The Digital Evolution of Mutual Funds: From Paper Cheques to AI-Powered Innovation
By Ashish Sethiya
It was the year 2006. I was working as an all in one sales-cum-service-cum-ops personnel in one of the branches of a Mutual Fund company based in the beautiful city of Chandigarh. I was performing the incredibly important task of counting the number of cheques given by an investor. That was how a 5-year SIP was done back then. I still remember the count—it was 60 cheques. One Cheque for each month, which we were supposed to deposit every month for 60 months. And this was the case for thousands of customers of that single branch.
A Decade of Disruption: The Rise of Digital Transactions
Fast forward to 2024, we are now using the super-convenient digital bank mandate for 20-30 year SIPs. There is no need for a single piece of paper. For someone who started their career in the last few years, it would be hard to believe that a Mutual Fund company once required 60 cheques for a 5-year SIP. They would likely laugh out loud at the idea.
I believe there is absolutely no way to overestimate the role of technological disruption in the evolution of Mutual Funds in India. Millions of transactions are processed digitally every day, smoothly and without the involvement of any paper. This includes digital KYC, onboarding, and investments. Today, more than 80% of Mutual Fund transactions originate digitally.
Beyond investor-facing technologies, the entire backend of Mutual Funds operates digitally. These backend players perform a variety of roles. To name a critical few: transaction platforms (like BSE), clearing corporations, banks, registrar and transfer agents, depositories, custodians, and others are involved. Every Mutual Fund transaction involves all these players, who are responsible for digitally processing their part of the value chain seamlessly, day in and day out.
Although I come from an investment background and am aware that, over the last 20-25 years, Indian Mutual Funds* have delivered excellent returns as the stock markets have been booming, I have no second thoughts in claiming that the success the Mutual Fund industry enjoys today is perhaps more a function of technological advancements than even the performance of the Mutual Funds themselves.
For instance, today there are more than 10 crore SIPs in India, and I am certain that a majority of them would not exist if the entire Mutual Fund ecosystem were not digital.
Technological Progress vs. Performance
Going forward, I think the next major wave of technological disruptions will come from the adoption of AI in business processes, whether it’s sales, service, or even investments. While many people speculate that AI might eventually become a fund manager, I believe the larger disruption will occur in client services and operations. A significant amount of low-end, manual work such as reconciliations, data entry, and basic investor queries will likely be overtaken by AI agents. I imagine an AI call center agent mimicking a real person will soon become a reality, at least for basic tasks, if not more complex ones, in the near future.
Even sales and marketing teams are likely to rely heavily on AI agents to augment—if not completely take over—their day-to-day work.
AI, combined with the massive amount of investor behaviour data available, could also lead to hyper-personalized and dynamic messaging for target investors.
With everything happening in the world of technology today, I am reminded of a super-advanced era characterized by the unforgettable words of Captain James T. Kirk in Star Trek ” “Scotty, beam us up”
(The author is Ashish Sethiya , Head of Business Development, AssetPlus and the views expressed in this article are his own)
