CAMS Believes Innovation Is Key To Long Term Growth

Tell us a bit about CAMS's business model. What innovative solutions do you intend to bring to the market in the future, and how will they add value to the Mutual Fund ecosystem?
CAMS are SEBI registered R & TA (Registrar & Transfer Agency) specializing in investor servicing and CAMS has been an integral part of the Indian Financial infrastructure for over 25 years.  Our Company's mission is to pursue growth of our clients, which in turn drives our growth. With the Asset Management Companies (AMC), we engage as a strategic service partner to co- create service delivery model and strategic customizations aligned to vision & business strategy of each AMC. Our management processes, governance systems are aligned to deliver brand promise of each AMC client.  

Our service stack is primarily to 3 important stakeholders of the industry, Asset managers managing mutual funds, investors and distributors. We provide a full range of life cycle services to investors and intermediaries of 15 Asset Management Companies, excluding advisory & distribution services. The service canvas includes account set up, transaction processing, record keeping, customer care services, commission administration, risk management, compliance and value-added services. We provide investor and distributors services through a national network of over 260 service centres and multi-locational call centres supported by a large centralized back office.

We serve 63% of assets of the MF industry, about 2.8 crore active investor accounts and 75,000+ intermediaries.

CAMS believes innovation is key to long term growth and has pioneered many industry first  technology led innovations like the Consolidated account statement across various Mutual Funds, an original innovation of CAMS in 2008, which has now become a securities market practice; FundsNET distributor platform which led to development of similar utilities. As part of our digital strategy to deliver superior customer experience, we have offered mobile app myCAMS for Individual investors; GoCORP platform for Institutional investors and Aadhaar based eKYC app. We offer investor friendly services to manage multiple mutual fund accounts via mailback services, PAN based services and even a CAMS One time Mandate.

We continue to work closely with financial ecosystem participants to bring speed, ease and convenience leveraging emerging technology trends, Fintech innovations, innovations in payments & settlements like UPI, AEPS, e-Mandate to design and deliver new service innovations to Indian Mutual Fund investors.
 
Do you think that the presence of multiple repositories creates inefficiencies for distributors, who resultantly need to cull data multiple sources and collate them if they are to run analytics on their business?
The Mutual Fund RTA service is not fragmented among multiple players.  There are only two large players.  Over the years, the data standards and reports have become harmonized to a great extent. Distributors are key partners and are supported with convenient options like SFTP channel, variety of distributor platforms including stock exchanges.

CAMS aggregates 94% of industry data and provides a BI service Data Compass, customized for large distributors.

How do you foresee Robo Advisory and DIY platforms shaping up in the next five years? Do you feel that there's a risk to the industry from such platforms, in terms of bringing on board direct, unadvised clients who don't fully understand Mutual Funds?
With access to well researched data and digital technologies DIY investor confidence is increasing. Robo advisory platforms using rich analytics appeal to younger investors.   Increasing diversity of customers and their needs will support emergence and co-existence of multiple distribution formats. Regulatory initiatives for distinguishing advisory services from transaction services and technology led initiatives of many large distributors will help increasing investor confidence. On our part we deliver wide variety of investment performance reports to investors on demand at no cost.

We believe that multiple formats are needed to cater to diverse needs of growing individual MF investor base.

What's your take on the dramatic surge in the number of equity oriented SIP's in recent times? Do you believe that robust SIP inflows will continue even if markets were to remain muted or head south in the near future?
Increasing investor awareness and confidence in Mutual Funds has helped the explosive SIP growth. Mutual Funds, AMFI and Intermediaries have all contributed to building this awareness.  CAMS processes about 95 lakh SIPs every month.  Staying invested through market cycles and volatility is a behavioural change that can be inculcated only through sustained investor awareness on benefits of professional fund management.  SIP is a superior way to get best return form the volatile equity asset class. We see an increasing trend in investors holding their SIPs to maturity and even renewal.  

Tell us a bit about the CAMS MFDex.
MFDEx is the most comprehensive Data Bureau service designed to present rich, accurate Mutual Fund data in an intelligent structure using multi-dimensional parameterisation. The application integrates participant Mutual Funds' aggregated data and enhances to present relevant peer market data (anonymised) to develop a single view across several parameters and dimensions.  

Launched way back in 2002 for CAMS serviced funds, MFDEx data repository has been continuously expanded and enriched to meet changing business dynamics, sales and marketing needs. The compelling benefits of the application has drawn 12 Mutual Funds (not serviced by CAMS as RTA) to join the platform.

MFDEx remains an unmatched Sales and Business Intelligence tool aggregating data of most Mutual Funds representing 94% of Indian Mutual Fund industry data.

MFDEx allows the participating Mutual Fund to review its own performance for the period, its performance in a historic period and its performance in relation to the aggregate MF industry aggregates either at present or in an earlier period.

How is MF penetration into B-15 cities shaping up, and what role is CAMS playing in this vital push?
SEBI impetus to penetrate into B-15 is serving well and investor participation from B-15 locations is seeing a steady increase. From having a share of 2% of assets just few years back, it has grown to nearly 13% now. Investments from B15 locations are dominantly in equity funds with nearly 63% unlike T-15 locations where it is only 33%. We see increasing trends in both new folios and SIP registrations in B-15 locations.

CAMS has believed in investing ahead of business needs with the premise that availability and access will lead to category growth.  RTAs have been the face of MF industry in most of the towns in India. While a typically large AMC might have presence in 80 to 100 locations, we have presence in around 260+ locations. Investors and distributors have convenient access to 15 Asset Management Companies under one roof.

CAMS technology platform and real time connectivity of service centres to central data centre assures high standards of services irrespective of investor location and mode.  There is no differentiation in service turnarounds for transactions submitted via paper from a remote location. This increases investor trust and confidence, vital to growth.  Investor on-boarding conveniences using Aadhaar based eKYC, call centres with multi lingual capabilities are extensively used in B-15 locations.

What are the key challenges that you foresee for the MF industry in the next couple of years? What pre-emptive steps can be taken to minimize their impact?
There is visible shift in preference towards financial assets over physical assets and first signs of higher MF allocation.  Deterrents such as lack of KYC documents have been overcome with the introduction of Aadhaar eKYC to start an MF investment pretty much instantly. Despite this shift and process simplifications, Mutual Funds remain urban centric, elitist product category and is only about 13% of GDP when compared to average 50% in mature markets.

Awareness and Distribution remain as two key challenges.  While the licensed intermediaries base is over 75,000+ active distributors are less than 40,000. This pales in comparison to the Insurance industry with 20 lakh agents. PSU Banks with reach and investor connect are yet to tap into their potential.

To seize the opportunity developing skills and capabilities of IFA is critical. IFAs own 35% of equity AUM, contributes >30% of new MF accounts. Industry must develop IFAs, support with technology tools, provide management development support and assist in CRM. MF distribution needs to become an attractive profession with the younger generation entering the work force.

Lastly, do you feel that there's scope for new entrants in the space that you're operating?
Our scale and specialization brings several advantages to our clients such as deep knowledge and experience of serving the Indian investors for over 2 decades, vast resource pool with the domain knowledge, mature operations, risk management and governance practices. Our scale helps to deliver significant cost benefits as well.

MF industry has significant potential for growth given that currently less than 5% of household savings are invested in Mutual Funds despite compelling investment returns & tax benefits. Mutual Funds as a growing industry offer enormous scope for credible & sustainable business models.