BFSI VISION | Marketing


Gaurav Suri

Sr EVP and Head Marketing, UTI Asset
Management Company Limited

Challenges and Technological aspects of Marketing

Challenges Faced In Marketing/Selling Financial Services

As the financial services industry continues to recover from the economic crisis, it is critical that financial institutions deal with the longer term trends that are transforming the market and competitive environment. It is of utmost importance; market players in the industry identify risks and threats to their business and capitalize on the opportunities presented by the continuously evolving landscape.

Key challenges of the industry:

  • Lack of financial education and awareness
    Financial literacy is one of the most fundamental factors impeding the growth of penetration of any financial products in the smaller cities and towns. Investors need to be made aware of their financial goals and the means to achieve the same. AMFI and SEBI along with the Industry are making efforts for investor awareness campaign. Fund houses are also mandated by regulation to invest 2 bps from scheme expenses towards investor education and awareness campaigns, but India has a long way to go.

  • Limited Distribution network
    The second critical issue for fund houses to distribute their products in smaller cities is the availability of quality distribution infrastructure. Fund houses need infrastructure like branches, adequate number of relationship managers and sales service staff in these locations to be able to increase their sales volume coming from these geographies.

  • Distribution cost
    Cost of establishing a distribution network in B-15 cities is quite high. It is the cost per transaction or the low sales volume that makes the pursuit economically unviable or at the least challenging. Although, additional TER can be levied to extend of inflows from these cities (up to 30 bps); entering these markets have a long gestation period and requires a capital investment for distributors.

  • Cultural bias towards physical assets
    As of FY14, more than 45% of total individual wealth in India is invested in physical assets (gold and real estate). Although, in the past few decades, the investors have increasingly relied on financial assets to invest their savings; the contribution of MFs in the asset portfolio is very low. Insurance products constitute 17% of the individual savings in financial assets, whereas the share of mutual funds is lower than 3.5%

  • Tangiblising the intangible
    At the end of the day, one is trying to sell a concept, scaling up a common understanding of the solution and delivering it consistently is the key to success in this business.

Marketers’ central job is to increase demand. How easy is it in today’s world?

The Mutual fund industry needs to have an ‘outside-in’ perspective as compared to ‘inside-out’ perspective. Understanding investors’ needs should be followed by a product channel alignment. A number of change catalysts discussed in the previous section like technology, investment in B-15 cities, investment adviser etc. would be required to help ensure the overall objective of prudent growth and profitability. Increasing financial literacy will be the key to unlock the doors to B-15 and also to remove the perception that equates mutual fund to only equity. Given competitive intensity and proliferation of media it has become very difficult to do demand creation.We look at frugal innovation given the margins in the business and look at leveraging our presence across the country to deliver investor awareness sessions or surface the latent demand for products..
We also look towards technology in helping bridging this gap and creating customised propositions in an integrated fashion with our customers.

Role of technology in marketing

Technology if used well can and is becoming a game changer both to create more convenience as well as democratise access to information and products. We are already witnessing it in e-commerce environment. In financial services firms are still looking at delivery mechanisms which make it seamless and good for the investor.

Technology to expand the market and create convenience

It will help reach out to larger customers. As the cost of establishing a distribution network in B-15 cities is comparatively high, technology could play a pivotal role in garnering new AUM via internet and mobile banking channels. There are 143 million internet users in India, out of these, 24 million access internet through their mobiles. India has over 938 million telecom subscribers; more than 95% per cent are wireless subscribers (TRAI) as of May 31, 2014. 40% of these subscribers live in rural areas and can be tapped through mobile phones. Using mobile phones to purchase mutual funds could have a huge potential to increase investments in B-15 cities. Many mutual funds have already enabled purchase of mutual fund units through immediate payment services (IMPS) and more recent National Automated Clearing House system (NACH) platform, which have made mutual funds purchases for investors’- paper less. The transactions can be done either via sms or via an application. The technology is further developing to make it more user friendly and hassle free. For example, now investors can invest in SIPs of various schemes at once. A new investor needs to fill up the common application form, along with ‘know-your-investor’ documents and a registration form. After the folio is created and the investor receives personal identification number (PIN), he can download the mobile application to buy and sell fund units. The existing investors can also avail of this facility.

Technology as a democratiser of content: Use mobile, video based learning tools to educate investors.

Technology as an enabler Technology helps reduce the cost of operations for the intermediaries, save cost and paperwork making it virtually a green process. This increases convenience and frees up a lot of time for selling.

Technology is used as an enabler for the sales team to illustrate their products, showcase strengths on the go and also seek queries using pull services on mobile. Services like portfolio management and data analytics can be easily performed on the go using smart phones or tablets.

The role of marketing in driving the firm’s social and environmental sustainability impact

Our organization aims to be the most preferred brand that is admired by all stakeholders. It also endeavours to be a socially responsible organization known for corporate social responsibility. In this context, UTI MF has carved out a vision with a potent CSR philosophy. 2 key areas have been adopted in this regard: Promotion of education & reducing child mortality and improving maternal health.

We have partnerships with the NGOs such as SNEHA (Society for Nutrition and Education & Health) working for health and disease prevention as well as with Hospitals and Pharmaceutical companies.

The following have been the projects to in the year to come:

Health Vertical:

  • Framework for Swa-raksha Mitras (Community Health Workers)
  • Swa-raksha Express (Mobile Medical Van) for eye care
Education Vertical:
  • Principals and Teachers Training
  • Libraries in Schools

Our role is to bring out the heart of the organisation in public space and showcase our giving back to the environment. Trust is why people come to our brands and that is not only because we are efficient money managers, but because we have a conscience. Additionally Marketing’s role is to get participation internally and align employees to participate in the noble cause so that it truly becomes an organisational initiative. At the same time ensuring that the resources are well spent and we mobilise good will for the projects.

Defining your target customer

The needs of wealth creation for this India have changed. And not many organizations have the experience or expertise to cater to this changed India. In an effort to align our positioning and perceptions with this, we are looking at a communication campaign that targets the below 40 year olds, people with investible surplus and are aspirational. Our secondary Target audience would be colleges/ Post graduate institutions that can be brought into gambit of first time investor through our platforms on investor education.

The young Indian looks for a mix of expertise and experience in his/her financial planning needs in order to increase his/her income and fulfils their financial goals without burdening today’s income and purchasing power. We will appeal to them by demonstrating our professionalism, our expertise and our understanding of their life needs.To an India that is younger, stronger, faster, more ambitious and more impatient.