Exclusive Interview with Abhijit Roy - GoldenPi
Introduction
GoldenPi is a fintech pioneer in the fixed income space. It offers Indian investors a marketplace for bonds and debentures, radically opening up a previously closed market to a potential customer base of millions.
The following is an extract from an interview with GoldenPi co-founder and CEO, Abhijit Roy.
Why did you start GoldenPi?
We started on the 21st June 2017, inspired by developments in the financial markets.
In India the traditional, safe, investment space is bank fixed deposits.These have tended to give 9-10% returns. The cost of borrowing for businesses is therefore very high - it needs to pay for the interest rate on deposits.
As the Indian economy has developed this model has become unsustainable. By 2016 rates were at 6%. Given that the inflation itself stood at around 4%, there was hardly anything left back in bank deposits for the investors. Hence a large segment of investors were looking for a new place to put their money - somewhere safe but with better returns than bank deposits
We knew that the bonds and debentures markets could potentially meet this need, but there was a big problem: retail investors couldn’t access those markets.
Though the bond market is huge, it is a closed market with most of the business done over emails and phone calls between huge financial institutions. Investment is also complicated. Investors need to know the availability of certain bonds - there has to be a discovery mechanism of what is available today, and at which price.
There’s also a lot of paperwork involved. Know Your Customer (KYC) is complex, with lots of documents needing to be filled in.
So, we thought, why not create a tech platform to open up the bond market to everyone across the country - to anyone with an internet connection, mobile, laptop etc.
Why shouldn’t it be easy? Why can’t investing capital be as straightforward as buying from Amazon?
How are you using technology to provide your service?
We offer a marketplace for bond providers. Our platform aggregates and rationalizes large amount of bond inventory data on a realtime basis. Users can apply their preferences -- for example, how long they want to invest for, whether they prefer a public sector bond, and so on -- and we let them know what fits their requirements.
There are three legs to the problem of democratising the bond market:
Discovery.
Distribution.
Advisory.
We’ve solved 1) and 2). Our customers can find and buy bonds through our platform. We’re working now on (3), developing AI to provide an advisory service based on the profile of the investor.
Who are your customers?
We’re reaching people who know about the bond market but who may not have accessed it due to the difficulties facing retail investors.
Our customers are comfortable with technology and buying online, and are looking for a secure place to invest their money. Broadly speaking this means urban Indians with more established careers. Though we do have some interest from the under-30s, that demographic tends to favour investments with a higher risk/reward profile.
How Do You See the Market Developing? What are the Challenges?
The Indian government and SEBI (the Indian financial regulator) are both committed to deepening participation in the bond market and have done great work here.
However, there are still some structural issues which are slowing growth. Know Your Customer (KYC) processes are extremely stringent. There are now technological solutions but these are yet to be adopted by bond houses.
Awareness level on bond investment in the retail segment still has a long way to go, though it has improved over the years.
Also the government could do more to promote the retail investor - for example, mandating that a certain percentage, say 20%, of a bond issue needs to be made available to retail investors. Giving tax incentives for investing in bonds is also another move that we believe will widen and deepen the retail bond market.
Is this a model which could work in other countries? Can GoldenPi expand internationally?
We do want to establish a presence outside of India. The problems with the bond market -- lack of information and accessibility -- exist all over.
The obvious choices for expansion are developing countries like Argentina and Brazil. Bond rates there are better than for bank fixed deposits. In the EU bond yields are still negative - we’ll have to wait and see if there’s a recovery there.