RTAs are the backbone of the mutual fund industry, whose growth has been primarily pivoted on technology; be it use of innovative platforms like online transacting, online self-help tools for investors and distributors, intermediary interfaces, or exchange of data. Without technology, could one imagine redemption money being remitted into bank accounts within 30 minutes of a transaction? Not just that, redemption payouts nowadays are directly uploaded onto the bank’s system through a server-to-server integration. Who could have imagined an ‘Any-day SIP’ or a ‘Step-up’ SIP with insurance, asset allocation features and many other similar products and product variants a few years back?
Let us now also understand the pain that an RTA goes through in supporting multiple stakeholders in this industry. RTAs are the lynchpin that support the entire mutual funds ecosystem, as they have to provide seamless interfaces to asset management companies (AMCs), fund accountants, exchanges, depositories and depository participants, couriers and postal agencies, channel partners, mutual fund utilities, payment aggregators, multiple banks, and others. In effect, the RTA has to process data and information from multiple sources, and in multiple formats. Is it possible for all these stakeholders to support the file types and formats suggested by the RTAs? The answer is no, because it is practically impossible.
Finally, it is the RTAs who have to support all these stakeholders with the files and formats that each individual stakeholder’s system has. Be it data exchange through Excel, DBF, CSV, text or as advanced as XML formats or data exchange through Web-services,; it has been the efficiency of RTA systems that have made this process seamless. The RTA system accepts images from different stakeholders in different formats, converts and stores them in its database in the desired formats. If the RTAs’ systems are incapable, accepting input files and generating output files as per each of the stakeholder’s requirements would not be possible.
More importantly, the RTA industry is not yet a completely mature industry and is still in an evolutionary phase. In this process, there are many regulatory guidelines and changes in process, and products that are introduced by AMCs simultaneously within short timelines. It is the high-end technology of the RTAs that enable these kinds of turnarounds, in many instances overnight. Can we imagine process and technology implementations within such stringent timelines in any other lateral or parallel industry?
However, at times, our strengths are misconstrued or projected as weaknesses. This refers to a recently published article in Mint, ‘Mutual fund operations are still in the dark ages’. In this context, we would like to clarify that RTAs’ efforts have always been towards supporting each stakeholder. Time and again, RTAs have upgraded their systems to make them secure, foolproof, risk mitigated and yet highly customer friendly.
We would, in fact, state that RTA systems are the backbone of the industry’s growth. We not only support introduction of game-changing products, product variants, and regulatory changes rather quickly but also facilitate and encourage other stakeholders as well to innovate and come up with initiatives with minimal technological changes at their end.
One of the best indicators of the RTAs’ technology competence is the complaints data. In the past several years, in spite of continuous growth in investor base and transactions, the overall number of complaints has been minimal. This would not have been possible if technologies were obsolete or processes were inefficient as is being suggested in certain quarters.
Mutual fund operations are certainly not in the dark ages. In fact, it is the RTA systems and capabilities that have provided confidence to clients, regulators and other stakeholders to introduce path-breaking products, systems and recommended process changes, that too in aggressive and minimal time frames.
Last but not the least, India is perhaps the only country that facilitates a plethora of transacting channels like service centres, exchanges, online, mobile apps, debit cards, mutual fund utilities, SMS, and call-n-trade; which are coupled with an even more complex proliferation of delivery channels through snail mail, email, SMS, online, teller machines, apps, channel providers, and others. RTAs operate in such a dynamic market by providing one of the most efficient customer services.
In fact, the mutual fund industry can be laterally benchmarked with the best of banking services to the extent that investors virtually suffer from a choice of plenty.
Public data on mutual funds suggests that the complaint-to-investor base ratio is perhaps the best in the banking, financial services and insurance (BFSI) sector, and much ahead of the banking industry, which is more than a century old.
V. Ganesh is chief executive officer, Karvy Computershare Pvt. Ltd.