall business volume which Paytm’s new Mutual Fund app can generate is mind-boggling.

Besides, almost 50% of transactions on Paytm comes from Tier 2 market, and this same demographic is responsible for 28% of overall mutual funds investment, as per Association of Mutual Funds of India.

In the first phase, Paytm plans to offer mutual funds from 12 of the 15 largest AMCs in India, and by August end, Paytm will tie up with all the 25 AMCs, thereby targeting 100% of the market.

Analysts are already stating that this can unleash a Jio-type disruption in the mutual fund market.

What Will Paytm Offer?

Paytm plans to focus only on direct plans, which have no embedded distributor commissions, which means expense ratios would be less.

Direct Plans can be directly sold by an advisor registered with Securities and Exchange Board of India (SEBI), and Paytm fulfils this criterion.

Direct Plans were devised for those investors, who want to purchase mutual funds directly, without any distributor in the middle.

This particular niche witnessed a growth of 97% last year, and Paytm now wants to tap this growth. Besides, Paytm’s own insurance and credit score are also being developed, which will complement their mutual fund business.

It would be interesting to observe, how Paytm convinces their 300 million users to invest in mutual funds now.

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