Indian financial services sector is experiencing a significant upswing: Inventure Growth & Securities’ Kanji B Rita

A conducive regulatory environment has led to the expansion of the financial industry in India. The optimistic perspective is fueled by the growing demand for creative financial products and services, which is a result of the expansion of urban areas, technology, and the increase in disposable incomes. In a conversation with ET Digital, Kanji B Rita, MD Inventure Growth & Securities Ltd says the pace of change in India’s financial services system will be nothing short of exhilarating. The combination of a young, tech-savvy population, a supportive regulatory environment, and continuous innovation will accelerate progress. Edited excerpts.

Economic Times (ET): When did Inventure Growth & Securities Limited start and what was the idea behind it?
Kanji B Rita (KR): In the mid-90s, a transformative vision began to take shape amidst the dynamic shifts of the Indian stock market. It was an exciting time to be in the financial industry, a period of great change and opportunity. That is when the idea for Inventure was born. We saw the Indian economy undergoing reforms, and the stock market was poised for significant growth. However, the existing brokerage landscape felt limited. I wanted to create a financial services firm that was more accessible, more comprehensive, and catered to the evolving needs of investors. In 1995, trading was primarily floor-based, and the options for investors, particularly retail investors, were quite restricted.

We envisioned Inventure as a one-stop shop, offering a broad range of financial solutions under one roof. Fast forward to today, and we're proud to have grown into a formidable presence with memberships in all the major stock exchanges and segments. Our commitment to excellence extends beyond trading to encompass wealth management, research, and advisory services as well.

Today, we have over 75,000 clients, over 400 partners, and a dedicated team of over 200 professionals.

ET: What services does Inventure provide and how is it different from others?
KR: At Inventure Growth, we believe in fostering long-term partnerships with our clients, becoming their trusted guides on their financial journey. While today many brokerage firms offer similar products and services, what truly sets us apart is our personalized service and building genuine relationships with each client. We understand that financial goals are unique, and a one-size-fits-all approach simply doesn't cut it. That's why we take pride in our customer centric RMS, ensuring a smooth and efficient experience for every interaction. Our dedicated customer support team is always available to answer your questions and address your concerns promptly. Additionally, each client is assigned an exclusive relationship manager, who, as an advisor, gets to know your financial aspirations and develops tailored solutions to help you achieve them.

ET: What is the market size for financial services that Inventure provides and how can it be strengthened?
KR: The Indian financial services sector is experiencing a surge, with a market size estimated in the tens of billions of US dollars. While the exact figure varies depending on the specific services considered, the growth trajectory is undeniable. For instance, just the securities brokerage market is worth over $4 billion. This is fuelled by rising incomes, a burgeoning middle class, increasing digital adoption, and government efforts promoting financial inclusion. However, despite this growth, there's significant untapped potential in the Indian financial services market. Market penetration, especially in rural and under-banked areas, remains relatively low. This presents a tremendous opportunity for growth in the coming decades leading up to 2047.
Estimates suggest that by 2030, India's Internet economy could surpass $1 trillion. India's insurance market is poised as one of the world's fastest-growing, projected to rank sixth globally by 2032, with total insurance premiums increasing at an average annual rate of 14% in nominal local currency terms. These figures highlight the immense potential for financial services to empower a wider segment of the Indian population.

ET: How has business expanded over the years and what revenue has the company clocked last fiscal?
KR: Inventure has shown strong financial performance in FY2024. We have reported an annual revenue of Rs 90 crore, with an operating profit of Rs 21 crore and a profit after tax of Rs 12 crore. Notably, equity and commodity broking accounted for nearly 55% of the total revenue.

For the fourth quarter of FY2024, the company’s consolidated revenue stood at Rs 21.81 crore, reflecting a growth of 80.7% on a year-over-year basis and 36.15% on a quarter-over-quarter basis. The EBITDA for the same period was Rs 11.16 crore, showing a significant increase of 88.84% year-over-year and 53.94% quarter-over-quarter. This resulted in an EBITDA margin of 51.17%, which grew by 220.49 basis points year-over-year and 591.33 basis points quarter-over-quarter.

Furthermore, IGSL posted a net profit of Rs 7 crore for the fourth quarter, marking a growth of 66.67% year-over-year and an exceptional 163.16% quarter-over-quarter.

Overall, the company’s robust performance in Q4 FY2024 underscores its strong growth trajectory and operational efficiency.

ET: What are the challenges that a company like Inventure faces in the financial services domain?
KR: The financial services industry, much like navigating a bustling marketplace, presents a unique set of challenges for a company like Inventure Growth.

The regulations governing financial services are constantly evolving. It's akin to the marketplace constantly rearranging its stalls–we need to be agile and adaptable to ensure our offerings comply with the latest guidelines.

Not everyone is a seasoned investor. Imagine a marketplace where some shoppers are familiar with every product, while others are new and overwhelmed. Inventure is committed to bridging this gap by providing financial literacy programs and educational resources, empowering individuals to make informed financial decisions.

The financial services sector is experiencing a wave of technological innovation. It's like the marketplace suddenly adopting new modes of transportation – from pushcarts to high-speed delivery drones. Inventure actively invests in fintech solutions like our IGSL Trade app.

The financial services domain is a competitive landscape. Think of a marketplace overflowing with vendors vying for your attention. Inventure differentiates itself by focusing on personalized service, building strong client relationships, and offering a comprehensive suite of financial solutions to cater to diverse needs.

I would also like to add that capital allocation decisions in the financial services domain are a tricky tightrope walk, much like a high-wire act. Imagine being a chef with a fixed budget, but customer preferences are constantly evolving. You need to source the freshest ingredients (allocate capital) strategically to create the most desirable dishes (financial solutions) while keeping costs in check. At Inventure Growth, we constantly grapple with this balancing act.

ET: What is fuelling the growth in India's financial services sector and what do the long-term fundamentals look like?
KR: From an observer's perspective, the Indian financial services sector is experiencing a fascinating upswing. I see a confluence of factors driving this growth. A young and growing population, coupled with a burgeoning middle class, creates a natural demand for financial products. This is evident in the increasing interest in investments, insurance, and access to credit. We can't overstate the positive impact of government programs like PMJDY and Aadhaar. These initiatives have brought millions of people into the formal financial system, fostering greater inclusion. The rise of smartphones and internet connectivity has been a game-changer. Fintech has emerged as a powerful force, making financial services more accessible, particularly in rural areas. This digital transformation is truly democratizing finance.

The long-term outlook for India's financial services sector is promising. Factors like continued urbanization and rising disposable incomes point towards a growing demand for sophisticated financial products and wealth management services. India's improving macroeconomic stability, with controlled inflation and a growing GDP, creates a predictable environment for the financial sector to thrive.

Of course, there are challenges. Financial literacy remains an area for continuous improvement, especially among those newly included in the formal system. Cybersecurity is paramount as we rely more on digital platforms. Income inequality is a broader issue that requires attention to ensure inclusive growth within the financial services sector.

ET: What is the role of technology in today’s financial services industry? What are the strengths and limitations?
KR: I can tell you that technology plays a truly transformative role in today's financial services industry. It's like completely revamping the way we navigate the financial landscape. Technology automates mundane tasks, freeing up our human talent to focus on complex financial analysis and personalized client service. Imagine streamlining paperwork and calculations, allowing our team to delve deeper into investment strategies for our clients. Fintech solutions make financial services more accessible than ever before. People can now research, invest, and manage their finances from anywhere, at any time. It's like putting a full-fledged brokerage house in your pocket.

Yet, as we rely more on technology, cybersecurity becomes paramount. We constantly invest in robust security measures to protect our clients' data and financial assets. It's like building a high-tech fortress around our systems to keep everything safe. At the same time, remember, not everyone has equal access to technology or the digital literacy to use it effectively. We strive to bridge this gap by offering user-friendly interfaces and educational resources within our IGSL Trade app.

ET: How will the sector likely evolve over the coming 2-3 years? What do you think will be the pace of change in India's financial system?
KR: I am going to take some liberty for this question, because I am an eternal optimist. The next 2-3 years promise to be a whirlwind of innovation in India's financial services sector.

Imagine an AI-powered financial advisor that learns your financial goals, risk tolerance, and even your emotional responses to market fluctuations. This isn't science fiction–it's the future we're all building. AI-driven personalization will revolutionize wealth management, enabling real-time adjustments and hyper-focused investment strategies tailored to each individual.

Blockchain technology has the potential to streamline financial transactions like never before. Paper trails will become a relic of the past, replaced by secure, transparent, and instant settlements. Picture investing in overseas markets or transferring funds across borders with a few clicks, all secured by an immutable blockchain ledger.

Financial inclusion won't just be a domestic phenomenon. Imagine a world where migrant workers can seamlessly transfer funds back home or access micro-loans to start businesses, all facilitated by interoperable, global financial platforms. This will empower individuals worldwide and unlock tremendous economic potential.

Get ready to see financial services embedded seamlessly into your everyday life. That's the future of embedded finance. Financial literacy will become engaging and interactive. One can learn about compound interest or stock market basics through gamified apps that make financial education fun and accessible for all ages.