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In conversation: Raghu Kumar on Upstox as India’s first to enable e-Aadhaar account opening service

e-Aadhaar account opening service Upstox
Upstox becomes India’s first online low-cost brokerage firm to introduce the service

In Conversation

In conversation: Raghu Kumar on Upstox as India’s first to enable e-Aadhaar account opening service

Only about 1.8% of the population invests directly in the capital markets and this move from Upstox is a step forward in making trading available and affordable for all

Upstox has a goal to provide every Indian citizen with the tools to trade and invest in stocks. To enable this, the online brokerage firm has launched the e-Aadhaar account opening service becoming India’s first to start such a service.  The service helps eliminate physical paperwork and creates efficiency.

We spoke to the co-founder of Upstox, Mr. Raghu Kumar on what the service means and how it would make an impact for both, users and Upstox:

What was the reason for enabling account opening services through e-Aaadhaar and what will be the benefits?

Mr. Kumar: Nobody likes paperwork. Nobody likes signing documents. Nobody enjoys getting documents signed, especially 25 times. Nobody likes being asked to courier a document. And the icing on top: nobody enjoys receiving a phone call where the representative on the other side says that there was a signature mismatch / document missing that prevents you from opening an account.

We decided to change that. Although a couple other brokers have attempted at launching e-Aadhaar KYC account opening to get paperless account opening done on a mass level, it still hasn’t picked up momentum. For starters, there were issues with the OTP authentication process. Since the e-Aadhaar process authenticates you through the number you registered when you applied, many were getting rejected applications since they changed their phone numbers from the original number they gave the Aadhaar agency. But perhaps the biggest reason is that all the brokers that were offering e-Aadhaar were charging high brokerage charges. There were no discount brokers offering e-Aadhaar KYC account opening.

So we decided to take the plunge and do it. We spent months planning, building, testing, refining, designing, and finally—launching. Upstox made the transition from having to sign 25 pages and sending a bunch of documents via courier to getting an account opened in less than 10 minutes online.

We’re hoping that a lot more users begin investing and trading. That’s the clear, bottom line. Eliminating barriers to entry lowers the resistance of someone from opening an account.

How does it change or add to user experience?

Mr. Kumar: Before e-Aadhaar, the process was a lot more time consuming. The application had to be printed on paper, which meant the user needed access to a printer. It’s amazing how cumbersome it can be to have to go to a cyber cafe/Xerox shop and print out 25 pages of paper. Next, signatures were required at all the right areas, and the signatures had to match. A passport sized photograph was required with a signature across it. Finally, a cancelled cheque made out to the right brokerage was required.

With E-KYC, that process is greatly simplified. An Aadhaar card, Pan card, address proof (which can be submitted online), a cancelled cheque (can be scanned and submitted online) and a copy of your signature (submitted online) are all that’s required. This should ideally not take more than 10 minutes.

So it’s a significant change in user experience. It was difficult for us to get this done, but we’re proud to be the first discount broker to launch the service. With free demat account opening, trading account opening, and no AMC’s (annual maintenance charges) and free equity delivery trading, it becomes a zero barrier game.

The direct investing population in India is very low, two reasons is the lack of know-how and fear of security. How can this be addressed?

Mr. Kumar: We take security very seriously. Since inception, we’ve never had a case of major security lapses. A lot of automation and leveraging of technology is required to ensure that all user information is securely stored. Every user is naturally going to be wary of giving away any piece of private information; that’s why we validate your identity by sending an OTP to your Aadhaar registered email address or phone number.

But it goes deeper. Many brokers have defaulted in the past due to providing their customers too much margin, or even worse, margin lending (lending extra funds to “trustworthy” clients). Upstox doesn’t do that. We will always remain on the conservative side and constantly run risk checks to gauge how volatile the markets are. If we even have a shred of doubt that volatility might be high, we dial down the margins given out to our clients. Our highly active traders usually aren’t pleased, but deep down they know that it’s better to be safe than sorry.

To increase the 1.8%, perceptions of the stock markets must change. We’re doing our best through education. We have an education portal,, that breaks down misconceptions that have been ingrained into India’s culture. Simply put, it’s almost never a good idea to invest in fixed deposits when there are much better options available, such as mutual funds and debt funds. It’s almost impossible to make a strong case for fixed deposits; yet, we see television ads promising amazing returns on FD’s. These are the types of misconceptions that must change.

The objective of any business is returns but how does this move impact yours?

Mr. Kumar: From a revenue-per-user standpoint, it probably lowers it since we will be getting a lot more dormant/less active traders versus before. Since we offer free equity delivery trading, investors don’t generate us much revenue.

But that’s really not what we’re chasing with Upstox. We feel that the opportunity in the Indian market is too large. With 98.2% of the population not participating in the capital markets, it’s not about revenue per user. It’s about getting the word out that investing is the real deal. When we can get that figure to something like 5%, communities will open up across India. Traders will begin forming local groups, and healthy discussions will begin. That is the mission of Upstox.

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