How Robo Advisory is Finding a Foothold in India

Wealth advisory services need to be flexible and accommodating for the masses and not the other way round

More and more financial initiatives nowadays are directed towards millennials, who are mostly influenced by what they see and read online.

So, it wasn’t long before Robo Advisory made its way into our minds, suggesting us how we do our investments. Robo Advisory is a segment of financial technology, where one can receive financial advice through artificial intelligence, analytics and data driven information.

Robo Advisory in India

While India is witnessing sudden sprouting of robo advisory companies, funding in the sector hasn’t been high. Yet, wealth advisory services will be on the rise — thanks to the increasing need to reduce human intervention in sales jobs.  Akhil Handa, Advisor to MD & CEO and Head of Fintech & New Business Initiatives, Bank of Baroda, said, “Wealth advisory is gearing up for high growth in the coming years, both in terms of AUM and new customers. The industry is experiencing strong tailwind from technology adoption, favourable regulatory / environmental changes (e.g. digitization) and the move towards financial assets. Technology will play a much more important role now, than in the past, given smartphone penetration, increasing comfort with online / on-app transactions and falling commissions.

“It will allow access to quality advice to the mass and mass affluent segments, not only the HNI segment on which the industry has been focused historically.”

Advisory Services Need to be Tailored to Suit India’s Needs

One of the companies in India that has seen success is FundsIndia, an online platform which offers an array of financial services, but the company had initially started off as a mutual fund platform.

“We reacted to the market needs and evolved into a hybrid advisory platform where we offer both human as well as robo advisory services. Such offerings have the rather modern name of ‘Bionic’ advisory model these days. For us, it is simply what works in this market,” said Srikanth Meenakshi, Founder and COO, FundsIndia.

Meenakshi mentioned that the challenges in this sector were very similar to other services offerings, but the needs of the Indian services market are unique that require a bottom-up approach to be understood.

“One cannot transpose a foreign/western notion of providing advisory services in India and just expect it to work. We need services that are tailored for the Indian market. Also, acceptance of pure robo solutions will not be quick or easy in India. We need to let the market mature in this regard,” he added.

Long Way to Go

Be it in terms of investments or advancements, Robo Advisory still has a long way to go in India. Talking about how the sector will keep on evolving to adapt itself to the changing market conditions, Meenakshi said, “No company can expect or force a market to accept or adapt to their services. They need to be flexible and accommodating to what the market needs, not the other way around. As the industry and service providers learn this cardinal lesson, we’ll see more and more companies offering flexible and friendlier solutions to the market and when this happens, adoption will pick up as well.” 

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