During Diwali and wedding season, it is an annual ritual for Indians to make a beeline to jewellery shops to purchase gold jewellery, coins, and bars. Gold, a precious yellow metal whose importance in Indian households is beyond intricate jewellery and is a prudent investment that acts as a safety net against inflation, diversifies a portfolio, and is subjected to lesser risks as compared to stocks.
But, despite it being the most preferred investment acquiring and owning physical gold has its downsides. The challenge lies in identifying the metal’s purity and safekeeping and storage. Realising this to be an opportunity, the fintech in India has launched digital gold that frees individuals from the hassle of inspecting the purity of gold and offers safe storage using cutting-edge technologies.
Fintech tapping into digital gold to attract millennials
If digitisation in the financial sector has made disruptions in lending loans, insurance, stock market broking, credit card payments, investment in stocks, cryptos, and now NFTs then why investing in gold digitally should be left out?
Digital gold is fintech’s newest offering that allows individuals to purchase and invest in gold virtually without requiring to physically hold the gold. One can easily buy it online with the minimum buy or sell value of one rupee only. With most millennials now existing in the workforce, who are early adopters of disruptive technologies, they will likely be most interested in digital gold investments that take place within a click without requiring to worry about inspecting the gold physically. . The fintech players are offering a digital gold guarantee to the purity of gold purchased and store it into secure vaults for free of cost for five years and provide full insurance for the customer. The customer is liable to pay a storage fee to the custodian if they do not sell or redeem their holding.
Currently, three companies offer digital gold in India, Augmont Gold, MMTC-PAMP, and SafeGold. Digital payment platforms such as Paytm, Gpay, PhonePe, Groww, and now Airtel Payments Bank in partnership with SafeGold are offering digital gold as an investment option on their platform. Small banks like Shivalik Small Finance Bank are ramping up to provide customers loan products against digital gold in partnership with fintech firm Indiagold.
Investing in gold digitally can begin with an amount as small as Re 1.
What are the benefits of investing in digital gold?
- One can start investing in gold digitally with Re 1.
- It can be used as collateral for online loans.
- The gold is genuine and the purity is 24k
- Its storage is safe and is 100 percent insured.
- At anytime it can be converted into coins, bars, and jewellery and will be delivered to the doorstep.
Its disadvantages include :
- Rs 2,00,000 limit investment .
- There is no lack of regulating body like RBI or SEBI
- Companies charge for extending the storage period.
What is in it for the fintech platforms offering digital gold as an investment?
Investment in gold became an attractive investment due to its resilient nature to market fluctuations. Millennials were found investing in gold more than ever before. With immense trust in technology and apps, millennials will likely invest through these fintech platforms in digital gold. These fintech platforms will have an upper hand over traditional suppliers and will lower the entry barrier since they are making quantities of gold available digitally and will not require a huge amount to buy gold. But, there might be a probability to switch to gold ETFs and gold sovereign bonds since gold can be held for the long term as compared to digital gold.