How This Investment Services-based Fintech is Balancing between Human Touch and Technology
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A person who is looking to start investing in mutual funds (MFs) is stymied by twin problems – where to invest and how to invest. The first problem is one of choice and confusion – about the product categories, suitability, appropriateness etc. The second problem is of the technicalities – KYC, forms, physical travel etc.
So, when Srikanth Meenakshi, who had just returned from the US and was quite keen to invest in Indian stock market through mutual funds, realised the onboarding processes and seeking information is nothing but an onerous task. His friend C. R. Chandrasekhar and he both had experience in the investment services space, and this episode was their entrepreneurial calling.
In late 2008, the duo started FundsIndia and in 2009 they launched their digital platform to distribute mutual funds in the country. Discussing his entrepreneurial itch with Entrepreneur Media, Meenakshi says, “It was a case of market opportunity meeting our personal talents, meeting an entrepreneurial ambition. Also, the timing of it in the middle of 2008 crisis, ensured that we were not distracted by other opportunities (jobs from MNCs etc) for ourselves. We were able to dedicate ourselves entirely to this enterprise and get it off the ground.”
Even though FundsIndia was backed by Meenakshi and Chandrasekhar’s expertise, the men lacked the background in the domestic industry and hence, the market proved a hard nut to crack. It was not until 2014 the MF distribution company saw a real good uptick in the business.
“Since then, however, it has been nothing but upward momentum for us. At this time, with more than Rs 5000 crores in asset under management and 2 lakh investors across the country, we are recognized as the market leader in the space of investment-oriented Fintech enterprises. But it was a hard journey from zero to here,” the co-founder claimed.
The financial services sector is going through a major digital disruption, however, the mutual fund's industry is busy ignoring the tremors. The entrepreneur feels the industry should have adopted digital-first outlook to the business three years ago.
“Even now, when regulations are passed or products are launched, it is done with the paper-form world in mind. The market has evolved significantly, and products that are not digital first will get left behind quickly,” he shared while adding that, “. At FundsIndia, we have been at the vanguard of this transformation, and have been pioneering this switch-over. However, it would be of great benefit to the larger market if the entire industry adopted this attitude and approach.”
With the advent of new age technologies like artificial intelligence and machine learning, Meenakshi feels investment services is well positioned to use these solutions. Reasoning his opinion, he explains, “There is a lot of scope for managing customer behaviour and expectations in the areas where the predictive ability and customization techniques provided by AI and machine learning can come in really handy. Along with data analytics, these offer great opportunities both for our customers and our business.”
FundsIndia operations range from technology implementations to call-centre servicing to advisory and support. With time, the entrepreneurs have also realised one cannot simply wave a technology wand over scalability issues and hope it would disappear.
Meenakshi adds, “There are some aspects of the problem that needs human scaling – one cannot provide customer support in a completely automated way to thousands of investors with very nuanced issues. And it applies even more so to advisory requirements.”
So, when it comes to advisory and support, the online platform relies more on human power to solve the problem with technical support as the duo believe that scalability is the cornerstone of the enterprise, and solving that is the heart of FundsIndia's business differentiation.
Beyond Mutual Funds
Apart from the mutual funds, the company also offers direct stock investing on its platform as an allied product. On asking whether FundsIndia will go beyond mutual funds in the near future, Meenakshi says yes but at a measured pace.
He shared, “To foray into other, non-investment financial products, we would tread carefully. We would like to achieve a certain position in our primary business before venturing into such products, so we have an anchor point. However, the opportunity from a business point of view is significant and the services we could provide as a wider financial service platform would be immensely beneficial to our customers.”
Additionally, the company is aiming to manage 50,000 crore assets and serve more than a million customer in five years.
In the past, FundsIndia has raised three rounds of funding. In 2010, the company raised series A round from Inventus, in 2012, series B from Foundation Capital, and in 2015, series C from Faering capital. In total, the fintech has raised around Rs 95 crores in funding.
At this time, FundsIndia is not active in the market for additional capital. However, it is likely to do so within the next 12 months.