Stock investing in India has changed significantly in the last twenty years. In the earlier days of trading, people used paper certificates and manual trades, the modern apps that we have now have brought about a smooth experience, and everything has evolved. In fact, a process that used to be tiresome and very heavy on paperwork is very conveniently executable nowadays by just making a few taps on your smartphone. Not only has this transformation of the process given a wide range of people the opportunity to enter the market but it has also been instrumental in opening themselves up to the transparency, ease, and speed that they have not enjoyed before.
In this article, we will talk about India’s transition from traditional investing to digital-first stock markets and the crucial role played by demat apps in that transformation.
The Era of Paper-Based Investing
Early share buying in the 1990s was time-consuming as it required a trader to go physically to a stockbroker, put in orders on paper and then to wait days if not weeks for the transactions to be processed so that they get their share. Shareholders were given a physical record of the share, which was supposed to be stored safely and would have to be physically transferred during the selling process. The process, being paper-based, was slow besides exposing holders to thieve, misplacing, and administration delays.
There were no fast verification protocols, and the tracking of one’s collection was a very hard task in the old system. It was very limited in accessibility and mostly for big investors and veteran market participants.
The Birth of Dematerialisation
Seeing that the system was due for a change, India in 1996 brought about the dematerialisation which was done through the National Securities Depository Limited (NSDL) by the demat account. This was the place they onlined all the assets and demolished the use of the paper certificates.
This move was the beginning of digital investing. Investors could now hold and transfer securities electronically, thereby, reducing risks and cutting down transaction times significantly. The process became quicker, safer, and more cost-effective.
Entry of Online Trading Platforms
The early 2000s were significant as this was when online trading platforms were introduced. These web-based portals allowed investors to place buy/sell orders from the comfort of their homes. Brokerages like ICICI Direct and Sharekhan led this shift, providing integrated platforms for demat, trading, and banking.
However, those platforms were still bereft of mobility and suitable only for urban, educated, and technically savvy populations. The mighty powers of the internet were not yet available in the small towns and the rural areas, predominantly due to the limited access and lack of digital awareness.
The App Revolution
The real turning point in retail investing came when the first demat apps were launched on mobile phones where every person could have access to them at any time. Companies like Zerodha, Groww, Upstox and Angel One designed user interfaces for mobile devices first and this was the main reason for the massive growth of the stockbroking industry in India.
These apps had the following characteristics.
- Anyone with a smartphone could use them.
- The UI was straightforward and first-time investors were able to navigate the app easily.
- Without a commission and the least account charges.
- Transactions could be realised instantly, and the live market could be tracked.
In the coming years, the mobile trading market will not be limited to exclusively being an option for those who want to venture into the stock market, but it will become a market research center, a platform for new share issues, a place to set and forget investments in mutual funds through the Systematic Investment Plan, and even a place to find insurance products, etc.
Widening Reach in India
Handset penetration in smaller cities and towns has been a force propelling the multitude of Indians who are now empowered to traverse their markets. These bricks, and clicks business models also bring a multitude of novices who might have been left out of profits to the circle.
Other such platforms provide the same by-the-hand familiar courses and guides in the local language of their audience workforce and still with options for easy and quick joining, and thereby, barrier-free investments.
Many digital trading platforms also offer the capability to do checking of CIBIL scores via the application and user-centric investment advice, tax-saving schemes, and asset management options tailored to their financial capabilities. By investing the previously mentioned resources, startups can become more profitable and able to attract micro-investors as well.
Regulatory Oversight and Safety
The regulators like SEBI have increased security checks for the digital platforms where people are investing, and it has happened because of digitalization.
The services provided by Demat apps are still the ones such as data storage, tracking, opening a few of our financial accounts at a time, raise the bar in terms of both personal and professional protection of our assets, it is by far the most cost-effective and very easy oppor
- Secured via Aadhaar and PAN to perform the KYC process
- Two-factor authentication to encrypt data
- Via payment gateways and the process is secure for the elimination of fraud in the accounts
Further, nowadays, you can opt for the service of receiving real-time transaction alerts that can help minimize the chances of fraud and hence secure your money.
Convergence with Financial Services
Would you believe me if I tell you that modern-day Demat apps have become the backbone of the equity stock market? The growth of a company, a single unit of SDFC, will take 36 months.
- Systematic investment plans
- Exchange-traded funds backed by gold
- Bonds that provide a steady income
- Initial Public Offer applications
- Recording and tracing the profits and losses of the performance of indiv
The biggest players in the market also attribute their domination to the successful work they have been carrying out for the past few years which has included partnering with UPI and loan providers thus providing a single customer experience.
Conclusion
Just as a butterfly takes off from its cocoon after a period of struggle, the share market too has paved
Demat apps will no doubt become more advanced as time goes by. They could provide AI-based insights, voice-activated trades, and hyper-personalised portfolios. However, the basis of the matter has not changed in essence: the purpose of it is still to give people the control of their financial destinies.
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