While some distributors may be anxious over SEBI’s plans to facilitate mutual fund sale through e-commerce platforms, top MF CEOs believe that this technology will just be an enabler. Since mutual funds are push products, fund officials feel that distributors will continue to play an important role in guiding and handholding investors. This was the consensus of a panel comprising top MF CEOs at the 3rd Mint MF conclave held in Mumbai yesterday.
When asked whether these platforms will be a game changer for the industry, Sundeep Sikka, ED & CEO, Reliance Nippon Life AMC said that technology will play an important role in execution. “Distributors can use technology for convenience. However, I don’t agree with the belief that technology will eliminate human intervention.”
Talking about the behavior of people using e-commerce sites, he said that people know what they have to buy on sites like Flipkart and Amazon. “They know what to buy on e-commerce sites. So instead of buying through shops they are now buying products online,” pointed out Sundeep. However, he said that is not the case with MFs. “Today, 96% of Indian population doesn’t know that they have to invest in mutual funds. We have to nudge them to invest. So we will need advisers to onboard new investors,” added Sundeep.
Nilesh Shah, Managing Director, Kotak MF said that the industry will adopt technology to cut costs to maintain margins. He said that technology will help distributors increase their productivity, stressing the need to collaborate with platforms. Nilesh pointed out that we have woefully less number of distributors and there is an urgent need to expand the distribution force.
Nimesh Shah, MD & CEO, ICICI Prudential MF shared similar thoughts. He said that while people are curious to know about mutual funds and are willing to invest, the KYC process puts them off. “When people want to invest in mutual funds they Google ‘mutual funds in India.’ Through search engines, more than three lakh people visit our website but we don’t even convert 3,000 of them. So there is no scarcity of people coming to our website. If Flipkart had asked people to undergo KYC then it would not have grown. So it is very easy to talk about how technology will change our world but the fact is that there is a very complex KYC process which is deterring people to invest in MFs. We need to simplify this KYC process.”
He said that people don’t invest in MFs unless they are nudged to do so. “Very few people get up in the morning thinking how to make money. Most of them have to be pushed to invest in MFs,” added Nilesh.
He stressed the need to rope in more distributors to expand the pie of mutual funds. For this to happen, he said that people should find MF distribution a lucrative career. “Mutual fund distribution is not a lucrative business for huge armies to take up this profession. Less than 10,000 people have taken up MF distribution last year. So we need more distributors to penetrate mutual funds,” he added.
