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August 23, 2018

Digital evolution

Can technology be the propelling factor for the industry?

AMFI-CRISIL Mutual Fund Factbook


In the past decade through fiscal 2018, India’s mutual fund industry has been growing at twice the pace of its global peers.


Monthly SIP contributions and accounts have trebled in the past two years, which suggests more people are following the disciplined investment approach that the mutual funds industry has been advocating for long. Good part is, this growth has not been just an urban phenomena. Assets under management from cities beyond the top 15 (B15) have grown at 32% annualised since 2014.


The ‘Mutual Funds Sahi Hai’ audio-visual campaign has played a big part in this.


The industry is also adopting best practices and moving towards better transparencies and disclosures encouraged by SEBI, such as re-categorisation of schemes, disclosure of total expense ratio on a daily basis, and adoption of uniform and timely disclosure of data.


The digital dawn


The digitalisation and technology wave that the world is witnessing is also enhancing investor convenience. Technology, which was used for back-end fund management systems, transaction processing and customer servicing has improved to facilitate investments through digital modes. The government and the regulator, too, have played their part in furthering digitalisation, especially through their financial inclusion efforts.


Not surprisingly, digital money flowing into mutual funds has multiplied from ~0.5% two years back to ~10% as of June 2018. With transaction systems improving every day, technology will continue to play a major role in the industry’s growth and afford investors easy access to the capital market.