In a significant development in the Indian financial technology (Fintech) landscape, Bengaluru-based startup Groww has overtaken Zerodha, one of the country’s leading discount brokerage firms, in terms of active investors. According to data from the National Stock Exchange (NSE), Groww boasted 6.63 million active investors by the end of September, outstripping Zerodha’s 6.48 million. This report delves into the impressive rise of Groww, the dynamics of the Fintech sector, and the differing strategies adopted by these two market players.
Groww’s Remarkable Growth
Groww’s ascent in the Fintech world is nothing short of remarkable. The company has displayed a consistent and substantial increase in its user base, growing from approximately 0.78 million users in FY21 to 3.85 million in FY22 and ultimately reaching 5.78 million investors in FY23. This surge has been achieved amid fierce competition from established financial institutions and rival startups, including HDFC Bank’s Sky discount broking app.
Zero Fees Model
A key driver of Groww’s success has been its customer-centric approach. The platform, like several other Fintech startups, does not charge customers for account opening or annual maintenance. This zero-fee model has attracted a growing number of retail investors looking for cost-effective and user-friendly investment options.
Zerodha’s Dominance in Revenue
Although Groww has triumphed in terms of the number of active investors, Zerodha’s revenue significantly surpasses that of Groww. Zerodha, the largest discount broker in the country by revenue, reported a 39 percent year-on-year growth in revenue and profit, reaching Rs 6,875 crore and Rs 2,907 crore, respectively, from 2020 to 2023. This substantial revenue is mainly attributed to Zerodha’s dominance in the high-profit Futures & Options (F&O) trading segment.
Groww’s Revenue Surge
In contrast, Groww has focused on attracting new customers with long-term investment products and mutual funds. The parent company of Groww, Nextbillion Technology Private Limited, reported a revenue of Rs 1,294 crore in FY23, marking a threefold increase from the corresponding Rs 367 crore in FY22. The company’s net profit for the same period stood at Rs 73 crore.
Market analysts suggest that the significant revenue difference between Zerodha and Groww is primarily due to their distinct market strategies. While Zerodha excels in the high-margin F&O segment, Groww’s approach caters to retail investors seeking long-term, low-cost investment opportunities. This divergence reflects the diverse and evolving needs of India’s growing investor community.
The rise of Groww to the forefront of the Indian Fintech landscape, surpassing Zerodha in terms of active investors, highlights the rapid transformation and diversification of the financial services sector. Groww’s meteoric growth underlines the appeal of cost-effective, customer-friendly platforms, while Zerodha’s substantial revenue demonstrates the profitability of dominating high-profit segments. The coexistence of these diverse market players reflects the dynamic nature of the Fintech industry in India, offering a range of choices to investors and challenging traditional financial paradigms.