Groww takes aim at Zerodha, begins testing stock trading platform

Investment platform Groww is testing its stock trading service among select users as it prepares to start brokerage services in a market dominated by Zerodha that is attracting the attention of fintech players.

Groww will soon go live with its stock trading service, said two people familiar with the matter. They did not want to be named.

Bengaluru-based Groww entered the investments space as a direct mutual fund selling platform and now wants to expand into stock broking. Its entry could potentially open the gates to more new generation investment startups that intend to coax a small but growing number of people looking to invest directly in stocks.

Paytm Money, a unit of the payments company, is expected to go live with a trading platform soon. Once live, these players will attempt to eat into a customer segment dominated by Zerodha, the country’s largest stock trading platform.

Zerodha has grown at a sprinter's pace with a strong technology play, easy-to-use platform and aggressive discounting strategy. It has around 13 lakh active traders currently, offers mutual fund investments along with trading through Coin. It runs a popular knowledge sharing platform for trading enthusiasts.

All these make Zerodha is a formidable rival for an upstart.

Groww did not comment on the development. Its website still says 'Coming Soon' for stock trading.

"The platform is still being tested among our user base, but it is ready to go live within the next few weeks," said one of the persons quoted above. "Like mutual funds, in case of trading also the attempt would be to simplify the entire process and make it attractive for new traders."

The emergence of new players trying to challenge Zerodha in its home turf could significantly boost the brokerage ecosystem. The ten-year old bootstrapped yet profitable Zerodha managed to capture massive market share by going the discount brokerage way, said Abhishant Pant, founder of Fintech Meetup and an active angel investor in fintech startups.

Now for new platforms to take these traders away from Zerodha will be a challenge.

"What they can do is try to attract new users and expand the trading market overall, that is where the current Covid crisis has further complicated issues," he said.

Pant said due to the current crisis many young employees with disposable income are seeing job losses and salary cuts around them. For them to enter into trading at this point is highly unlikely. The segment between 35 and 45 years of age, with a good salary and disposable income, might look at this correction in the market as an opportunity to start investing actively.

"Will these new platforms manage to attract this segment or will they choose more traditional brokers, that is the point which will decide success for these players," said Pant.

Groww was started in 2017 by former Flipkart executives Lalit Keshre, Harsh Jain, Neeraj Singh and Ishan Bansal. The startup is backed by YCombinator, Sequoia Capital and Ribbit Capital.

Groww competes in the direct mutual funds space with Paytm Money, Zerodha Coin and others.

To make the offering attractive to potential traders, Groww is set to start with account opening charge of Rs 200 which will be waived off for early adopters and charge 0.01% of the total turnover with maximum of Rs 20 for traders buying and selling in the same day. The platform will also use Aadhaar based eKYC for easy sign up of new customers. Zerodha on the other hand also charges Rs 200 for account opening. It takes users through the Digilocker route for onboarding. For same day trades the platform charges 0.03% or Rs 20 whichever is lower.