Banks are gearing up to enter the market and utilize their banking channel for distribution
Last year IDBI and Axis Bank entered the mutual fund business and this year Union Bank has set up an asset management firm with KBC Group of Belgium. The industry expects more players to enter the space.
Bank of India is also looking at entering the MF industry as it feels that there is enough potential in the industry to explore. “We are trying to put a few things in place and then enter the industry. We are planning to enter the industry as soon as possible,” said a top official from Bank of India. Central Bank of India too is rumoured to be considering getting into the mutual fund space though their spokesperson refused any comment on the issue.
With the entry of these bank sponsored AMCs, other AMCs are gearing up with various marketing strategies to take on the new competition.
“We have to come out with different strategies to stand out in the market. There are already eight mutual funds either fully or partly owned by banks along with overseas partners. We feel that the industry is still not crowded. Entry of new players will initiate healthy competition,” said an official from UTI.
One positive impact of the entry of bank sponsored AMCs will be their ability to expand the reach and coverage of mutual funds. “We will be happy to see more players in the industry which will make all of us develop more innovative approach towards product development and marketing. One advantage that a bank has over AMCs is that it can utilize its banking channel for distribution of its products. This industry is still under penetrated so we need players to reach to masses and make them aware about mutual funds,” said an official from DSP Blackrock.
