Decoding the behaviours of a small city trader and investor in India

Shipra Bhutada
5 min readFeb 4, 2022

“Earlier in my area people were investing in real estate and fixed deposits but now people’s thinking is changing. Now, they have started investing in the share market. This is also because real estate and fixed deposits both are not giving a good return on investment.” says Ajay Sharma* a professor living in Hassan, Karnataka. The change in investment patterns is more than evident in Bharat.

Three major factors can be attributed to this change:

Firstly, an increasing number of individuals are moving away from the conventional instruments of savings and investments like fixed deposits, real estate and gold due to consistently low returns, lack of immediate returns or exit route making them increasingly unappealing to the investors.

Secondly, when the pandemic hit, several businesses had to be temporarily closed and people were forced to look for other avenues to earn a secondary income. With their backs against the wall, several people reached out to their inner circle — which largely consisted of their friends — for recommendations on ways to make instant redemptions on their investments. Prateek* from Meerut who runs tuition classes says “During the lockdown, when my source of income had shut down, I got very anxious about my future. It opened my eyes and made me realize that to secure the future there must be a second source of income too and since then I started searching for another source of income.”

Lastly, easy access to technology and platforms that support small town people with easy and quick opening of Demat and Trading accounts and provide end-to-end investment options for their users have made it feasible for people to think of investing in the stock market.

But this was not the case earlier. For the longest time, people from smaller cities saw the stock market as a quicksand where losses were inevitable. They had heard and read stories where people lost huge amounts of money. However, eventually, the success stories of their inner circle influenced the first time investor to jump on the stock market bandwagon. Trust and dependency on one’s inner circle to learn about the stock market and choosing the platform/app to invest in proved to be the biggest influencer for people from tier 3 cities and towns. Pandemic also gave people time to reconnect with their social networks and also learn more about the stock market. These first-time investors also reached out to their friends at any point they were ‘stuck’ — whether it was an inability to understand the fintech app, limited understanding of the works of the stock market, or getting recommendations for a winning stock.

During a user research study to understand the trading and investment behaviour in tier 3 cities, we spoke to several people living in tier 3 cities. From those conversations, after a detailed synthesis, we arrived at 4 broad personae of traders and investors. The investment journey of 3 out of 4 personae showed friends to be a crucial touchpoint that led to start their journey or change their mindset towards the stock market from being a skeptic to an investor.

“In the beginning, I asked my friend for help in learning the app, he showed me how to do things on the trading app as I had no clue how to transfer money, how to buy/sell shares, how to put stop loss.” — Rakesh*, an accountant from Ara, Bihar.

This trend is in line with the behavioral finance research studies that mention investment behaviour in India is highly influenced by social factors, and conversations with friends reinstates this faith.

Culturally, we (India) are a country that’s comfortable sharing financial information with our inner circle, and even though financial experts dissuade investors from relying on friends for investment advice, the tight-knit neighbourhoods in smaller cities and towns become strong security nets that support and advise each other.

Several user research studies done by UCC have consistently reaffirmed this fact that people from smaller locations in India invest time and energies on their social networks; they do things together; and therefore, rely on each other a lot more than the people from bigger cities.

What can trading and investment platforms do for newbie investors?

  1. Increase the financial literacy of first time, small-town investors, by providing learning in a structured, reliable and easy to understand manner. In 2019, the National Centre for Financial Education did a survey that says that only 27% of Indians are financially literate. While the government bodies have taken various initiatives to improve this number, the trading and investment platforms. “In my area, people are not very educated, there is a lack of awareness hence they cannot make wise investment decisions. I saw people here play Dream IPL game. I think they should invest their money in the share market rather than playing on Dream IPL.” — Abhijit*, a small business owner from Chirkunda, Jharkhand.
  2. Provide customer support to the investor for any questions, grievances or clarifications to reduce their dependence on their inner circle and move towards developing trust on the experts and eventually using their services for investment advice. In a previous article published by UCC on trust, we shared insights on trust and talked about why building trust is an important goal to chase for businesses.
  3. Make it easy to use the app for the first-timer. Leverage technology to provide seamless onboarding experience as it sets the tone for the user-platform relationship.
  4. Tap into the regional flavour and provide support and learning aids in regional languages to deepen the connect with the users and forge trust with them.

In a nutshell, great user experiences are created when the platforms are designed with user-centricity, understanding the users’ needs, and empathizing with them. This user-centricity creates meaningful, desirable and distinctive experiences for the users, and increases the value creation for the users by the platforms.

The name of the person in this article has been changed on their request for anonymity.

At UCC, we specialize in Global User Research by placing human connect at the heart of the business. Our insightful, bold, and honest research practice enables creation of meaningful strategies, products, services and user experiences.

Interested in collaborating with us? Email us at and let us know your research needs.



Shipra Bhutada

Shipra is the Founder & User Research Director at User Connect Consultancy.