Digital disruption has paved the way for many industries, and the asset management industry is no exception. In India, the mass adoption of digital financial practices by customers started with the advent of UPI payments and mobile banking. With the COVID-19 pandemic dictating the new normal for users, online platforms are set to emerge as preferred destinations for banking and investing. Asset Management Companies need to optimize their platforms to benefit from this shift, lest they stand to lose out to "mobile-first" third-party aggregators like Paytm Money and Scripbox.
The current economic environment has made it increasingly difficult for AMCs to expand and drive up investments. While contingency plans have been implemented, the true impact of widespread lockdowns and layoffs is unforeseen. However, third-party distributors have emerged as the winner during lockdown, recording strong growth figures. With decrease in interest rates and the faltering real estate market, experts believe more money is going to flow into stock markets. Online platforms have been able get the most out of this traction. Take for example Zerodha. Nikhil Kamath, Co-founder and CIO, Zerodha, in an interview to Business Line stated that Zerodha has seen a significant increase in the number of new investors, recording 100% month-on-month growth for March.
So, in light of recent circumstances, what are the best digital practices that AMCs can adopt to drive mutual funds investments on their platforms and give their users a seamless experience?
Just the Use of Digital Marketing is not enough
When thinking of digital practices, the scope needs to be expanded from the digitization of processes and the use of digital marketing to applying digital measures across the entire spectrum. Most AMCs have taken proactive measures when it comes to digital marketing, from online advertising to campaigns aimed at increasing literacy and awareness. Digital marketing is very useful in establishing a share of voice, increasing website traffic and driving leads and sales.
But what happens once the customer is attracted to an AMC's website/app? The platform needs to act as a stepping stone in their journey and ensure the incoming traffic converts to users and investors and subsequently translates to growth in the portfolio base. If any customer is brought to a poorly-functioning and difficult-to-use platform, the entire effort of digital marketing turns futile on account of huge visitor drop-offs.
This is where most asset management companies are losing out. Most AMC platforms have not concentrated on crafting user-centric experiences, and as a result, are losing out increasingly to third-party aggregators especially during the COVID 19 market surge.
Digital Solutions to Drive Growth for AMCs
While it would be an endless list of interventions that can be brought about across the digital landscape for AMCs, here are a few solutions that can drive that change:
- Intuitive Design: Despite brand equity, increased interest towards mutual funds, and extensive digital marketing, AMC platforms see huge drop-offs owing to poor digital design. Understanding the needs of different investor cohorts allows for mapping their goals and frustrations to effectively calibrate user journeys. Intuitive digital design allows for easy navigation of the user effectively guiding to move from visitor to user to subscriber.
- Interaction and Engagement: Interactive portfolio management is a powerful dynamic feature that can allow users to balance their portfolio right from the application in real-time. Driven by powerful machine learning algorithms in the backend and an intricate notification engine to engage users this can effectively allow the native AMC applications to double as investment advisors.
- Product Performance Optimization: On the digital platform side, it is important to continuously employ performance optimization. This can be brought about by rapid learn-build-measure cycles on the backbone of Lean/Agile frameworks and managed by product analysts and scrum masters. What does this mean? This translates to thinking digital from a product mindset - there are daily progress, weekly updates, and quarterly releases for a continuously better-rounded application.
- Digital Innovation Programs: Digital is a big, bad world - if you stay still for long then you get obsolete. Creating an ecosystem of products that are digital-driven can be an efficient practice. For instance, take the example of Zerodha - it has Coin for Mutual Funds, Varsity for Investor education, etc. Another tried and tested way of retaining users in the consumer internet space has been gamification. While there might be limitations in employing such concepts directly in the financial sector, it does leave room for the imagination of certain possibilities of introducing investment as a concept for late teens and young adults in a more fun and accessible manner. Or digital going vernacular with simplified user experience for non-digital native populations to bring about the next phase of investor growth and inclusion.
Asset management companies have been comparatively slower than other financial institutions in the full-fledged adoption of digital practices, but they still have ample opportunities that they employ to get the most out of the digital world. By creating digital-first strategies, AMCs can emerge victorious in the digitally-led post-COVID 19 world.
