The online distribution space is heating up. The competition to acquire maximum clients seems to be intensifying.
Just two weeks ago, Paytm founder and CEO Vijay Shekhar Sharma confirmed that Paytm Money would be offering no cost direct plans to its mutual fund investors while speaking to Cafemutual on the sidelines of the second AMFI Mutual Fund Summit.
Now ETMONEY too has switched gears. Since its launch two years ago, the app has offered its users regular plans of mutual funds for investment. However, yesterday in a chat with Cafemutual Mukesh Kalra, Founder & CEO - ETMONEY confirmed that they would be offering more than 1,000 mutual funds (across 20 AMCs) at zero commission on the platform starting Monday. Both new and existing app users can avail this limited period offer by registering for their ‘free forever account’. As the plan name suggests the platform will offer direct plans of mutual funds to its users. Additionally, there will be no transaction fees for purchase or sale of mutual fund units on the app for lifetime for these users.
While new users can directly register for the free forever account, existing users will automatically migrate to this account. Furthermore, existing users can switch their regular plan investments into direct plan without any charges.
Kalra says that since inception their focus was on building a simple platform with low operating costs. This allows them to offer users direct funds without charging transaction fees.
While new user registration and transaction numbers were still coming in, the overall user response has been quite good, mentioned Kalra.
When asked about how the app would make money, Kalra said that at present they were not looking at the monetisation aspect. Their current focus was to attract and retain maximum investors. Later they could offer paid value added services to their users; however, discussions regarding those were still at a nascent stage.
Sharma of Paytm too has said that the company would offer value added services to generate revenue from their platform. He, however, said that he did not want to disclose these services at this moment.
Media reports mention that 8.5 lakh investors have already registered on Paytm Money app and majority of them are from B15 cities. Going forward, the company expects the app to acquire users at a faster pace than the Indian mutual fund industry and quickly penetrate smaller towns.
At present, the app offers all schemes and direct plans from 25 mutual funds. Eventually they plan to on-board with the remaining AMCs. Despite being an RIA, initially the app will just operate as a platform for mutual fund transactions. However, in the next few weeks the company plans to launch ‘investment packs’ which would recommend a basket of schemes, to clients depending on their risk profile.
Overall, both companies are vying to attract new investors and increase penetration of MFs. With Flipkart rumoured to enter the fray, the competition will only heighten going forward. While ETMONEY is already an established name offering loans, insurance and mutual funds to more than 40 lakh users, Paytm is a fintech mammoth who will offer mutual funds through its wealth management arm Paytm Money. What will be the outcome of this competition on the distribution space? Only time will tell.
