This post has appeared in the India Markets Observer 2018, an online publication that brings together experts who discuss these challenges in the fund industry and investing insights and various perspectives.
When I think of the role of technology in financial advisory, the immediate thought that comes to mind is “when”, not “if”. And, in my view, the “when” is now. The speed at which technology is moving is unprecedented. It took 75 years for the telephone to reach 100 million users. Compare that with the time take to reach the same number - Internet (7 years), Facebook, (4½years), WhatsApp (3 years, 4 months), Instagram (2 years), and Pokémon Go took only a month to cross 100 million downloads!
No stakeholder in the mutual fund industry can afford to remain oblivious to or isolated from the onslaught of technology. From paper-based operations a few years ago, it’s now possible to conduct 100% paperless transactions.
For an adviser, the biggest beneficiary of technology is the enablement to minimize time spent on mundane operational tasks thereby allowing them to spend maximum time on value added activities.
Operations
The key aspects – client onboarding and KYC, transaction execution, and payments can all be facilitated via technology. All these aspects are now integrated on the adviser’s mobile phone. The trinity of Jandhan, Aadhaar and Mobile (JAM) will be a key enabler to facilitate fast and easy execution. The day is not far when a thumbprint will be the only thing needed to onboard and execute transactions for a client. A number of platforms already offer ‘industry standard’ operations capability and are constantly innovating in terms of products and features offered.
Customer Service
This is a challenging area given the growing number of customers accessing mutual funds and their high service expectations. Besides Customer Relationship Management softwares and human assisted chats currently in use, we are seeing the advent of Artificial Intelligence enabled chatbots to respond to common customer queries such as requests for account statements and fund information. Video calling too is emerging as a customer service tool for anytime-anywhere access. Websites including those accessible on smart phones and apps will soon become de rigueur for customer self-service, and are increasingly available at a low cost.
Back Office
Technology can build efficiencies while reducing scope for errors. Reporting softwares, including those that provide reconciliation and automated portfolio updates at day end, are in common use. The ability to mine data to find cross-sell or business opportunities will be the next phase of development in this area.
Use of big data
With closer integration between the manufacturer and adviser, manufacturers will use their data analytics capabilities to provide actionable intelligence to the adviser. Intelligent inputs and analysis of client interactions can help provide
triggers to engage with customers with more timely and effective communications.
Predictive analytics can alert an adviser of customers who are likely to redeem based on a wide combination of factors, not just past transaction history. Data analytics will not only help in selling better, but will also help protect assets that an adviser has worked hard to gain.
Automated triggers basis this data, personalized to each investor’s preferences will allow distributors to effectively target investors. For example, a customer can be reminded to rebalance her portfolio if allocation to a single asset class exceeds a specified percentage, while another customer who has not changed her SIP amount for long could be communicated about a Step-up SIP.
Social media
Facebook, LinkedIn, Twitter and Instagram are a great way to engage with customers. Interspersed with Webinars, Facebook-live sessions, Pod-casts, Twitter chats, etc. advisers can use one or more of these channels to connect with customers, and share important updates on topics like the Budget, monetary policy and important regulatory changes. With data getting cheaper by the day and increasing smartphone penetration, these channels are almost ubiquitous in their use.
Robo advisory
Millennials are tech-savvy, educated and born into a world with instant connectivity. They form a third of our population and will make up more than 40% of India’s population by 2025. A hybrid model, using a mix of technology backed by
human intervention will be critically important in addressing the financial needs of tomorrow’s investors. The technology underlying robo advisory can be effectively used by advisors to support their business.
It’s not technology against humans. It is technology with humans. The bionic adviser who grasps that will be the winner.
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