Digital Disruption - Accelerating Product Innovation and Distribution in Mutual Fund

300 million internet users (Globally #2)

92 million facebook users (Globally #3)

3 billion app downloads in a year (Globally #3 in Google Play downloads)

India is exponentially better in mobile adoption than the rest of the world. Out of the 300 million internet users, 200 million (65percent) users are mobile only internet users.

In fact, Digital Influence in India is 2.5 times the actual digital sales that happen. Following are few interesting data points

• 28percent of all buyers across categories are internet users
• 15percent of all buyers engage in at least one of the stages in pre-purchase, purchase or post-purchase activities online
• 6percent of all buyers indulge in actual digital sales

So firstly Digital is not only about digital buying. It is mainly about the influence that the brand has over its potential customers through digital means.

Digital in India is disruptive

Five disruptive themes challenging business models today are

1. Physical footprint is less relevant today - The modern consumer values convenience and value for money over everything else including brick and mortar stores / offices.
2. Big Data and analytics break entry barriers - The relatively lower cost of leveraging digital tech compared to physical presence, combined by customer acceptance of new products and brands, is breaking down the barriers to entry across industries. Data Analytics is helping organisations create CX (customer experience) as a competitive advantage.
3. Brand Partnerships and digital cross-selling at the point of customer intent
4. New convenience platforms making company interactions more social resulting in new product ideas, better customer services and improving social influence
5. Mobile internet driving customer engagement and sales

The new breed of Investors

As a result of impressive growth in technology, a new breed of investors - more informed and more inquisitive is emerging in our country. Never before an Indian investors had so much available to them at the click of a button or tap of a phone. The Internet has emerged to be a powerful tool for people to manage their money and get financial news. As a result, there has been a boom in online searches, online brokerage firms and financial news web sites.

Today, many individual investors make extensive use of Internet for investment research and their number is increasing day by day. By visiting various web sites, they can now see fund’s portfolio, scan corporate results and research reports, get stock quotes, and engage in e-trading. The new era for technological revolution has brought with it longer trading hours, lower costs, and greater transparency and better pricing information.

Further, emergence of online brokerage firms has given many investors ease of use and lower commissions than charged by traditional brokerage houses. As traditional ways of doing business have been transformed by technology, many high net worth individuals are opting for online investing. Far from being passive spectators, these new investors are proactive, are directly involved in making their own investment decisions, managing their assets, and researching investments.

Technology in the mutual fund industry

Effective and on-going communications with unit-holders heightens importance for the mutual fund industry. Mutual funds are attractive savings vehicles for investors, often investing for the long-term future such as retirement plans, higher education, etc. Therefore, the need to communicate and service millions of investors, who frequently purchase units on an on-going basis (for instance systematic investment plans), makes it vital for the mutual fund industry to invest in technology. Technology has made the explosive growth of the industry manageable.

The relentless pace of technological change and user needs are all changing the way we use, or even understand innovations, such as the internet or mobile. Technology through internet and mobile

• Reduces distribution and transaction costs
• Speeds up document processing online
• Provide instantaneous access to information
• Enable investment decisions
• Handle investor’s grievances and many more things
• This in turn dramatically improves efficiency and decrease the costs of back office
• The Internet lets mutual funds engage in "one-to-one marketing" allowing them to tailor the online experience to fit unique individual needs.

Technology and the impact on distribution of mutual fund products

The area that is most likely to have the biggest impact as result of changing technology is MF distribution. Even though average investment in technology in this sector is yet not very high, distribution of mutual fund products and services is likely to be immensely affected by technology in a big way. Financial products such as mutual funds are being sold differently. More funds will sell and service their products through the Internet, Mobile, ATMs, kiosks, etc. While several mutual funds like UTI Mutual Fund have already started offering investments on the net, mobile and other alternate channels like Call centres, many Registrar and Transfer Agents (RTAs) too have invested heavily in technology.

Figuring out the best way to distribute products and services is the challenge mentioned most often by the mutual fund industry. The three biggest challenges facing the insurance industry are distribution, distribution and distribution. Fund houses are now experimenting with several methods of delivery. No one is likely to rely any longer on a single form of distribution. Funds are now selling their products through agents, the Internet, the mobile, the Stock Exchanges and through other third parties. Each fund has to be able to provide products and services across distribution lines to stay competitive in the overall marketplace.