Access to Mutual Funds Expands Through Digital Platforms

Digital platforms solve distribution and other challenges such as customer onboarding using digital KYC

Access to Mutual Funds Expands Through Digital Platforms
Access to Mutual Funds Expands Through Digital Platforms
Terence Lucien - 24 August 2021

The Indian Mutual Fund industry has grown multi-fold in the past decade and is now managing assets worth Rs 33.67 lakh crore as of June 2021. However, the growth potential for this segment is huge as the mutual fund AUM as a percentage of India's GDP currently stands at just 12 per cent against the global average of 63 per cent.

Mutual Funds have always been a superior investing product for individual investors given their various benefits such as professional fund management, a wide range of schemes that suit different investing needs, transparency, robust regulations, low cost, and high liquidity. However, while more than half of the industry’s assets are from individual investors, there are approximately only 2.4 crore unique investors in the industry today.

However, the overall trend has been changing and more than 50 per cent of the total investors were added in just the past 4-5 years. While investor awareness initiatives such as the “Mutual Funds Sahi Hai” campaign have helped in a big way to create awareness and demand, the rise of digital investment platforms has helped in making mutual funds more accessible to investors across India. The participation of investors from tier-2 and tier-3 cities has increased significantly in recent years as digital platforms have not only solved distribution but also other challenges such as customer onboarding using digital KYC. I believe this is just the beginning of this trend and see a huge opportunity in taking a high-quality investment product such as mutual funds to a large population in a country that has remained under-serviced all these years.

Over the last few years, digital investing platforms have evolved in terms of user experience, product features, and investment capabilities. From real-time tracking of portfolios to ease of execution transactions, these platforms have made investing seamless. This has led to even existing mutual fund investors finding these platforms extremely convenient for making investment decisions, getting actionable investment insights, and transacting and tracking their investment portfolios.

Here’s how digital platforms empower investors to invest in mutual funds:

Easy access to high-quality investment insights: Most investors have limited access to information about mutual funds and often struggle to start their investment journey. Digital investment platforms have brought relevant information to the investors’ mobile phones. Now, even investors from smaller cities have the same access to information and resources as investors from larger cities.

Assistance in selecting the right fund: The process of selecting the right fund can get quite overwhelming for individual investors considering the plethora of choices available. Digital investment platforms have taken a step towards helping investors in this decision-making process. For example, we have built various features such as assisted investment widgets and curated lists of suggested funds with consistent performance across various mutual fund categories to help investors make the right investment choice. With these features, even a first-time mutual fund investor can make an informed decision.

Paperless Investment Process: Physical documentation for various investment processes such as KYC, purchase, nomination, etc. has been one of the biggest barriers for individual investors to begin investing. Digital investment platforms have made the entire investment process completely paperless - starting from investor KYC to investing. With this seamless investment process, investors can open their accounts and transact right from their phones in a matter of a few minutes.

Ease of Setting up SIPs: SIPs have always been regarded as the best way for individual investors to build long-term wealth and have become a preferred investment vehicle for individual investors in recent years. India now has more than 4 crore SIP accounts contributing over Rs 9,000 crores per month. With the help of digital investment platforms, setting up SIPs has become completely hassle-free. For example, at PhonePe we recently launched SIP with UPI Autopay through which investors can set up their SIPs in just a few minutes.

Tracking of consolidated investment portfolio: One of the challenges of making offline investments was the inability to track all the mutual fund investments in one go. With digital investment platforms, investors can track their investments on a real-time basis and get a consolidated view of their investments across mutual fund companies.

Complete Control of Investments: Using digital investment platforms, investors can access their investments anytime and anywhere giving them complete control. This enables investors to execute their investment decisions at their convenience with just a few clicks. This can be particularly useful during a volatile market environment where investors want to capitalise on investing or portfolio rebalancing opportunities.

To sum up, digital investment platforms have made the entire process of investing right from research to consideration and tracking very easy and seamless for users. Going forward, I believe they will be instrumental in making mutual funds a preferred investment option for crores of Indian investors.

The author is Head of Mutual Funds & Gold, PhonePe

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.


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