In this blog you’ll learn about digital transformation in the BFSI industry, how businesses are functioning amidst the crisis, how daily digital operations, processes, transactions, data collection and customer engagement can be made quicker with technology that aids faster productivity and recovery.
Co-hosting this webinar with us is Enparadigm.
Assets Under Management (AUM) have been growing well, but the penetration of mutual funds is in the lower single digits. While the US has its AUM more than the country’s GDP at 103%, it is only 11% in India. Low preference and awareness levels for investment options are the only reasons only 2% of India’s population invests in mutual funds today.
“BFSI as an industry has always been apprehensive about moving to a WFH scenario, mainly because of data related issues, not exposing systems outside, whether the customers can be serviced from home and so on. But with Covid, everything has been expedited, now there is a lot of confidence that this can actually happen. The first challenge was ensuring that everyone has laptops, and then came the challenge of shipping systems across the country. We’ve kept adapting, including allowing ‘being your own device’, to a certain extent by adding security layers. When data is accessed from the outside, there’s always an element of risk involved. If you look at Mutual Funds and Trading for example, all conversations need to be recorded. In the office, it’s easier. Covid however has taught us that a WFH scenario is definitely possible, and we’ve achieved that quite successfully.” – Rahul Dayal, Head of IT, Aditya Birla Sun Life Asset Management Company.
Aditya Birla Mutual Fund Investments has been around for almost three decades now. What are some of the learnings that would still be applicable today and what are some of the similarities and differences we can learn from, we asked Rahul.
Businesses are adopting a technology first, digital first strategy in today’s world. It’s not that this wasn’t coming in the long-run, Covid has just accelerated the process, and IT has moved from being an enabler to sort of a driving factor.
To give you an example, at least 1/3rd of GoldmanSachs employees are tech based, and they are a financial services company. Even on the hiring front, companies are shifting to digital and tech enablement.
Every company, from the biggest companies (Amazon, Uber, Google, AirBnB, ITC, Dominos, KFC, the list is long) to growing startups, all of them have always been or are becoming highly tech dependent and that’s where the strategy is constantly on-the-move. Take for example, how ITC partnered with Domino’s distribution, an odd combination but highly effective. Dominos has a certain process and technology around delivery which was leveraged. From Domino’s standpoint, it was more of a re-strategizing move.
Mobile usage is expected to reach 5.5 million by 2022. Branchless banking is exactly as it sounds – banking without going to a bank. India is a vast country with around 70% of the population in rural areas. Branchless banking delivers banking services outside conventional methods. It is enforced by agents using communication technology. Mobile phones or point of sale (POS) terminals are the main vehicles through which branchless banking services are delivered in unbanked rural areas.
Mutual fund penetration in India is much lower than the world average and many other developed economies. The best part of the data published by AMFI however is this: Individual investors hold a higher share of industry assets, i.e.51.9% in July 2018. Institutional investors account for 48% of the assets, of which corporates are 90%. The rest are Indian and foreign institutions and banks. With millennials also investing and a lot of options of self-investment through apps and web portals propping up, the number is only likely to increase.
According to various reports, millennials are increasingly taking matters into their own hands when it comes to financial planning, from setting goals to selecting investment instruments. With a vast amount of information, ranging from data to articles and video tutorials available online, tech-savvy millennials are moving away from relying solely on advisers to guide them. Investors prefer investing through apps, which have easier on-boarding processes and instant investment options. According to data from Groww, millennial investors frequently track the performance of their portfolios as a whole. They are also more actively involved in wealth creation as compared to the previous generation.
In a poll we conducted with our business and investment community, 40% prefer buying mutual funds through a relationship manager, 60% prefer aggregators and direct channels. This trend also widely increases among the millennials. And about bringing older generations upto speed:
A lot of the older generations were leaning on IFAs or someone they consult with, in general, may not apply to all. We have a huge unit that does investor education. In fact before the lockdown, we had sessions in every location. Our team would go down, invite investors, walk them through what mutual funds are about, how they can invest, processes etc. It’s a major part of our initiative to educate customers about investing in mutual funds. Once a year we have an event called Voyage. It was an in-person event then – numbers we restricted. However this year, we conducted it online. We had around 35-40 thousand people attending it. This is something we do very regularly, as part of our cadence to educate investors about investing and the kinds of products available.
We’re also doing a lot of research and development in-house. Lot of companies outsource tech. We believe that there is some amount of tech and development that we should be retaining within, allowing us to explore newer technologies. As long as we’re able to fail fast. We don’t want to get into a mode where we invest excess time and money into projects that leave the feeling of a white elephant sitting around.” – Rahul Dayal, Head of IT, Aditya Birla Sun Life Asset Management Company.
How do you focus on these untapped markets, what is the communication like, how do you use technology as a driver for these, you know, larger extended markets, we asked Rahul.
You’re handling something very critical to people, it’s their money and time. How do you bridge the digital divide while building trust?
“During the lockdown, we’ve had a mandate from regulators that we’ll be doing only digital transactions. So, there’s no physical transactions during this time for sure. We’ve enabled everything digitally. Most of the resolutions are straight through, there will be some extreme cases requiring documentation or processing, which remain manual. But overall, we’re implementing tech and digital, for a wfh environment. The other side of the challenge is we had to fast track the development teams to build softwares that meets the need of the hour. Our customers can now carry out every transaction, digitally” – Rahul Dayal, Head of IT, Aditya Birla Sun Life Asset Management Company.
Here’s a recording of the entire session:
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About the Speaker:
Rahul Dayal is the Head of IT at Aditya Birla Sun Life Asset Management Company. He brings with him 20+ years of experience in technology and strategy. He is an expert in the BFSI domain and management. Prior to building digital for ABSLAMC, he headed RBL banks retail solutions.
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