Digital technology and artificial intelligence will be key enablers to the next phase of evolution of the mutual fund industry in India states an EY- Cafémutual report titled ‘Mutual Funds: Ready for the next leap’, released today at Cafemutual Confluence 2016 in Mumbai.
Technologies such as mobile, social media, big data and analytics, cloud and artificial intelligence are key growth enablers for the mutual fund industry facilitating seamless customer acquisition and real-time efficient processes. These technologies can drive efficiency and cost reduction if adopted across key operations, spanning from transaction processing and fund management to distribution and customer service.
Abizer Diwanji, Partner and National Leader – Financial Services, EY said, “The impact of technology on the mutual fund industry cannot be understated. Tablet and mobile apps are helping increase reach in B-15 locations and the paper-less experience though e-KYC and technology enabled systematic investment plans are tapping the millennial customers. Furthermore, the new digitally powered entrants such as payment banks who are allowed to sell third-party mutual funds through their advanced technology platforms will revolutionize the reach and efficiency of the Indian mutual fund industry.”
Fund houses in India today offer mobile and online apps for tracking and transacting portfolios, as well as for effective distribution and customer service. They are also using social media to reach out to customers, especially new-age customers, and employing big data and analytics in data-driven models for improving offerings and customer engagement. Cloud technologies are enabling process efficiencies and rationalizing costs.
On this occasion, Prem Khatri, Founder and CEO, Cafemutual said, “Digital has created a lot of difference in the mutual fund industry. Ever since SEBI allowed intermediaries to use stock exchange platforms to facilitate transactions in mutual funds on behalf of their clients, many distributors have signed up with transaction enabling platforms to grow their business. This is gaining traction and in all sense it is a win-win for all stakeholders – AMCs, distributors and end customers. Hence, we, at Cafemutual, strongly believe that both funds houses and distributors can grow business by leveraging such transaction platforms as this will help them cut cost, save time and increase volume.”
Artificial intelligence such as robo-advisors are threatening the traditional advisor model. Different models are emerging — while some offer direct plans with a fixed advisory fee, others offer regular plans with robo-advisory and financial planning. Currently, most robo-advisors primarily offer mutual funds as the solution for financial objectives and are free of cost, earning from trail commissions.
