Kunal Nandwani is the co-founder and CEO of uTrade Solutions, an India-based fintech startup kick-started in 2011. uTrade is an open source trading platform available both on desktop and mobile, for retail brokers, algorithmic trading software for institutions and proprietary traders.
FTA: What was your background prior to uTrade?
I am based in India right now, but prior to returning to india, I was working under several investment banks in London. I started off my career with Lehman Brothers where I was in product development for algorithmic trading for a few years before moving on to Nomura.
Before moving on to uTrade, after Nomura, I was a partner at Leo Group and I helped set-up sales and distribution networks in UK from India. After over 6 years in London, I moved back to India and started up uTrade.
FTA: So, tell us more about uTrade!
uTrade focuses on trading technology, in the likes of equities, derivatives, forex and more and we focus on a B2B business. We offer 3 products:
- Multi-asset trading platform
- Algorithmic trading and strategy which is automated. Through this system, our high frequency, low latency trading system can trade more than 1,000 times in a second.
- Risk management systems
We started about 5 years ago and have grown rapidly since then with over 40 clients which includes the Bombay Stock Exchange, institutional brokers, fund managers, proprietary traders, hedge funds and more. And we are present in 10-12 countries outside India, including Dubai, Vietnam, Uganda, USA, UK, Singapore, Chile and more.
We aim to help people achieve what they want through our global platform which provides global accessibility and reach.
FTA: If regulations are tight and the market isn’t that adoptive of fintech solutions, why did you decide to start uTrade back in India?
I believe that the Indian market will grow at some point and that user knowledge in capital markets will also grow. Nonetheless, the market hasn’t really grown in the last few years.
I was looking to build traditional risk management and trading technologies
Now, we are looking to tap into the biggest markets. And in regards to our blockchain product, we will be setting that up in the UK.
FTA: How is the government regulation landscape in India and how do you think this is affecting you and uTrade?
Regulations are fairly conservative in India and the landscape is not as modern as the UK and USA. Other than that, the Indian rupee is also highly regulated and controlled which means it can’t really freely traded. The currency is controlled by central bank.
Many other countries have introduced new initiatives in fintech, such as allowing for crowdfunding and cloud based trading. In the UK, the FCA also said that they will not be regulating blockchain, in hopes to encourage development, testing and innovation in the field.
And these initiatives are not available in India yet, and I believe it will continue to be that way for the foreseeable future.
FTA: What do you think of the fintech, in particular algorithmic trading scene in India?
Fintech is a fragmented industry and consists of many segments such as finance, payment gateway, peer-to-peer transactions, asset management, insurance and more. The level of regulation is different in every country, and besides that, the legacy infrastructure between financial institutions such as banks, clearers, stock exchanges and more are also different, even if they are from the same country.
So, it is hard to make a common platform that works for everyone. While blockchain can help, it is going to take a while for that to kick off.
The India fintech landscape has grown very slowly and it is still at its nascent stages. This is due to three major reasons:
- Regulation issues
- Legacy Infrastructure issues
- Smaller and fragmented market
While the rest of the world is experiencing a big fintech boom, I don’t see it big in India as of now. When people talk about fintech in India, one of the biggest names we know is Paytm, while PolicyBazaar is a popular in the insurance space.
As for peer-to-peer lending, which is a big sector in Asia, it is still not allowed in India. Companies are not allowed to set up a lending club in India, and similarly, blockchain is also out so far.
Fintech in India is a hard market to crack and it will take a long time before something revolutionary happens.
In terms of Indian consumers, the world has a misinterpretation of our 1.3 billion population. The number sounds incredible, but in reality, perhaps only about 10 to 20 million of them possibly willing to pay for the technology. That is the real market size of Indian consumers for some financial products.
Generally, Indian consumers are demanding and are difficult to understand / penetrate. If Indian consumers do not see monetary returns to consumers, they will not be willing to part with their own money.
Unless you can raise a lot of money, in hundreds of millions, it is difficult to gain sufficient market share in India. And even if you can buy significant market share in India, this does not necessarily guarantee sustainability or profitability. It is a tough nut to crack.
Besides that, fintech is too difficult to integrate into the existing infrastructure. It is hard to provide seamless integration of services to consumers through existing financial institutions too, unless you have a lot of money to build sufficient runway .
FTA: What are your plans for uTrade this year and the next 3 years?
We are currently developing a blockchain product which we intend to work on for the rest of this year. We are diving into blockchain because of it’s ability to speed up the clearance process. With blockchain, there is no overnight risk as processes are completed within seconds. This product will take a year or two to start out but we already have some forex brokers lined up for this.
In the next three to five years, we expect to expand into more emerging countries and continue building our core products in India. We are likely to see a year-on-year growth of at least 50% during this period. We have also signed up with the stock exchanges in Tajikistan and Vietnam recently.
We are currently expanding in emerging markets and that is where we are putting our main efforts now.
We want to go into developed countries where blockchain is required and allowed. Nonetheless, since we have only started developing our blockchain products, I am only in a better position to comment about our medium term plans next year.
FTA: What is your proudest achievement through uTrade so far?
As of last year, uTrade is now profitable. It takes a long time to build products and become profitable, especially in enterprise technology. uTrade being profitable is my proudest achievement so far. With this, we can finally start working on our blockchain product and be part of that new and growing market.
FTA: Finally, do you have any advice, tips or a marketing plug that you would like to share with our Fintech Asia readers?
My advice to fintech entrepreneurs and stakeholders is that, when building fintech, try using Open Source. It can be difficult at the start, but it helps standardise the platform as well as provide flexibility for modules to be planted on top. Through Open Source, this makes adoption faster and also more economical.
And the Fintech Sales cycles are long and complex. You must be willing to persevere for much longer than you expect.