It is often not easy for people to save money in a systematic way. The reason is simple: We live in an ecosystem that is consumer-driven or require spending. One who spends cannot save and one who wants to save needs to minimise spending.
It makes difficult for people to strike a balance between spending and saving. And every household faces this problem. However, household savings are inextricably linked with economic growth.
In development economics, this is explained through Harrod-Domar model of economic growth which suggests the level of savings is a key factor in determining economic growth rates.
India, which is usually considered as a country of saving-oriented people, witnessed a fall in household savings in the last decade ending March 2016.
Household savings fell from 22 percent to 19 percent as compared to GDP’s ratio, which grew from Rs 0.23 lakh crore to Rs 1.36 lakh crore during the period.
Besides, financial savings as a percentage of household savings also fell from 45 to 40 percent between 2006 and 2016.
The new trend was alarming — as opposed to India’s nature of deep savings.
Sanjeev Sharma and Samant Sikka, who collectively have over 37 years of experience in the financial services sector, thought of flipping it and redeveloped the trend of savings.
They decided to tap a new market — millennials — and inject in them the importance of financial savings through a new financial product.
Sharma and Sikka roped in Dhananjay Singh, an IIT-Kharagpur graduate who has over 20 years of experience in data science and analytics and launched Sqrrl in September 2016.
“The platform is a personalize investments needs of individuals and match them with funds available in the industry. It is a personal finance buddy one can count on to help save and grow money. It’s an app-only platform with the MVP around savings and investment products powered by Mutual Funds,” said Sharma, Co-founder at Sqrrl.
He added that the product embodies the certain character of a squirrel — saver, planner, doer, prudent, natural intelligence and social — that the company stands for.
An insight into the product line of Sqrrl
Sqrrl provides four different features — goal-based investment, Sqrrl Away, Axe Tax and Systematic Investment Plan (SIP) — under the app.
The goal-based investment, as the name suggests, involves target savings for various goals such as making purchases, traveling, marriage and others. The user creates a bucket list of future goals and earmarks funds which he would like to save in a particular number of months and would fulfill the wish list afterward.
The app through its technology throws investment figures along with gains on the investment which could be saved within a given time-frame. The app further shows the chosen mutual funds where it invests the money to get investors maximum return, which would ultimately the users to achieve their goals.
Sqrrl Away, the second feature, rounds up the amount to the next 100 (or 500) everytime the user makes a purchase.
The user can set daily or weekly deduction of the amount and also set a maximum limit of savings from Rs 500 to Rs 5000 per week. The app seeks permissions to monitor users’ transactions via phone messages.
On Sqrrl Away, the app claims to offer returns at 6.5 per cent per annum. The platform offers the returns to investors through investments in mutual funds.
The third feature ‘Axe Tax’ is for tax saving. The app helps users in tax saving through various investment plans — public provident fund, national savings certificate, 5 years fixed deposit, home loan, life insurance policy and ELSS schemes — through which an investor can save tax up to Rs 1,50,000 in a year.
SIP is another feature, where the investor can begin monthly investment with as minimum as Rs 500 and can invest for as short as 1 year period.
“Technology is being used for the greater good today. It is our attempt to stay at the forefront of this new wave of technology by combining a great user experience with something substantial – helping millions of young Indians save some money,” said Singh, another co-founder at Sqrrl.
Riding wave with millennials
The present business model revolves around distribution fees from the Asset Management Companies. It also plans to add multiple revenue lines across fees and subscription in future with the addition of products and services.
“We have over 3500 investors on-board who have collectively invested over into the market via our application. We have total 8,000 users who have completed the KYC on the platform,” said Sikka, Co-founder, Sqrrl.
He also shared interesting data points and said that 90 per cent of the users are under age 40 years. Besides, 61 per cent of the users are from beyond top 15 cities. The platform has been able to cover over 700 cities of India.
Demand for tech-driven brokerage firms
According to an industry expert, India’s asset management industry has grown at a CAGR of 2 per cent over the last 17 years and is expected to grow to $700 billion by 2022.
Amidst the growth, various app-based platforms are offering similar services in the financial sector. Sqrrl aspires to be amongst the top 10 players within four years, with an asset under management [AUM] of approx $14 billion and 12 million customers.