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Is the web model of personal finance failing?

Last December, NetAmbit bought Rupeetalk.com. Last week Karvy Private Wealth took over iTrust.in. Has the click and buy model failed?

The crowded space of personal finance in cyberspace-peppered with the likes of policybazaar.com, myinsuranceclub.com, apnapaisa.com and paisawaisa.com (to name a few) is struggling.

In just two months, two of the venture funded companies, Rupeetalk.com and iTrust.in have been bought over. The new owners have strong offline presence and were looking for a foothold in the online world.

NetAmbit had looked at iTrust.in before finalising on Rupeetalk.com. Karvy Private Wealth gave an exit for the founders of iTrust.in, Dhruv Agarwala and Kartik Varma.

Both the websites offer comparisons of loan, insurance, mutual funds, and so on. Rupeetalk.com offers online tax filing, while iTrust.in is known for financial planning.

NetAmbit, a financial services distribution company, will be able to start an Internet-enabled model for fulfilment of leads with the Rupeetalk.com acquisition.

The online comparisons of products along with lead generation will be used by NetAmbit to reach customers offline to complete the business cycle.

According to Anand Lunia, chief financial officer, SeedFund, "The lead generation model of Rupeetalk.com had its drawbacks. Fulfilment of leads was the missing aspect. At the same time, they had generated a wide enough customer base for NetAmbit to get interested. It gives them an online presence as well as diverse product offerings-like personal loans, home loans and so on. The synergy should help taking the business to the next level."

When asked about the growth prospect of the new venture, Mr Lunia said, "We have not exited our investment as we feel that the story is yet to unfold. We have become a shareholder in NetAmbit. Hopefully, the Initial Public Offering (IPO) of NetAmbit in three to five years will give us a really profitable exit."

Myinsuranceclub.com has secured funds from unnamed angel investors. This is the site's second round of angel funding. The funds will be used for enhancing its platform, with features such as real-time rates, assistance and a service called 'Ask an Expert' for insurance-related queries.

According to Deepak Yohannan, chief executive officer, myinsuranceclub.com, "We want to be the Wikipedia of insurance. Our focus has been the insurance sector. Other websites have been doing diverse sectors, but it adds to costs and may not give a competitive advantage over us as they will be juggling with a lot of things. We are also focused on a pure online model, as the online-offline combination also is difficult to succeed because it needs major distribution channels."

When asked about current developments he told Moneylife, "We want to fulfill insurance purchases online by redirecting customers to the insurance company website if they allow online purchase. It involves technological integration of systems so that the insurance company can identify us as the one who redirected the customer and pre-filled customer information that was keyed in on our website."

He is optimistic about the future of the business and believes that the online business has less to do with offline expertise. He points that makemytrip.com was not started by conventional travel agents looking to set up an online website. He added, "The skill set to succeed in the online world is much different, the customers need instant service, a lot needs to be done beyond getting leads or advertisements."

As we had reported in our 30 December 2010 cover story (Compare,click & buy?), price comparison websites offer incomplete or inaccurate information.

Some websites may not show all the product options or may indicate inaccurate premium for the product shown. Buying airline tickets, especially for international travel through an online agent, can sometimes be cheaper than buying directly from the airline.

However, the same is not true for financial products in India. There is no price advantage for buying financial products from aggregator sites. Unlike airline ticket prices that get updated for prices on agents' websites, premium quotes from different websites seem to be different. Airline ticket prices are accurately updated even though there could be changes on a daily basis.  

Financial product rates don't change frequently and, hence, aggregator sites should have accurate information.

The accuracy is even more difficult in case of motor insurance where insurers allow preferred partners like car dealers to offer discounts that may not be available for the price shown on aggregator sites.

Moneylife found out that the motor insurance premiums shown by apnapaisa.com in many cases were higher than those offered by car dealers.

In some cases we found that even insurance company agents were not allowed to as much discount as car dealers. Read: (Bharti AXA offers 50% discount through auto dealers in new war for market share)

Considering the above issues, how will personal finance websites give accurate premium information and how will customers know that it is the best price?

There is stiff competition among the players-each vying for customer attention and lead generation. Even though apnapaisa.com is a comprehensive website, it is far away from an IPO or even the breakeven point.

This view was affirmed by their investor Sequoia Capital. Websites like fundsupermart.co.in and fundsindia.com may have an advantage here as they offer free online purchase of mutual funds, but many asset management companies (AMCs) also have websites to do the same, at no cost.

Icicidirect.com and Hdfcbank.com also does the same with a nominal fee. There is competition and hence not great competitive advantage for personal finance websites.

iTrust.in had a few offices in India focussing on financial planning, but with the Karvy Private Wealth takeover, it is expected to grow its wealth management and financial planning business. This will also enable the company to enter the tax preparation and filing services.

Commenting on the development, Hrishikesh Parandekar, chief executive officer, Karvy Private Wealth told Moneylife, "Karvy Private Wealth is continuously working towards providing customers with innovative solutions, insights and tools that help them make informed decisions. With the iTrust takeover, we are strengthening ourselves to provide expanded reach, superior technology, increased number of services and reach out better to the emerging affluent and High Net-worth Individuals (HNI) investors in India. The takeover is timely and will enable us to be prepared for the emerging market opportunities that are centered around the Indian growth story."

User

COMMENTS

Srikanth

6 years ago

Hello Raj,

Agree with the part of the article that says that online lead building financial websites have a tough revenue model to sustain over the long term.

However, when talking about models such as ours (fundsindia.com), the article says, "There is competition and hence not great competitive advantage for personal finance websites".

This is a sweeping statement and does not apply to all the players in the market - definitely not to us. I agree that if a service does not create useful, perceptible differentiators between itself and its competitors in an established market, it would be tough to succeed. However, at FundsIndia, we have been aware of this from the very beginning, and have created useful value-adds in our system for our customers. These value-adds are transactionally useful and are not available with any of our competitors. For a full list of these value-adds, please visit here:

https://www.fundsindia.com/content/jsp/c...

It does not mean that we have a silky smooth road to success as an enterprise. Every venture is an adventure, but we're are confident of our business model and our ability to succeed in this marketplace.

Thanks for the opportunity to address this question.

Regards,

Srikanth Meenakshi
Co-founder and Director, FundsIndia.com

REPLY

Raj Pradhan

In Reply to Srikanth 6 years ago

Dear Sir,
I agree. The article does say 'Websites like fundsupermart.co.in and fundsindia.com may have an advantage here as they offer free online purchase of mutual funds'. Transaction based websites fulfilling purchase along with value added services (like fundsindia) will surely do better than pure lead generators and comparison sites

Srikanth

In Reply to Raj Pradhan 6 years ago

Raj,

Thanks for the clarification.

Appreciate it,

Srikanth

Home away from home

This is with reference to your Cover Story “Retirement Havens”, (Moneylife,15 July 2010) in...

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