As more people get comfortable using technology, PWC India, in its report, recommends that fund houses take advantage of this behavioural change, and promote direct plans among investors. Promotion of direct plans can help increase the market reach of the industry.
PWC India suggests the MF industry promote direct plans through technology and pass on the benefit of commission to the end customer. “With the increasing use of smartphones, there lies a huge opportunity for MF houses to leverage them for a successful business-to-consumer (B2C) model and pass on the benefit of commission to the end customer,” it stated in its latest report titled, ‘Mutual funds 2.0 – expanding into new horizons’.
The report also says that technology could play a big role in nudging the industry to greater heights. Use of mobile and online apps for tracking and transacting, use of robo-advisory, instant redemption from money market funds, transaction through MF Utilities, are some areas on which mutual funds can work to generate investor appetite, PWC India suggests.
The report predicts that robo-advisors, artificial intelligence, big data and analytics are going to take over the traditional model of financial planning and advisory. “In future, fund houses will primarily depend on robotic applications to understand client requirements, their spending behaviour as well as future goals, and accordingly make calculated suggestions with regard to the right investment portfolio. This will make sales as well as client onboarding more efficient and help in increasing the market reach of the industry,” the report says.
It also predicts that the mutual funds industry will grow by 25% this financial year, an uptick from the current growth of 15%. The AUM of the Indian mutual fund industry will touch Rs20 lakh crore by the end of current financial year, due to the positive impact of demonetisation, coupled with lower bank interest rates, the report suggests.
Lower interest rates may also help channelise retirement savings with banks into mutual funds, according to PWC India. The report gives reasons for growth in assets and cites changing mindset (from saving to investing), rise in wealth accumulated by HNIs and demand for an alternative, as some of the key factors.
The AUM of the mutual fund industry has so far witnessed tremendous growth, crossing Rs17 lakh crore. Over the last two years, the industry added Rs4 lakh crore to its kitty, largely due to the increase in inflows in mutual funds through SIPs, and growing popularity of mutual funds in B15 cities.
The PWC India report says that mutual funds could become one of the first choices for both short-term and long-term investment in the country. Even though traditional products will continue to be in demand, the report suggests that there is need to innovate and develop new specialised products to cater to different customers and bring in more investors.
