Ganesh Ram is an Industry leader, with over twenty years of experience in Financial Services. With a thorough expertise in Capital markets, Process transformation & Investment Banking, he has previously worked with some of the most reputed institutions in the country. Having joined MFU from BSE Limited (Bombay Stock Exchange) where he was working as MF Business Head for 2.4 years, Mr. Ram is extremely well versed with Mutual Funds, serving as the Head – Mutual Fund Ops & Digital Products at KFintech (RTA).
The Mutual Funds segment is witnessing myriad changes in ways that are more dramatic than one would have foreseen a few years ago. From smart technologies to collaborative software and more, Digital Platforms are remodelling or adopting newer ways to reach out to customers.
Digital Platforms are arguably of utmost importance and influence on the Mutual Funds Industry.
Digital platforms have challenged the conventional MF Distribution process and almost eliminated a lot of paperwork, cumbersome, and error-prone manual processes. Given below are the key benefits these Digital platforms have brought in the table:
Driving efficiency
- No need for a physical visit by AMCs or Distributors
- AMCs/RTAs redeployed and had optimum use of their manpower
- No/Lesser Paperwork, a significant reduction in manual errors, and complete elimination of other prevailing issues
- Platform open for all AMCs and all schemes
- Dedicated helpline and strong support system driving efficiency and quicker addressing transactional issues.
Reduction of Cost to AMCs and Industry
- Addressed the level playing field in the distribution fraternity by bringing many Distributors, Fintech, banks, etc.
- Significantly helped AMCs to reduce TER and a significant reduction in cost incurred by AMCs as compared to conventional distribution mode
- AMCs without their own digital platform can completely migrate and digital platform maintenance cost has reduced for other AMCs. For example, there are a few AMCs who are using MFU as a white-labelling solution there by avoided capital, maintenance, and related cost.
- For AMCs, Distributor management cost was Zero as these digital platforms was managing all the reconciliation, queries, and other services to Distributors.
- Digital platforms have played a significant role in industry growth by reducing cost/TER and able to consistently surge digital growth.
What Digital platforms should offer going forward:
Digital platforms have contributed significant benefits to the industry, but they have a responsibility to extend that to help AMCs to reduce cost, standardize processes and use newer technology for improving processes and significantly improve Investor/Distributor Services.
Recently, SEBI the capital market regulator has moved in the right direction by asking RTAs to develop a platform that will be a single-window, integrated, simplified investment, and service experience for investors. The platform will provide services, including reports on mutual fund holdings in Demat and standard statement of account, transactions, capital gains, and losses, and details of unclaimed dividend and redemption. This will provide the investor an integrated, harmonized, elevated experience.
SEBI has time and again reiterated that AMCs are the owners of Investors/Distributors’ data and RTAs are their agents for the data repository. The regulator also has made it clear that investor-level data to be shared with Stock Exchange platforms and digital platforms for transacting in mutual funds to further augment ease of investing and servicing of investors.
So, with data going to be available in near future, digital platforms need to gear up to provide value-added and superior services, data-based analytics by using AI, Blockchain, etc.
Additionally, digital platforms need to focus on servicing part of also and use technology to innovate how efficiently they can service the investors and distributors. Today everyone’s effort is on investor onboarding, payment, transactions, etc when we talk about innovation. But the need is to focus on Innovation in Client Services. That is one area which is lagging and requires a big-time overhaul.
So, over the period, data will be available from RTAs for digital platforms so given below are the key offerings they should provide:
For Investors:
- Portfolio monitoring, benchmarking, and other key stats
- Indicators on simple stay or exit strategy
- Inclusion & tracking of various asset classes
- Educative and knowledge enhancing based data points, blogs etc
- Driving Risk profiling culture by enabling unique Risk profiling technique
For Distributors:
- Providing subsidized and efficient Back-office and portfolio software for including some unique high standard features
- Use technology to explore the opportunity to simplify and make Investor onboarding easier. This is one of the major issues for MFDs/RIAs today.
- Provide eKYC and make KYC process smoother and faster
- Efforts in making brokerage management/reconciliation process better which is another pain point for Distributors
- Value additions for MFDs/RIAs including soft skills training on retaining clients, how to acquire clients etc
Its time for AMCs, RTAs, Depositories, Digital platforms, and other stake holders to move from Competition to Collaboration.
AMFIs vision 2025 of 100 trillion crores is very much possible and digital platforms will be the key drivers for the same if they take their platforms to next level.