New interoperable MF platform could queer the pitch for fintechs

Sebi's move has raised doubts over the role of players like Kuvera, Groww and Paytm Money. Currently, most users prefer these players for most activities that the new platform is designed to do

The proposed common transaction platform for mutual fund (MF) investing could queer the pitch for fintech players, who are fast gaining popularity with their intuitive mobile applications.

The Securities and Exchange Board of India (Sebi) has announced that registrars and transfer agents (RTAs) will jointly develop an interoperable platform for purchase and redemption of MF units. The platform will also be loaded with other features such as on-demand financial and holding statements and change of email or mobile number. The regulator is aiming to make it a one-stop solution for the Rs 33-trillion MF investors in a bid to enhance user experience by providing the proposed platform free of cost.

Sebi’s move has raised question marks over the role of existing intermediaries such as fintech players like Kuvera, Groww and Paytm Money and large distributors. Currently, bulk of users prefer these players for most activities that the new platform is designed to do.

“MF Utility, BSE and NSE are already three interoperable platforms, so it is not clear why the regulator is seeking another such platform for ease of use,” said Gaurav Rastogi, CEO of Kuvera.

Industry players say it remains to be seen how the new platform takes shape and whether it is as user-friendly as some of the existing platforms offered by fintech players.

The new platform is being developed in a phased manner.

“The interoperable solution is conceptualized to go live in 3 distinct phases all of which are planned to go live by the end of this calendar year. The first phase covers non-commercial transactions (service requests of investors), financial portfolio, consolidated account statement amongst other features even as phase-2 will see the launch of mobility platform. The last phase covers commercial transactions and integration with ecosystem partners for several value-added services. Phase-1 is progressing at a brisk pace with a sizable quantum of work completed. The platform's sustenance could come from marketing space for the participants, integration with eco system among others,” said Sreekanth Nadella, CEO, KFin Technologies.

Fintech players say that several of the services proposed under the new platform are already provided by them. Moreover, many of these players offer these services free at present.

Industry players say Sebi’s move will force them to enhance their services and offering in order to remain relevant.

“Most wealth platforms like ours use BSE and a few have integrated with MF Utility or with RTAs directly. A new interoperable platform having a common standard will create another option for us as the regulated platform is required to share all feature application programming interfaces (APIs) with digital partners,” added Rastogi.

“This platform will require both digital and offline players to focus more towards adding value through advice. A key pain point of getting data and aligning email IDs will also get addressed,” said Sandeep Jethwani, Co-Founder, Dezerv a new age, wealth–tech/ wealth management firm.

The regulator has said that the platform should be scalable with robust cyber security protocols and supported through an API-based architecture. In this regard, the platform shall adopt the Cyber Security and Cyber Resilience framework specified by the regulator.

RTAs interoperable platform to improve investing experience in MFs

• RTAs to implement standardised practices, system interoperability among themselves to jointly develop a common industry-wide platform.

• AMCs and Depositories shall facilitate the RTAs for development of the platform.
• Platform to provide a user-friendly interface for mutual fund transactions.
• Through this platform, investors will be able to access services for all MFs in an integrated manner.
• The platform shall be fully operational by December 31, 2021.