The Indian Mutual Funds industry stands at approximately 27 Lakh Crores. Only in October 2020, the NSE saw 3182 Lakh trades conducted and a turnover of 10 Crore approximately. The stock market fluctuates either up or down every second due to fluctuations in stock prices so for Asset Management Companies and Mutual Fund Intermediaries being able to deliver on investor expectations is critical.
What do investors want?
Investors who are experts in mutual fund investing or stock market trading are few and far between. Most people are unaware of how mutual fund NAVs work, and they cannot differentiate between a hot fund or a tepid fund. They predominantly count on their financial advisors or bank sales team to guide them in the right direction. They want advice that will help them to grow their money. The code of conduct laid down for mutual fund intermediaries is very clear that advisors and sales teams must put the customer benefit first.
What do advisors want?
Advisors and different sales team members want their customers to benefit because that is how they can hope to get repeat business, word-of-mouth references, and maintain their reputation overall. However, there are some real challenges faced by those working in the mutual fund industry and stock markets.
What does SEBI want?
For one, there are some stringent compliance guidelines put into place by SEBI on investors, so intermediaries need to ensure that the system they put into place is meeting these compliance guidelines. The most important one is to ensure that the investments are done only from the bank account registered with investment companies, so technically, the payment solution that is implemented is required to have third party verification with banks. Paytm has created its payment solution suite keeping this in mind and it comes with TPV with 31 banks for net banking and all banks for UPI.
What do AMCs want?
Maintaining customer confidence and trust is very critical when dealing with a market that is volatile by nature. So, when a customer is explained about the entry NAV or entry price, s/he understands that this will be the price per unit of a mutual fund or price per share, respectively. This automatically means that if a customer places an order to buy units in mutual funds or stocks they are expecting to get a certain number based on the amount they are investing on that day.
If they place an order based on the prices they are informed today, they want the purchase to happen today so they can get the price benefit they observed. And they can get this benefit only if the mutual fund trade is executed anytime before the daily cut-off put in place by SEBI. Now there is usually a 24-hour delay in the Asset Management Companies realizing the money that a customer pays using net banking or UPI using TPV, and this delay can play havoc with the customerâs expectations.
Addressing everyone with one complete solution
Paytm has a complete payment solution suite that has been designed to ensure that AMCs can release the money on the same day through a feature called direct settlement. This allows for investment companies to trigger a direct settlement with 8 banks, on-demand. What this means is that the investment company that implements the Paytm payment solution suite gets access to a dashboard that allows them to choose third-party verified transactions and get direct settlement immediately. This allows them to place the customer orders before the cut-off time.
Also, the payment solution suite by Paytm has the option of split settlement. This means the customer can choose to invest in different assets but pay in one cumulative transaction. This delivers a good customer experience, and when coupled with the third-party verified direct settlement option, all the orders can be executed within the cut-off time, ensuring value to the customer.
For serious investors, investing with the 24-hour delay has always appeared to be a weak execution strategy but with companies choosing the Paytm payment solution suite, investors can experience the power of same-day execution before the cut-off time, which can help build the investment companies brand and improve customer experience.