“But why? Can somebody please explain to me” – CEO
“We had the best funds in the market, more than three-fourths of our funds were performing better than benchmark indices” – GM Product
“Our sales strategy was perfect; we had mobilized all distributor channels” – VP Sales
“Absolutely. We spent a great deal on advertising - television, print media and overhead advertising” – GM Marketing
“Then...how could this happen? Why is our market share dropping YoY? Would any of you care to explain?” – CEO
Mutual fund houses are spending a lot of money on improving participation from retail investors. There are many initiatives from regulatory bodies, industry leaders, and even from some leading IFAs (Independent Financial Advisors). The economy is good, jobs are on the rise, dispensable income with the youth are at a high, NIFTY is gaining at least 50 points a day. It’s all bullish. Still mutual fund is not keeping pace.
Indian Mutual Fund industry - Whither Retail Participation
Mutual Fund houses have tried out every method in the past to improve retail participation. Doubling or tripling commission to distributors had been a common practice, until the regulators put a cap on commissions. Advertisements were a money draining exercise as well - mutual fund houses have spent hefty amounts on mass media channels in the past. As it was mandatory for fund houses to conduct awareness sessions, these were conducted in one city after another without much improvement in retail participation — another futile exercise.
So What Could Be Wrong?
There are multiple (investment) channels available for mutual fund investors — Direct, mutual fund offices, Independent advisors, Third-party agencies that offer mutual funds along with equity shares commodity trading. In almost all channels, investors are faced with paper forms while a few offer web-based interfaces. However, mutual fund houses have not been keen in offering services through a mobile interface. This has, in fact, adversely affected mutual fund penetration.
One of the biggest reasons investors postpone mutual fund purchase is the sheer amount of paperwork and time involved in account opening and fulfilling Know Your Customer (KYC) norms. Mutual fund houses have failed to capture the attention of the millennial or post-millennial generations to the fullest extent, because of this reason.
The Solution
It is Mobility for certain. With the regulators giving a green signal to e-KYC, fund houses need to facilitate online registrations, eligibility checks, and linking of bank accounts through mobile devices. They also have to enable investors to choose relevant funds with proper research assistance, monitor portfolios and so on, all on the go.
Future of Indian Mutual Fund Industry
Fund houses have no other way but to embrace ‘mobility’. A few early birds have launched mobile apps for their investors and are offering basic services to facilitate transactions using mobile devices. Undoubtedly, mobile mutual fund platforms will be the most convenient channel for investors. For improving capitalization and investor penetration, the mobile channel has to be tapped to the fullest extent.
More Advantages of Mobile Mutual Fund Platforms
Another advantage of mobile-based mutual fund platforms is the flavor of personalized reminders/notifications. SIP alerts, advertisements on NFO, announcements for dividend declaration, and so on. This can be realized using app notification and will help garner attention and brand recall compared to other channels that fund houses have been using traditionally. With advanced analytics, advertisements and notifications can be be timed appropriately to enhance impact.
