Digital payments are now commanding a significant share in mutual fund transactions. A recent AMFI – CRISIL study shows that over the last two years, transactions in mutual funds through digital payments such as debit card, mobile banking, IMPS and mobile wallets have grown from 0.5% to nearly 10% as of June 2018.
The report attributes this growth to growing availability of information, awareness and increased penetration of mutual funds across investors. The encouragement by government and regulator to fintech startups, launch of small finance banks and payment banks, running of financial inclusion campaigns to spread financial awareness in the remote parts of the country have also played a key role in digitisation, says the report.
While transactions through mature transaction platforms such as debit cards grew at 15% annually newer payment platforms such as mobile wallets are fast gaining consumer acceptance. This is reflected in the exponential increase clocked by these platforms (mobile wallet and mobile banking 120% and IMPS 106%) in the last one year. Despite these numbers, in term of volumes card payments cruise ahead of the remaining platforms, reports the AMFI –CRISIL study.
Digital payments find favour amongst investors
Source: RBI
Further analysis of geographical and investor segment-wise sources of digital payment shows that the adoption of digital payments is higher in T15 cities compared to their B15 peers. Similarly, institutional investors have overtaken individual investors in terms of digital transactions, says the report.
The report finds that many fund houses have started enabling transaction through newer digital platforms such as UPI as it facilitates seamless payment transactions and reduces turnaround time. While investments through internet banking could require up to 2-3 days for the conpletion of purchase to unit allotment process, UPI can crunch the time to one day.
The industry has also adopted new technologies which have helped streamline transaction process. The industry’s migration from electronic clearing system (ECS) to national automated clearing house (NACH) is one such positive move by the industry. One-time mandate NACH (OTM-NACH) has eliminated the operational hassles arising out of ECS mandate. Consequently, SIP registration time has reduced from 15-20 days to 5-10 days.
Another game changer in the sphere of online investing is introduction of AADHAR based eKYC. This has enabled the masses to invest in mutual funds effortlessly.
The role of technology is expected to get bigger going forward. Adoption of technology will help the industry increase penetration, reduce costs and bring greater efficiency to its processes, concludes the report.
