It is not tech versus humans; it will be tech with humans

By Satish Prabhu

When was the last time you visited your bank branch (excluding the demonetization period)? Or the last time you hailed a cab without an app or boarded a flight without a web check-in? When was the last time you took a print of a photograph or booked an offline movie ticket at the multiplex window? Technology has truly come a long way and become part and parcel of our daily lives. Here are some amazing stats to illustrate this point – it took the telephone 75 years to reach 100 million users since its invention. To achieve the same user base, the internet took 7 years, Facebook took 4 years 6 months, WhatsApp took 3 years and 4 months, Instagram took 2.5 years and Tiktok took 9 months. But, here’s the clincher – most recently ChatGPT took just 2 months to cross 100 million users!

Technology is disrupting and at an accelerating pace. While the internet was the cause of technology disruption in the previous century, ‘Smart Phones’ are the disruptors of this century. Smart Phones have moved from being a mere mode of communication, to an all-encompassing device that performs a range of tasks – from banking, to entertaining to shopping to locating to teaching, besides a host of others. Social media engines like WhatsApp, Facebook, LinkedIn, Twitter, Instagram, have been the biggest beneficiaries of smart phone penetration making communication truly geography, time-zone and genre agnostic. The smart phone is expected to continue to take big leaps over the next 1-2 years as technologies like Artificial Intelligence (AI), Virtual and Artificial Reality (VR / AR) and Internet of Things (IoT) work with remotely connected devices in our house or office, help us reach our destinations in driverless cars and most importantly bring greater efficiencies.

Financial Services is a sector that has been revolutionized by technology. Starting with internet banking, technology has covered most of the commoditized aspects of the business like, onboarding, transaction processing, communication, audit and payment systems – be it UPI / IMPS / NEFT / RTGS, payment banks, payment wallets, etc. Today, Smart Phones are the new ‘Bank branches’ and our mobile number is the new customer identity. A second leg was added when the government decided to cascade technology to the grass roots using Aadhar cards (more than a billion issued so far) and a third leg when the government decided to open bank accounts for the unbanked, called ‘Jan-Dhan’ accounts. This impetus has resulted in nearly 80% Indian adults now having a bank account. The country has thus created a robust financial trinity of – Jandhan (Bank Account) – Aadhar (Biometric Identity) – Mobile (Communication Device) – JAM for short, which can be used by players across the financial services space to improve their product penetration across the masses.

The mutual fund industry too has taken technology in its strides by easing onboarding via e-KYC using Aadhar, providing a seamless transaction experience, improving transparency, expanding beyond metros and reducing the turnaround time (TAT) for pre and post-sale activities. Thus mutual fund investing can be executed in just a few clicks. Not only this, goal mapping, portfolio tracking, asset allocation assistance and fund selection assistance are also technology enabled through ‘Fintech’.

While technology has its advantages, it can also come with challenges. A key question being asked by the distribution fraternity is whether technology will replace the role of the financial advisor with the advent of Robo-Advisory services being offered by online ‘Do-it-Yourself’ (DIY) platforms. The answer is ‘NO’. This is because as a first step, one should understand areas which are technology relevant and those which are not. I have already highlighted some of the former such as onboarding, transaction processing, goal mapping, portfolio tracking, asset allocation assistance and fund selection assistance. However, other areas, which I would argue are even more important for a trust based business like financial services and  cannot be managed by technology alone include – behavioral aspects like building a relationship, understanding a customer’s context beyond the few risk based questions and most importantly, hand holding them during times of volatility.

Most investors tend to redeem their mutual fund investments during turbulent market times. This is mainly due to lack of hand holding in times of market volatility. Hence, a pure online model may not be fully effective in India where we still have relatively low levels of financial literacy and penetration. Investor stickiness, and with that long term wealth creation, can only come if investors stay invested even during periods of turbulence. While robo-advisers will emerge to address a segment of the population, the most successful models will be those that combine technology with human touch.

The role of technology in building momentum for the mutual fund industry cannot be denied. Some numbers to illustrate the growth of the industry – an all-time high AUM of close to Rs.57 lakh crore as of April 2024 growing by over 18% annualized in the last 5 years and 21% in 10 years; over 8.7 crore SIP accounts with a monthly throughput of over Rs.20,000 crore. To continue this momentum, it is important to leverage technology as an enabler to improve distribution reach across the length and breadth of the country using the JAM trinity, reducing the cost and improving the ease of investing in mutual funds.

The future is not Technology vs Humans but Technology with Humans. In closing, this quote is apt – “Technology should improve your life…Not become your life”.


(The author is Satish Prabhu, Head – Content Development – India, Franklin Templeton, and the views expressed in this article are his own)