Broking licence and newsletter in hand, is Tata Neu finally moving on finserv ambitions?

The start of the Indian Premier League (IPL)—the world’s most lucrative cricket tournament—on March 31, 2023, was a chance for redemption for the Tata Group. Just a year prior, the salt-to-steel conglomerate had launched its super app Tata Neu to much fanfare. The app’s initial traction, however, was quickly derailed due to glitches, transaction failures, and a convoluted rewards system, among other issues.

But even as Tata Neu was written off by users, Tata Group was busy behind the scenes, ironing out the kinks in the app and preparing for a second shot at glory. Banking on the tens of millions of eyeballs the IPL attracts, Tata launched a massive advertising blitz to introduce viewers to a slicker version of the super app—internally referred to as Tata Neu 3.0.

The app boasted more Tata-owned brands than it did during its launch, offering everything from groceries to gadgets, medicines, travel, and jewellery. Tata Neu even launched co-branded credit cards with HDFC Bank, and has issued over 500,000 cards so far. All of this has seen Tata Neu emerge as a genuine claimant to India’s vacant super app throne.

Tata Neu’s latest avatar, however, is still missing some crucial pieces. Perhaps most noticeably, a full-fledged financial services offering. At present, apart from its credit card offerings, the app merely has Unified Payments Interface (UPI) functionality, bill payments, personal loans powered by Tata Capital and IIFL Finance, and digital gold investing in partnership with Mumbai-headquartered SafeGold.

When the app was first launched, however, Tata Digital CEO Pratik Pal often touted stockbroking as a key part of the app’s financial services ambitions. Indeed, Tata Digital—through its financial services entity Tata Fintech—even applied for a stockbroking licence in June 2022. As the app’s first iteration fizzled out, however, so too did talk of a stockbroking offering.

A seemingly insignificant development over the past month, though, may herald the long-delayed launch of stockbroking on Tata Neu. Questions sent to Tata went unanswered at the time this story was published. The story will be updated as and when the company responds.

Wheels in motion

Tata Fintech predates Tata Neu. Officially set up in November 2021, Tata Digital’s senior leadership, including Gaurav Hazrati, head of financial services; Modan Saha, CEO of financial services; Neeraj Lal, head of risk & compliance-fintech, and company CEO Pal sit on the board of the fintech entity.

The firm was tasked with developing digital financial services and products for the group, with these offerings expected to be integrated into Tata Neu. Tata Fintech’s existence thus far, however, has been a muted one.

While it did receive its stockbroking licence from markets regulator Securities and Exchange Board of India (Sebi) in September 2022, there was no frantic dash to make use of that licence in the months after.

Tata Fintech’s wheels finally began to turn in December 2022, when the company held an extraordinary general meeting to amend the company’s charter. Two new clauses were included—the first pertaining to the company’s stockbroking plans.

“The Company has been incorporated as a wholly owned subsidiary of Tata Digital Private Limited for undertaking business within the financial services industry. Further pursuant to the strategy and business plan envisaged by the Company, the Company seeks to offer following Services: De-mat services by obtaining the SEBI Depository Participant (DP) registration in accordance with the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018;"

As per a senior industry executive, the company may introduce international merchant payments as well. 

While the timeline for the launch of Tata Fintech’s broking services is still unclear, though, Tata Fintech has begun laying the groundwork for it with a content offering—Market Brew. Comprised of a short, daily newsletter and weekly in-depth articles, the five-week-old newsletter aims to help readers understand the goings-on in India’s financial markets.

While this seems benign enough on the surface, Ditto Insurance is living proof that amassing a large digital audience through content can be a great launchpad for financial services offerings. Ditto’s founders built a community of over 500,000 subscribers through their popular newsletter Finshots before eventually building an insurance advisory and commerce platform on top of it. In its first 18 months, Ditto had advised close to 100,000 customers.

For Tata Fintech, which is entering a space already filled with hungry rivals like Zerodha (which is an investor in Ditto), Groww, and Upstox, among many others, Market Brew could help it build up a head of steam even before it launches.

Can Tata afford to be slow and steady?

Even as Tata Fintech appears to carefully be laying the foundations for its entry into stockbroking, the sector is heating up.

The most recent example of this is the demerger of Jio Financial Services Ltd (JFSL) from Reliance Industries Ltd (RIL). JFSL is now expected to be the tip of Reliance chairman Mukesh Ambani’s financial services spear. It will cater to the growing demand for financial services in the country, including lending, insurance, digital broking, and asset management. Incidentally, RIL also harbours super app ambitions.

Meanwhile, India’s e-commerce leaders Flipkart and Amazon India are also looking for a piece of the country’s financial services pie, especially lending. The former recently tied up with Axis Bank to add personal loans to a financial services portfolio that already includes its Pay Later and co-branded credit card offerings.

In such a crowded space, doubts remain about whether Tata Neu is the right vehicle to carry Tata Fintech to the top of the financial services mountain. “I don’t know if I will go to the Tata Neu app for broking services or investment when I have standalone, pure-play discount brokerages or wealth management advisories which are dedicatedly working on this segment,” said one Gurugram-based analyst. “They need to either bundle services well or have some leg-up in terms of speed, convenience, easy understanding or pricing.”

The analyst quoted above did concede that newsletters are a smart way to get through to India’s online masses.

At a YourStory event in late 2022, Zerodha cofounder Nithin Kamath, too, appeared sceptical about Tata Neu’s foray into financial services. “I am not sure about the super apps. When people invest, they invest within a certain context. I don’t know if broking within a larger app would really be able to keep up. But there are companies coming up thinking differently,” he mused.