Investing is the key to compounding money, and it becomes easier with many online solutions. Over the last few years, investing through shares, stocks, mutual funds, IPOs, and other mediums has increased after the introduction of UPI in India. Whole India adopted the new change of using UPI apps for transactions, and many investing platforms emerged during the same time.
One big player that played an important role in this change is Groww. From a free Demat account to investment options in the share market, Groww offered all the key features in one place. Due to this, Groww became a leading investment app with millions of users. Investors can buy stocks, mutual funds, trade in ETFs, invest in FDs, and even explore digital gold. All these options in one place were the key reason behind Groww’s success.
However, most people have this question: if Groww is offering so many free services, then how does Groww make money? What’s the business model? For a better understanding, we will look at how Groww works with a quick view, core business model, what services help them make money, and so on. Let’s get started:
Groww – Overview
Groww was founded by Flipkart employees Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal in 2016 with the idea to make investing easier for youth. Groww targets people who want to invest but don’t know where to start. With the clean and easy-to-use app, Groww became successful in a short period.
In the current time, Groww has more than 30 million registered users. This thing makes Groww the fastest-growing investment platform in the country. No doubt that Groww has worked with many influencers, done various commercials, and lured new users through social media advertisements, but all this worked like a charm due to the quality of experience for most users.
The current value of Groww as a business is over a billion dollars, which shows that investors and customers have trust in the platform. It is said that Groww is also introducing its IPO in the upcoming months for the first time.
The Business Model of Groww Platform
Groww has simplified investing, and it reflects in their business model as they have three key pillars running the whole company. These pillars are as follows:
- Low-Cost Access to Financial Products: Groww offers an affordable option to access its platform. Even though it is free to register and make a Demat account on this platform. Due to this, many newbies, learners, and interested people join the platform.
- Broad Range of Investment Options: On Groww, you can find many types of investment options from mutual funds to Stocks, IPOs to ETFs, and so on. From beginners to experts, Groww is a perfect platform in more than one way.
- Revenue Through Small Charges and Commission: Groww doesn’t charge a single rupee to use their platform; instead, they rely on small charges and commission on the purchase and sale of stocks.
This approach allows Groww to attract millions of new investors who might otherwise stay away from traditional brokers or banks. Now, let’s break down the main revenue streams that keep Groww running.
How Does Groww Make Money?
There are many ways Groww makes money. It is obvious that the money comes from financial transactions for this app; however, there are different types of fees that help Groww make money.
1. Brokerage on Stock Trading
The biggest source of income for Groww is from the trading of stocks. Opening a Demat account on Groww is free, but when investors trade stocks, there are small fees charged when they buy or sell.
- Groww charges ₹20 or 0.05% per executed order, whichever is lower.
- This model is called a discount brokerage, where instead of high commissions, a flat fee is charged.
To understand it with an example, consider that if you buy a stock worth ₹50,000. As you make the purchase, Groww will charge you a ₹20 fee on this transaction. This may seem like a small charge, but on a platform like Groww with thirty million active users, it adds up to a huge revenue stream.
2. Premium Subscription Services
On Groww, you can find extra features and value-added services in premium plans. To use these premium features, many users upgrade to the paid plan to get advanced research reports, stock screeners, and analytical tools. In the free version, you can do anything from trading to investing, but these premium tools make things easier for professional traders.
3. Mutual Fund Commission
Groww allows users to invest in regular mutual funds (which include distributor commissions) as well as direct mutual funds (which do not include distributor commissions). In the case of regular mutual funds, Groww earns a commission from the Asset Management Company (AMC).
4. Interest on Funds in Wallets
Many users keep money in their Groww balance or trading account before they invest. Like most financial platforms, Groww earns interest on these idle funds. Even though the amount per user is small, when millions of accounts are combined, the interest income becomes a reliable revenue source.
5. Educational Content and Community Engagement
Even though educational content and community engagement might not be a direct source of revenue for Groww, these small steps help in getting new users on their platform or encourage many to invest. Once users are onboard, Groww earns money from brokerage, subscriptions, and commissions.
Why is the Groww Business Model Successful?
Many people have this question about why Groww is a successful business model than its competitor. Many other companies provide similar or better services. Well, there are a few reasons:
- Grow offers a user-friendly design on this platform, which makes it easier for first-time investors.
- Low charges attract new users to their platform, and this discount brokerage model makes things affordable for everyone.
- Trust and transparency are another strength of Groww, which they built by offering higher customer satisfaction.
By combining these factors, Groww has built a loyal customer base that keeps growing year after year.
Final Words
Groww has changed the way Indians look at investing. By making the process simple, transparent, and affordable, it has attracted millions of first-time investors. Its business model is based on small but steady revenue streams such as brokerage fees, mutual fund commissions, premium subscriptions, and value-added services.