Wealthtech_Ruchin Goyal.pptx 0

WEALTH TECH & ROBOADVISORY

Ruchin Goyal Partner and Director, BCG

1st March 2017

Wealthtech_Ruchin Goyal.pptx 1

Note: Data for 2015, Bank deposits includes CASA + Term deposits Source: Sebi MF Opportunities report, BCG Global Asset Management, BCG Analysis

India is underpenetrated in MF industry

0

50

100

India

8%

Japan

87%

20%

UK

57%

Europe

87%

US

AuM / GDP (%)

0

50

100

150

India

15%

Japan

18%

UK

71%

Europe

75%

US

139%

AuM / Bank Deposits (%)

53 37 10 4 33 GDP /

Capita ($k)

Significant growth opportunity in India as economy matures going forward

Wealthtech_Ruchin Goyal.pptx 2

Indian asset management industry in breakout phase

1,693

587505

79

+4% +45%

Dec-16 Mar-12 Mar-08 Mar-03

+25% Formative

Slowdown

Breakout Average AuM (INR '000 Cr)

Note: For 2020, USD 1 = INR 68 taken as conversion rate Source: AMFI, BCG Analysis, CAMS serviced funds data

Indian asset management

industry in high growth phase..

...Few trends shaping the

industry going forward

"With growing retail participation, low interest rates, digitization and introduction of new

products, the mutual fund (MF) industry is expecting to double its assets under management

(AUM) to Rs 35 L crore over the next five years.." – Business Standard, Jan 2017

AMCs leveraging technology to create

new digital propositions

Exponential growth in digital users

driving direct retail sales

Significant untapped potential in B-15

cities

Growing HNI base and share of wallet

New regulations challenging traditional

business models

Wealthtech_Ruchin Goyal.pptx 3

Digital sales has seen breakout growth in the last few years

404

150

115

FY17 YTD FY16 FY15

+87%

CAGR by asset class : Cash : 256%, Equity : 40%, Debt : 42%; One cash transaction of 1.7 L crore has been excluded in FY17 Source: Digital sales data from CAMS

"Digital is the way forward for all

transactions and we see it having

positive impact on mutual fund."

- RMF CEO Sandeep, Dec 2016

"Trend going forward… certain segments

of investors will make direct purchases,

just like they are making direct purchase

of cinema tickets… and buying products

online"

- U.K. Sinha, Nov 16

Gross Digital Sales (INR '000 Cr)

Wealthtech_Ruchin Goyal.pptx 4

Digital has been used across the mutual fund value chain to enhance customer experience

Sourcing On-boarding Advisory Transaction & Servicing

Aadhaar based

e-KYC

Replacing in-person

verification for KYC through

webcam - Wealthy

Birla – One swipe

transaction

Direct to payment page

with pre-filled form

from call center

Gamified

aspiration setting

(Dil Ke Ameer)

Intelligent

portfolio mgmt

Robo advisory

Wealthtech_Ruchin Goyal.pptx 5

Birla Active Account has taken the industry by storm owing to its ease of use & effectiveness

Very simple to use app. Can invest in MFs in a jiffy, is

a good gateway to investments

Invested my deposited money in 1 minute, and

added security ensures peace of mind

Quick registration. Smooth transactions. Great UI

So easy to get better returns from your idle money,

whenever you want to, hassle free as well 315k current downloads (as of Jan end, since Nov start)

Wealthtech_Ruchin Goyal.pptx 6

Capitalizing on this digital growth, several types of players have emerged in this segment

Digital advisor/ Intelligent

portfolio mgmt

Yu'e Bao

Robo

advisory

Online investment

channel

Source: Press search, BCG Analysis

Wealthtech_Ruchin Goyal.pptx 7

Digital value propositions to differ by customer segments

Mass Aspirers (untapped market)

Lower cost to serve

via e2e digital

solution

Mass Affluent

High quality and

customized advice

delivered digitally

Active traders

Dynamic advise and

low cost of

transactions

High Net-worth Individuals

Digital RM and self

service tools

Wealthtech_Ruchin Goyal.pptx 8

Globally, significant funding going into machine learning and robotic automations startups

0

700

1,400

2,100

2,800 +340%

2020

2,200

2019

1,500

2018

900

2017

500

AuM ($B) "New money"

From existing portfolios

1.21.0

0.60.4

0.00

0.45

0.90

1.35

1.80

2013 2012

Start up Funding ($B)

+200%

2015 2014

Significant funding inflows

globally into machine learning &

robotic automation..

..with over 300% growth expected

in AuM managed by robo advising

Source: Reuters, Gartner, Venture Scanner, Press search

“In India, Out of 39 fintech companies, ~10 have

announced receiving funding in robo advisory

domain with FundsIndia ($15.4M), MyUniverse

($9,7M) and Scripbox ($3.2M).." – Groww, Nov'16

“Pure transaction-based distributors who are

thriving on facilitating convenience will face heat

when robo advisers become popular and more

accessible..” – Sadique N, Network FP

Wealthtech_Ruchin Goyal.pptx 9

Points for discussion

Are we ready? Customers, AMCs, Distributors

Which model will work better? Fully online automatic asset allocation, advisory, human assist

What are the implications for different

stakeholders? Distributors, AMCs, Wealth tech & robo advisories, regulators etc..

What role can digital play for different customer

segments? HNI, Mass affluent, Mass aspirers

Thank you

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