Zerodha's Nithin Kamath says 2023 market bubble concerns ease, funding trends expected to correct

Nithin Kamath, the founder and CEO of Zerodha and Rainmatter, on Monday (December 11) shared insights on the financial landscape of 2023, expressing a sense of optimism despite concerns about a potential market bubble.

Kamath acknowledged that the burst if it occurred, wasn't as severe as anticipated, and he celebrated the resilience of many businesses progressing toward profitability.

"In 2023, one of the concerns that we had was that it seemed like a bubble at some point. We were wondering how bad it could be if that bubble burst, but it isn’t as bad as what it potentially could have been. It is awesome to see many of these businesses on their path to profitability," Kamath said.

One notable observation Kamath highlighted was the return to realistic expectations among founders, a welcome correction from the trend of setting unrealistic goals during fundraising. According to him, this shift allows businesses to focus on more meaningful objectives rather than chasing impractical targets.

Kamath emphasised the evolving theme of financialisation in the country and the associated challenges and opportunities. He stressed the need for a greater number of financial advisors to assist the growing population in managing their money effectively.

With the advent of the account aggregator framework, Kamath sees a vast opportunity to enhance financial advisory services and help individuals make informed decisions about their finances.

"I think this whole financialisation of the country is like a big theme. We are seeing that happen rapidly. So I think the challenge has been in finding different monetisation models around this.

So for example, with the population of the country, we just have 1,000 plus advisors, so as a country we need a lot more advisors if you want to help people do better with their money," he mentioned.

Addressing a broken aspect of their business model, Kamath discussed the challenge where customers cannot use the funds held with Zerodha for payments due to existing regulations.

While expressing a desire to solve this issue, he acknowledged the difficulty of obtaining a banking license in India and clarified that Zerodha does not have lending ambitions. Kamath hinted at exploring potential solutions for this challenge, contemplating the possibility of a payment bank license if made available more readily.

"One of the pieces which is broken in our business is the fact that our customer can't use the money, funds lying with us for payments. There are regulations today that require us to send money back to the customer once every 30 days. So it is kind of a broken experience, if we could solve it, we would love to attempt it," he added.