A massive two crore investors are involved in the mutual fund industry today, but who and where are they? What do they need and buy? Fintech firms beefed up by a host of disruptive technologies under their arsenal, from big data and artificial intelligence (AI) to Internet of Things (IoT), are figuring it out — cutting cost and mitigating risks on the way. To start with, AI in the form of intelligent agents or chatbots are now being offered to customers, bringing with them automated solutions for core functions like investing, asset allocation, portfolio management and reporting.
The widespread availability of cheap 4G data and reasonably priced smartphones are ensuring that this advice is accessible to a rapidly growing number of existing and potential customers. Fintech firms are looking far beyond just this, however. The successful ones are offering better customer experience and greater convenience at lower prices.
Vijay Kuppa, co-founder, Orowealth, India’s first zero commission Direct Mutual Fund platform, says that the most powerful aspect of tech-driven distribution channels is the disintermediation. “Robo-advisors are an automated, low cost alternative to traditional financial advice providers that conduct individualised risk profiling... to determine optimal asset allocation for an investor’s portfolio. Then a team of just 5-10 relationship managers constantly tracking your data can provide all these services, while still providing a feeling of one-to-one human advisory relationship,” he points out.
Kunal Bajaj, Head of Wealth Management at MobiKwik, adds that these programs eliminate excesses -- “the fancy lunches, the plush offices, the overpaid staff” that investors end up paying for without realising. “The money saved is passed on to customers by way of zero-commission plans, etc,” Bajaj notes.Financial institutions are also considering partnerships with digital intermediaries. Social media has become another avenue for firms to disclose information to investors and asset managers believe it has a significant influence on product offerings and distribution strategies.
Besides, mutual funds are increasingly offered on online platforms as zero-fee products, removing agent commissions from bills. In September, Paytm Money launched its own mutual funds app letting customers buy, sell and manage portfolios from a mobile phone. So far, it has partnered with 25 asset management firms offering direct plans which come with zero distribution fees or commissions.
“We are building a platform that offers both investment advisory and execution services, complete detailed risk profiling...,” says Pravin Jadhav, Whole-time Director — Paytm Money, adding it aims to handle over a million mutual fund investments per day. All said, technology can be dangerous too, a case in point being 2010’s flash crash of the Dow Jones Industrial Average when an errant automated trade execution system sent the index plunging 1,000 points in half an hour.
SBI MF launches AI-powered asst
Firm says it will help investors resolve basic MF services and in due course will be developed and trained to help investors
Social media to play critical role
A survey conducted by EY among mutual fund professionals shows that a large majority believe that social media is becoming a key tool, helping not only in developing and increasing brand awareness, but also product awareness andinteracting more directly with investors