Impact of Digitization on Mutual Fund Services in India

Abstract

Globally digitization has gained significance as a key building block for businesses and governments. Especially for the service sector it is considered as a great boon. Digitization has caused unravelling of a new paradigm in which businesses are catering to their stakeholders in novel and cost effective ways. It is expected that digitization shall help businesses enter newer realms of operating efficiency and associated profitability. The mutual fund sector in India is a promising case of digitization in the financial service sector. The prominent stakeholders in a mutual business are the Asset Management Company (AMC), Investors (retail as well as institutional), Financial Advisors (individuals as well as national level distributors), Registrar & Transfer Agents (RTAs) and Banks. These stakeholders play an integral role in the smooth functioning of the mutual fund business. This paper evaluates the impact of digitization on the inter-relationships and functioning of the said stakeholders towards realization of respective purposes. For instance, the Financial Advisors have the objective of communicating with their customers such that there is easy flow of information regarding valuations, purchase and sell decisions and consequent execution of the agreed decision Similarly, AMCs need to be in contact with their distributors and investors to communicate about the new developments and investment related decisions and executions of the same. This paper shall also attempt to identify the diverse areas where digitization has been taken up. Going forward an attempt shall be made to suggest areas where digitization can be helpful for mutual fund businesses. The research question that this study seeks to answer is whether digitization has contributed to more business in terms of AUM, number of IFAs, number of new customers, number of foreign country based customers (Indian Nationals). At the second level, this paper shall answer whether digitization has improved convenience of dealing in mutual funds and also the engagement levels of stakeholders. The results will be based on secondary as well as primary data using structured questionnaire and focus interviews. Statistical tools like paired t-test, chi-square test, correlation analysis and descriptive statistics shall be used.