Absence of secured payment gateway makes investors wary of investing through cell phones but MFs see a huge potential going ahead
Lack of safety and absence of any advisory role are hindering investors from buying and selling mutual fund units through cell phones. Although fund houses like Reliance, UTI, Birla Sun Life and HDFC have allowed transacting through mobile applications, investors are yet to take up the service in a big way. According to fund officials, buying and selling through cell phones will take some time to be become popular.
“It is only a technological transmission. Investors are concerned about the safety of such transactions. The mobile application only allows you to invest; it cannot advise which scheme to buy. It’s not an alternate mode of investing but is just an additional service for investors,” said a senior official whose fund house is providing transactions through mobiles.
UTI MF facilitates purchase of units in 12 of its schemes. To avail this service, investors have to register with UTI or its registrar Karvy by submitting a debit/ECS mandate and a signed UTI mobile agreement. Currently investors can only purchase (lump sum or SIP) and the fund house plans to allow switch, redemption and other services soon. It takes up to 25 days to get the registration process done.
Birla Sun Life MF allows investors to make additional purchase, SIPs, switches and redemptions. Similarly, Reliance facilitates purchase of units, redemption, access to NAV, account and transaction details to its existing investors.
UTI MF and Birla Sun Life use mobile applications of mChek, a mobile payment solutions firm, while HDFC MF has deployed ngpay solution.
“Currently, thousands of investors are already using this facility to perform transactions such as NAV check, scheme balance etc while we get lakhs of SMS requests for our ‘pull SMS’ services.
Mobile transactions for mutual funds via mobile phone offer investors a convenient and hassle free mode of transacting 'anytime, anywhere'. I believe that once secure payment gateway for mobile transactions stabilises and customer awareness about this channel increases along with comfort level with financial transactions via mobile phone, the usage of this channel will take off in a big way,” said Sundeep Sikka, CEO, Reliance MF.
Fidelity and SBI provide only access to information through mobile phones and do not allow any financial transactions. SBI allows its investors to check their account information through cell phones and plans to facilitate purchase and redemption options once RBI comes out with a proper settlement mechanism.
“Once we get some clarity from RBI, we will launch this facility. RBI is working on a central settlement mechanism. The current service providers are outside the purview of this settlement mechanism,” said Srinivas Jain, CMO, SBI MF.
The industry feels that the adoption will accelerate once awareness is created. “This is a new feature for mutual fund investors. Like any new feature and platform, awareness of this facility is low. Even in the banking sector mobile banking has not taken off in a big way. The same challenges exist for us to promote this platform. We are also addressing distributors concerns by way of educating them and making them familiar with the platform. We are also addressing them to confirm that there won't be any revenue loss to them, In effect it will be much more economical for them,” said A Balasubramanian, CEO, Birla Sun Life Mutual Fund.
Meanwhile, Kotak is also looking to start facilitating mobile transactions.
“It is on the drawing board. Mobile transactions will catch up because of the depth of mobile phone users in India. We are reasonably sure that this will become popular but it will take some time. We need to put all the processes and systems in place,” said Sandesh Kirkire, CEO, Kotak Mutual Fund.
According to RBI data, the value of mobile banking transactions of all banks stood at Rs 76.24 crore in April 2011. According to Telephone Regulatory Authority of India (TRAI), the total number of wireless user base touched 811.59 million users in March 2011.
“Many of our investors have been using this facility and have made repeat purchases indicating that they are comfortable with the system. Interestingly, we have witnessed enrollments from emerging centers as well. I am sure that it has a good future ahead mainly due to the ease of transaction that it offers,” adds Balasubramaniam.
