Individual mutual fund distributors (MFDs) are the heart of the wealth management industry in India. Their ability to serve growing customer needs in this fast-paced, often volatile environment, is what makes them indispensable.
In the current scenario, MFDs are confronted by a lockdown and uncertain financial What business continuity steps are they taking while working from home?
Withstanding a crisis
Compared to MFDs operating in rural areas, MFDs in metro and semi-metro areas are finding it easier to work from home because they embraced technology solutions.
Both investors and MFDs in urban spaces have become more tech-oriented over time. We noticed that 70-80% of districts in metro and semi-metro areas have moved away from paper-based transactions and have adopted online transaction solutions. Enhanced online platforms provided by the BSE, NSE, and MCX make digital transactions a breeze.
At the same time, links through traditional modes like phone, emails, video conferencing, etc. continue to keep communication flowing smoothly between MFDs and investors. This has helped reduce the burden that urban MFDs would have faced if they had maintained a pure, paper-based work process like their rural counterparts. While times are difficult for rural MFDs, all in all, it’s business as usual in metro areas.
What do MFDs lack?
Traditional wealth management firms and financial entrepreneurs now feel an urgent need to upgrade to a more tech-oriented process ecosystem to ensure resilience and avoid the loss of clients and their trust. The need for a robust platform that integrates all of their products and services under one interface, while being easily accessible in a plug-and-play format is a key priority. This move will ensure excellence in service and business as usual under all circumstances, even under lockdown. Standalone financial entrepreneurs will also need such technological tools to help them adapt to these uncertain times and flourish.
The current market situation is great for new investors looking to invest in quality funds, but a large set of MFDs at this specific point are facing difficulty in on-boarding new clients. Large volumes of paperwork: client signatures, requirements, and documentation that need to go back and forth between MFD and investor are the hitch here. The mandatory KYC procedure for new client acquisitions adds to the burden. Digital eKYC, digital signatures, and other online developments can assist MFDs in overcoming these hurdles today.
Seamless communication is another barrier that MFDs face. The key role an MFD plays is managing the behavioural biases of an investor. Their dependency on traditional communication and reporting methods may not be apt for these unstable times. Investors today want to be on top of their investments, getting updates and advice on precautionary measures ahead of time as the markets keep swinging. Firms that have an integrated artificial intelligence and machine learning based platform to ensure a constant flow of information to clients in the form of reports, updates and opportunities will find themselves in a better position, making it easier for them to manage their investors and regulate their investments.
Digitizing to adapt
What MFDs and financial entrepreneurs need today is a reliable technology backbone for wealth management across India. This current generation, future heirs to HNIs and ultra HNIs, are knowledgeable and tech-savvy. They look for financial services that answer their needs and solve the problems powered by digitization. If digitization is not the top agenda across financial client-facing services, then traditional wealth management firms, as well as entrepreneurs, face the threat of extinction.
Key highlights:
- MFDs in urban areas are well equipped to work from home as they have embraced technology solutions
- There is an urgent need to upgrade to a more tech-oriented process ecosystem to ensure business continuity
- MFDs should look at robust platform that can integrate all products and services under one roof
- MFDs can onboard new clients even during lockdown through eKYC and digital signatures
- Today, investors want to get update on key events that can impact their investments
Rajan Pathak, Co-founder and MD, Fintso
