While there has been a lot of discussion across social media on the potential disruption in the distribution business caused by the introduction of common platform, the industry experts are certain that the common platform will not have any significant impact on business of MFDs, RIAs, fintech platforms and exchange platforms.
On Monday, SEBI has asked RTAs to introduce a uniform and user-friendly platform for investors where they can execute transaction like investment, redemption and switch and non-financial transaction such as downloading account statement, updating email id and phone number, changing address and bank details and so on across all fund houses.
The new platform is expected to become fully operational by December 31, 2021.
We spoke to a few experts to understand if the common platform can disrupt distribution business. Here is what they have to say.
Ajit Menon, CEO, PGIM India Mutual Fund said that the common platform will complement distribution business. He said, “The common platform will be a single touch point for all mutual fund services. You can say that it is an RTA which standardizes mutual fund investments for better investor experience. I don’t think it will affect business of MFDs and fintech platforms. In fact, it will help individual MFDs to reduce set up cost in their business as the platform takes care of most backend operations. Also, individual MFDs are not just transaction facilitators. They play a very crucial role in financial wellbeing of investors by understanding their needs, guiding them about how to go about money and investment and riding volatility and above all helping them overcome behavioural biases. However, fintech platform depending only on transaction will have to level up their game.”
G Pradeepkumar, CEO, Union Mutual Fund said that MFD should look at the common platform as the integration of two RTAs. “Investors who have been using CAMS and KFintech to execute transaction in mutual funds will obviously migrate to the new platform. Also, there are numerous ways for investors to go direct. However, majority of investors need handholding by distributors to invest in mutual funds. In fact, MFDs should look forward to integrating their website with the new platform to offer end-to-end digital service in mutual funds.”
Vishal Kapoor, CEO, IDFC MF doesn’t see the common platform creating any disruption in the distribution business. He said that the common platform will make mutual fund transaction even more simple for distributors and investors. “We have been talking about standardization and uniformity across fund houses and RTAs for quite some time. This common platform aims to address this issue. In fact, there will be no need to move pillar to post to facilitate non-financial transactions. With this, MFDs would have more time at their discretion which they can use to acquire more clients and grow their business.”
Amit Bivalkar, MD and CEO, Sapient Wealth Advisors believes that MFDs need not worry about the common platform as it would only help distributors deal with non-financial transaction efficiently. “There is no need to go to CAMS and KFintech separately to update clients address, phone number and change nomination. These things will now become standardized and easier. In my view, the common platform is a boon to the MF distribution business.”
Bivalkar, however, feels that the common platform may affect fintech platform initially but will not have significant impact on their business.
Ganesh Ram, MD and CEO, MF Utilities is of the view that the move would make mutual fund investments more standardized and simpler for distributors and their clients. Talking about impact of common platform on his company, he said that MFDs use MF Utilities not just to execute transaction but to manage their business efficiently. The common platform is just an extension of RTA services, he said.
Varun Sridhar, CEO, Paytm Money believes that the platform will greatly benefit direct mutual fund platforms like Paytm Money. He said, "With higher industry digitization and standardization, the user experience we offer on our platform can be enhanced."
Varun further said, " This new platform could attract a lot of millennial and new-age investors to the mutual fund ecosystem, significantly expanding the market over time. If done right, the standardized service request feature would mean a major reduction in TAT for customer requests and a significant improvement in overall investor experience. An expanding market and standardization of industry processes is also the bedrock of product innovation, and we should expect to see an array of innovative products over time, further benefiting the investors."
