The recently launched AMFI and CRISIL report has outlined five technology trends, which will affect the MF industry in coming years.
Online platforms for investors
In last few years, AMCs, RTAs, industry associations such as AMFI (MF Utility) and stock exchanges have developed online platforms. These platforms enable investors to transact online in mutual funds.
One such platform promoted by AMFI, MF Utility (MFU) reported transaction of Rs. 1800 crore every day. Over the last two years, the trade volumes on MFU have grown five times indicating the growing popularity of online transaction platforms.
In a recent press release, BSE Star MF an exchange platform reported a growth of over 540% in the last 2 years.
NSE NMF II, which clocked 76 lakh transactions in the last financial year, has already processed 45 lakh transaction this year.
This rapid growth in business witnessed by these online trading platforms is a clear indicator of changing transaction landscape.
Social media
Use of social media as a communication channel is gaining wide acceptance in the asset management industry. Many fund houses are using social media holistically to create awareness about their products and services, engage with clients, resolve their queries and understand investor needs.
E-commerce platforms
The reach of mutual funds will increase exponentially across the country if e-commerce platforms receive permission to sell mutual funds.
A recent study by IBEF (India Brand Equity Foundation) found that there are 1-1.2 million transactions per day in e commerce retailing. The market size stands at US$ 38.5 billion as of 2017 and is expected to grow at 20.09% CAGR over the next decade. The mutual funds too can benefit from the wider reach of these platforms.
Robo advisory
Robo advisory firms use analytics to devise automated programmes, which dispense financial planning advice to investors. As per the CFA Fintech Investment Survey of 2016, introduction of financial automated advice tools will have tremendous impact on the asset management industry, and especially the advisory community. A white paper by FINEXTRA stated that while robo advisory is unlikely to result in extinction of advisors, it will clearly change their role and the adoption of robo has implications for the technology and business models of established wealth managers. In developed markets, robo advisory firms are gaining favour amongst the millennials. Moreover, they are providing low cost investment solutions to clients. Currently with most Indians being amateur investors who need hand holding, we may see prominence of hybrid models where the robo does the initial investment analysis while the advisor adds the final inputs and provides a personal touch, said the study.
Big data analytics
Data reigns supreme. Using big data analytics mutual funds can statistically analyse the actions of investors. This will help them get deeper insights on the investor behaviour and devise new strategies.
The big technology companies are using data to increase sales. Mutual funds too might be able to offer customised investment solutions to different investors using big data analytics, the report added.
