Retail investors are increasingly turning to digital platforms, according to a report by Benori Knowledge.
Benori Knowledge surveyed over 1,000 digital investors to gain a better understanding of usage patterns, preferences and trading activities on online investment platforms.
As per the report, over 81 per cent of digital investors started their investment journey in the last three years.
Buoyed by advancements in technology, consumer awareness, diverse offerings by investment tech startups and government support, the digital investment market is set to be worth $14.3 billion by 2025, growing from $6.4 billion in 2021 at a 5-year CAGR of 22.4 per cent, the report said.
“Investors are flocking to digital platforms because they find them convenient to use and they offer them a wider range of options,” it said.
According to the Benori research, many members of the younger generations are beginning their wealth management journey through digital platforms, with 93 per cent of users falling into the millennial segment.
“The younger crowd that these platforms attract are also increasingly diverse,” it said.
Female presence in the investment community on these platforms is also on the rise with women making up almost 40 per cent of digital investment platform users.
“However in terms of geographic dispersion, the investment space remains clustered amongst highly urbanised areas,” it said.
More than 60 per cent of users came from Tier 1 cities.
Further, as per the survey, 72 per cent of respondents said that accruing higher gains is their primary objective for investing digitally.
While 42 per cent invest with an aim to achieve their financial goals including building savings for retirement (51 per cent) and reducing taxable income (25 per cent).
Mutual funds emerged as the most popular option for online investors, accounting for 62 per cent of their trading activities. Investor interest in stock trading is also increasing, with half of users (51 per cent) participating in public markets.
Despite the rise of digital investment solutions, investor awareness is mostly guided offline, with 36 per cent of users consulting friends and family and 17 per cent turning to a financial advisor, as per the report.
Investors also reply on digital avenues such as financial websites and social media (32 per cent) for investment related information include. 14 per cent rely on traditional media (newspapers, TV and radio).
“Digital investment spaces are set to continue retaining and growing their number of users, claiming a high satisfaction rate of 87 per cent,” as per the survey.
“What is spurring gratification with these platforms is the perceived higher returns they offer, accounting for 53 per cent of user satisfaction,” it further added.
Investors are also pleased with their ease of use and operation (68 per cent) and the convenient KYC process (59 per cent).
When considering the benefits of investing online as opposed to the traditional way, users highlighted convenience (72 per cent), access to a larger range of products (55 per cent) and lower brokerage fees (47 per cent).
However, there are also certain limitations to digital investment platforms.
“It is not yet clear how they operate in terms of data security,” as per the report.
Those who were only moderately satisfied (9 per cent) with their platforms pointed out privacy issues (60 per cent), lack of relevant information (58 per cent) and unreliability (41 per cent) as causes for concern.
Ashish Gupta, the Co-founder and CEO of Benori, said, “The digital investment landscape has continuously evolved with the advancements in technology to provide customers with simple yet sophisticated investment processes that offer a variety of investing options.”
“These new age wealth management platforms have greater appeal amongst millennials, who are now increasingly participating in capital markets. With an increase in the number of younger investors relying on digital avenues to grow their wealth, financial institutions will have to come up with more user-friendly technologies to encourage digital investment,” Gupta added.