Household participation in stock market set to double in 5 yrs: Dhan CEO Pravin Jadhav

The current low participation of Indian households in the stock market underlines the massive headroom that exists for future growth, says Pravin Jadhav, founder and CEO of the online stock trading and investing platform Dhan.

The stock trading platform, owned and managed by Raise Financial Services, is busy scaling up with its 2.5 lakh plus user base of traders and investors. Jadhav is firm in his view that the participation of households in the stock market is poised to rise in the days ahead, just like digital payments have taken off. "If you think in terms of households… Only four per cent of Indian citizens participate in the stock market while about 50 per cent of US households are invested in stocks," Jadhav, said.

As India develops, the four per cent number has the potential to become eight per cent and more, the uptake similar to the trajectory for digital payments. "We're going to be there to actively be the vehicle of this growth," he said. While Dhan enables retail investors to trade stocks, equity options and currencies among other things, Jadhav said there is particular need for a smooth and reliable execution-only platform for mutual funds and bonds as well. This is the "next top priority" for Dhan.

Another factor fuelling his optimism about business prospects is that only about 80 million PAN card holders currently participate in the stock markets. While the levels have indeed grown 32-fold in the last two decades, these 80 million individuals represent a mere 13 per cent of the total tax-paying population of 610 million individuals. This indicates further headroom for growth.

"In fact, this number is purported to grow manifold over the coming decade, as the awareness around wealth creation through the markets grows (and becomes a necessity, more than a luxury)," Jadhav said.

Dhan's user base continues to grow steadily, with traders and investors from across India using its app and web platforms daily. The platform has 2.5 lakh daily concurrent users, while its total active users stands at 5 lakhs. While concurrent users are the number of users actively engaged on the platform daily, total active users are the overall number of users who have engaged with the platform till date. Discussing the company's growth and expansion plans, the top executive said, “There is a particular need for a super smooth and reliable execution-only platform for mutual funds, which is the next top priority for us currently." "The same goes for bonds," he added.

Referring to RBI's account aggregator framework, which allows a user to share information across financial institutions, Jadhav said, "While still nascent, it has opened the door to limitless possibilities, with one being the external portfolio-tracking feature that we recently introduced. If a user has multiple stock holdings across different brokers, they can track it all on Dhan." Dhan, he said, will build on top of this technology and see what else it can provide to users. The long-term prospects are bright with increasing awareness driving more retail participation in stock markets, he pointed out.

"More people today are aware of the stock markets than ever before. Awareness is driving more retail participation in stock markets... Retail participation is translating into higher trading and investing activity." Trading activity is expanding in the derivatives, commodity, and currency segments. "These traders want a platform they can rely on, with features that can help them achieve their trading goals," Jadhav said, adding that the platform has a razor sharp focus on user satisfaction and user retention. Amazon Web Services (AWS) is the cornerstone of Dhan's daily operations, added company Co-Founder and CTO Alok Pandey. It addresses cloud and infrastructure needs for smooth running of the platform, and frees up the stock trading firm's bandwidth for chasing innovation and business goals.

"Instead of allocating resources to managing infrastructure the hard way, AWS enables us to do what we do best - build a lightning-fast platform for our users, while it takes care of our cloud and infrastructure needs," Pandey said.

The importance of AWS in Dhan's operations is "pivotal", ensuring agility, efficiency, and security in a rapidly-evolving digital landscape. "Take VPC (virtual private cloud) for example. It adds a logical, isolated environment for our infrastructure, which simply means that there is a guarantee of data security," he said.

For internal security, IAM (identity access management) allows it to manage permissions with features such as roles, and while AWS has policies for managing access, it allows Dhan to write custom policies as well. "AWS enables us to stay agile, efficient, and secure in a rapidly evolving digital landscape, ensuring our operations run smoothly and our users are consistently satisfied," according to Pandey. AWS offers a vast array of services, ranging from EC2 (elastic compute cloud) to IAM, ensuring Dhan's systems function at full potential.

"When we began building Dhan, we wanted to fulfill the basic need of running our applications smoothly on servers. That's where AWS came highly recommended due to the robust efficiency of EC2," Pandey said. A platform, such as Dhan, is driven by users and the multitude of data that each unique user generates. "This means everything from their onboarding details to their trading positions(daily/weekly/monthly). RDS thus became the reliable way for going beyond data storage and also ensuring that we can fetch details out of the stored data quickly," he explained.

Dhan executives say the company is built with a user-first philosophy and most of the product roadmap is a result of its continued interactions with thousands of traders and investors across India. "Stock trading has been around for over 175 years in India, online trading has been here for over 25 years now, and discount broking has been around for about a decade. Yet, most broking platforms have remained the same for the past years with little or no innovation, except ones guided by regulations," Jadhav pointed out.

With time, investors and traders have become smart, but broking platforms remained the same with hardly any differentiation on products, features, or offerings. "While the industry continues to compete on pricing, and completely neglects product, technology and customer experience, we at Dhan are innovating and building solutions for traders and investors that are dynamic and efficient, designed to serve the user in the best way possible and at the same industry standard prices," he said.