The 14th CII Mutual Fund Summit whitepaper makes six recommendations to help each stakeholder in the MF industry identify their role in the next phase of chartering growth.
Recommendation 1: Focus on household savings for long term wealth creation
The whitepaper notes that out of total savings of any household, 3% to 5% is the allocation in mutual funds. Although it has gone up from 1%-2% in the past few years, the industry has so much more road to travel than what it has travelled so far.
In this regard, fund houses need to rethink a fundamental shift in the product proposition. They need to enhance investor awareness across all categories of products and simplify on-boarding processes to target such households, recommends the CII whitepaper.
Recommendation 2: The need of investing in ‘new age customers
The whitepaper notes that multiple large customer segments with different needs and preferences are expected to emerge over the next decade. For instance, the increasing prominence of digital-savvy millennial, the growing influence of women and the rising elderly population are all examples of ‘newer’ emerging customer segments.
To tap these segments to the fullest, fund houses need to rethink the product proposition and go-to-market strategy for these segments given their varying needs and preferences.
Recommendation 3: Acceleration in distribution outreach
The whitepaper recognises that even as executing transactions can be replaced by electronic or digital interventions to full extent, a high touch model will continue to be relevant, especially in B15 cities as first time investors enter the MF industry.
Therefore, expanding the network of MFDs, RIAs, better utilization of the banking channel and increasing the utilization of online presence should be a top priority.
Recommendation 4: Enhancing customer experience
The whitepaper observes that despite achieving scale and growth, the MF industry has continued to lag in delivering superior customer experience.
Therefore, complete re-imagination of the customer experience will be required to on-board new customers and engage with existing customers.
For instance, investing in mutual fund platforms with simpler user interface, simplification of the KYC process and automation of the back-end will be vital to deliver on these aspects.
Recommendation 5: Use of technology across the value chain
The whitepaper notes that the MF industry is going to be a volume based industry and not a margin based industry.
In this regard, technology can enable AMCs to target and reach out to a large number of investors with lower costs and improved efficiency to deliver enhanced customer experience without compromising on quality.
Recommendation 6: Understanding the importance of self-governance
The CII vision document advises the MF industry to focus on self-governance as the industry scales up. For instance, it notes that new age technologies such as data analytics and artificial intelligence can be increasingly leveraged to improve self-governance.
