Challenges of e-commerce distribution of mutual funds

| | Updated on: Nov 09, 2015

SEBI’s proposed move to allow the entry of e-commerce players in the distribution of mutual fund schemes could have its own challenges. 

With e-commerce players used to drawing customers with freebies and discounts, those in the trade are circumspect whether they would be able to pull off the same with mutual funds and whether SEBI would allow such practices.

“It remains to be seen whether e-commerce players offer MF scheme units free along with a high-end mobile phone or vice versa,” said the CEO of a mutual fund requesting anonymity.

“It could also be confusing to new entrants given the number of schemes the industry has, if a third NAV dedicated to e-commerce portals is published for the same scheme,” said another executive.

 Though the e-commerce schemes would help increase penetration, there are certain concerns as well.

 Waqar Naqvi, CEO, Taurus Mutual Fund, said, “We had requested SEBI a year ago to allow us the use of e-commerce channels. They would be the face and sell the scheme and the business would be routed to the AMC platform which is robust enough to service the investor.”

 Jimmy Patel, CEO Quantum AMC, says, “One is looking at them because they are selling everything other than financial services. There are portals which are into BFSI (banking, financial services and insurance) and they are nothing but robot advisors. They suggest a product to the customer based on the customer data and suggest an asset allocation pattern based on the inputs given by the customer, and hence theoretically the customer has, at his finger tips, all the variables required for making an investment decision.”

 “However, this is not for the technologically challenged or for those who believe in human touch and do not understand financial jargon besides being incapable of deciding when too much information is thrown at them,” cautions Patel.   

Published on January 22, 2018

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