imgbd Futurist Edge: Technology Perspectives

A platform that truly understands the Indian investor

Sanjay Shah, Prudent Corporate Advisory Services, Ahmedabad

28th May 2016

In a nutshell

Prudent has launched FundzBazar - a comprehensive online platform that truly understands the Indian investor, on the basis of which, it empowers Prudent channel partners to offer great service to their clients.

Sanjay bhai takes us through the many innovations he has introduced in FundzBazar, including a family log-in, single OTM across all fund houses, SIP Pause, Step-Up SIP, multiple types of triggers, wrap accounts and more.

For distributors who would like to expand their retail footprint rapidly and yet offer good advice and excellent service, here is a platform that offers a great way forward.


WF: Congratulations, Sanjaybhai, on the launch of your new platform FundzBazar. It appears very comprehensive and a lot of thought has gone into many details that are typical in our Indian environment. What is the biggest driver that you had in mind when you designed this initiative?

Sanjay Shah: There's been a lot of noise in the market on digital, and though there isn't a lot that has already happened in this space, we believe the next 5 years will see a huge change in the financial landscape on the digital front. We are very clear that we want to occupy this space and want to equip our channel partners to be fully future ready, and serve clients the way they wish to be served in the coming years.

WF: There are a number of very interesting features that you have built into FundzBazar. Let's start with the family log-in : how does this work? How do you manage to provide a single log-in for all members of a family?

Sanjay Shah: Family log-in is a big benefit we have been able to provide in FundzBazar, and a huge amount of work has gone into offering this convenience to investors. Indian families usually have one decision maker, who invests in the names of all family members. We wanted to give this decision maker the opportunity to have a single log-in, through which he can transact for all family members, rather than having to remember multiple log-in ids and passwords. We consulted a leading Mumbai based lawyer, who helped draw up a comprehensive set of initial undertakings and authorizations whereby family members authorize a single member to transact in their accounts. This enables us to offer a very high level of convenience at the very first stage itself - of a single log-in for the entire family. Within the family, you can set up any combination of holders and invest in any one or more of those combinations, from the same log-in.

WF: The other feature that brings in significant transaction convenience is your OTM - one time mandate. How does this work?

Sanjay Shah: I think the biggest innovation which has happened as far as our mutual industry is concerned is the OTM. Moving from ECS mandates to the NACH system (National Automated Clearing House) has enabled us to set up OTMs at a client level across all his holdings across all fund houses.

The one time mandate that a client gives is to Prudent, which is utilized through TechProcess - our payments partner - which is the same framework that AMCs are using for their OTMs. The difference is that an OTM to Prudent enables an investor to set up OTMs effectively across all fund houses, rather than registering individual OTMs with each fund house.

Based on the limits assigned in the OTM, we can enable transaction execution very easily and swiftly for investors, as money will be directly collected from their accounts and sent through to fund their purchase transactions.

We are educating our channel partners to help their clients understand the power and convenience of setting up OTMs with reasonably high limits. There is a general tendency to use OTMs only for SIPs - we are encouraging investors to think of higher limits that can enable them to transact lump-sums also, to the extent they are comfortable.

Let me give you examples of where these OTMs will be very useful for investors, keeping in mind typical investor behavior which we have observed. Many investors take an investment decision, but still try to time it to some extent. Then, they also want to try and time their exit, based on a variety of triggers.

We have provided a range of triggers for this purpose. Suppose there is money parked in a liquid fund, and the investor wants to switch into equity when the market say drops below 25,000. All you do is set up a trigger that is linked to Sensex level. When Sensex closes below the level, either a transaction is automatically triggered, or a communication is triggered to the investor, seeking a confirmation - depending on how he wants to set it up. The trigger coupled with the OTM allows for transaction execution exactly when the investor wants.

Some clients want to book profits when the absolute return reaches a certain level - say 20%. Again, all you do is set up a trigger. There is also an NAV level based trigger, which is still very prevalent in the market, though we all know that NAV level may not be a relevant metric at all.

Now, think of this from an IFAs point of view - from my channel partner's point of view. So many times, they go and meet clients, who agree on an investment strategy but want to effectively wait for a certain trigger to actually execute the plan. It becomes a huge challenge to track every trigger of every client and reach out to them instantly and then collect forms to execute - all within a day. When my partner sets up a trigger on FundzBazar after a conversation with the client, it gets executed exactly when it should or at least a confirmation is sought immediately.

WF: Another aspect you have built innovative features is in SIPs - which is the core retail proposition for the industry. In what way does your platform enhance the SIP experience for IFAs and investors?

Sanjay Shah: SIPs are one of the biggest success stories for our industry - 1 crore SIPs is not a small number by any yardstick. When we look at SIP behavior, there are two aspects where we are seeking to deliver a better experience: one is a solution to reduce SIP stoppages and the other is to enhance SIP amounts to optimum levels per investor.

SIP stoppages occur for two main reasons - one is some nervousness about markets and the second is temporary cash crunch with investors. March is typically tax saving month - many investors don't have money to fund their SIPs, so they stop them. Then its another effort to get another SIP started. Similarly, June is annual school fees time - another month where SIPs get stopped due to cash crunch. And of course, if markets turn volatile, SIPs get stopped. Every SIP stopped is potentially a long term goal not achieved, due to short term considerations. So, what we have done is to provide a SIP pause button. You can pause any ongoing SIP for upto 3 months. 4th month you will have to resume it, else it lapses. This 3 month pause window gives breathing time to investors to overcome either their temporary cash crunch situation or their fear about market volatility. You can pause a SIP for a shorter period - of even 1 month, and then resume it. By taking care of short term problems, we are trying to enable investors to remain committed to long term goals. For my channel partners, the effort involved in keeping clients on track against their goals reduces significantly, when you have a pause rather than an exit option for SIPs.

Second aspect on SIPs is to encourage automatic top-ups on SIP amounts to ensure that incremental savings are efficiently invested. Salaries rise every year. Increments, if invested effectively each year, will go a long way in helping investors reach their goals. With this in mind, we have given a Step-Up SIP feature, applicable for all SIPs of all AMCs, where you can specify semi-annual or annual increases in SIP amounts until you hit a particular target SIP amount. So, you can start a SIP at Rs.2000 and then opt for semi-annual increase of Rs.500 until the SIP amount reaches Rs.5000. Once you put this into the system, your top-ups will happen automatically over the period specified, thus ensuring that incremental savings get invested without any further effort. For my channel partners, this becomes a one- time effort to plan for goals, and then let the system automatically handle the rest, over the years.

The entire process for both these SIP features has been created by us, so that maximum flexibility is given to investors on SIPs, seamlessly, in the same folio.

WF: You also enable goal based investing and goal reviews with a lot of flexibility in managing investments against goals - can you please elaborate on these?

Sanjay Shah: We have provided a range of calculators to help investors make goal based plans. Once a goal is crystallized, investors can assign any of their existing investments to the goal, after which goal based statements will be available which show them progress towards each goal.

As we know, life is dynamic and so are goals. Goals change and sometimes, relative importance of goals also change over time. Recognizing this, we facilitate goal reviews not just at the calculator level, but also by reassigning investments from one goal to another. This then allows investors to track and achieve the most important goals successfully.

In the pipeline is a new series of scenario analysis reports for each goal. Based on progress so far against a goal and time left for goal maturity, we will provide a range of alternatives that can help the investor meet the goal, if it looks as if the current run rate is not going to be sufficient.

WF: What are the elements that have gone into the dashboard that sits at the front end of this platform?

Sanjay Shah: There are over 250 pages in this comprehensive platform - so, the big challenge for us was how to bring all the essential data points together on a single page - onto the dashboard - to enable users to get a quick summary of their portfolio and enable them to drill down into aspects they wanted to see more of.

What you will see in the dashboard is a bird's eye view of the portfolio valuation, status on current transactions and alerts, and an analysis of holdings. We have also created a facility for an investor to pick up from where he may have left off last time, on any transaction execution. Lets say you wanted to buy an ELSS fund, you went through the various screens, added a fund to the cart and when you came to the payment aspect, for some reason, you deferred the decision. From the dashboard, you can go to any of these pending transactions and pick up exactly from where you left off.

I believe our dashboard is so user friendly that maybe 90% of users will not need to go beyond it at all, for any updates they want on their portfolio from time to time.

WF: You also have wrap accounts built into the platform. Is this a robo-advisor within the platform?

Sanjay Shah: In wrap accounts, we offer three model portfolios for three levels of risk appetite, with funds pre-selected on the basis of an internal system that considers over 50 distinct quantitative parameters. Minimum amount for a wrap account is Rs. 5 lakhs. While we will review portfolios every quarter, we will not make any changes in the portfolio within the first 12 months after the investor has bought a wrap portfolio. The review process and transactions thereafter if any is automated and execution is done on the basis of a discretionary PMS mandate given to us.

While clients cannot make changes on their own in the wrap account, we have given them a facility, on the click of a button, to unwrap the portfolio - to move all holdings from the wrap account to a regular account - from where they can then buy and sell as they please.

There is presently no additional charge for wrap accounts, but from a system perspective, we have built in the capability to charge a fee, as and when required.

WF: Do your channel partners get all of these facilities or are there some that are meant only for investors who use this platform?

Sanjay Shah: Every feature in FundzBazar is available for our channel partners. It has been built with a view to enable them to harness technology and scale up efficiently. The only difference is that for partner initiated transactions, a confirmation from the investor is needed for execution - as this is not being done on the basis of any Power of Attorney.

We are shortly going to introduce a mobile version of FundzBazar, which you can operate from your mobile phone. Our partner can initiate a transaction from his desktop or his mobile, which will send a confirmation message to the investor. The investor can confirm or reject the transaction from his mobile phone or his desktop. Confirmed transactions will be immediately executed.

We have made sure that the platform protects the interests of our channel partners. Tomorrow, if an investor registers on FundzBazar independently, the system will identify his PAN number and tag the account automatically to a channel partner, if the investor has previously transacted through this partner.

What we want is to enable our channel partners to scale up efficiently, to reach out to more investors with the confidence that there is a system that will enable them to service more and more clients, with the same level of efficiency, if not more, than what they can manually do for a limited number of clients.


Content is created by Wealth Forum and must not be construed as an opinion by DSP Blackrock MF.

Share this article