Can AA systems and AI unlock innovation in mutual funds?

livemint.com:

Mint’s Mutual Funds Conclave 2023, held recently. The panel on ‘AA and AI—What’s the next wave of innovation in Mutual Funds’ comprised Varun Sridhar, CEO, Paytm Money; Chetan Mehra, head - quantitative investment, PMS & alternative investments, Bandhan AMC Ltd; and Vetri Subramaniam, chief investment officer, UTI AMC. Edited excerpts from the panel discussion: What, according to you, will be the next big innovation in the MF industry? Chetan: I see passive investing and a lot more quantitative investing coming through big time.

Varun: There are two ends of the spectrum to look at. One, how do you get UPI (unified payments interface) users to invest in MFs. There are about 300-350 million UPI users but the MF base is small.

It is easy for people to buy something for ₹500 with UPI but to make your first investment in MF for ₹500 involves hopping through KRAs and other things. So, an asset management company (AMC) or a tech company like us will flip this around to make investing easy with UPI. The day that happens, this whole sector will see an important change.

The second breakthrough will be the account aggregator system. On the other end of the spectrum are people with more wealth and are advanced investors. When asked what their wealth is, people generally calculate their household wealth.

But, because each family member has an independent PAN and thus, different accounts, it is difficult to determine and refer to the family wealth at one place. I think the account aggregator system can flip this problem statement and make it easy to see one’s wealth in an app. Vetri: We are a fiduciary business and I wouldn’t prioritize innovation for the sake of it.