NK Prasad, executive director and chief operating officer of Computer Age Management Services (CAMS) in an exclusive interview with Moneylife speaks on various services offered by his company for investors, distributors and AMCs. This is the first part of a two-part series

Moneylife (ML): What percentage of mutual fund investors avail of CAMS' online services currently?

NK Prasad (NK): At this point of time we are serving about 4 crore investor accounts. Out of these, 2.7 crore investor accounts would have positive balance and the remaining are zero-balance accounts. It is difficult to identify the number of unique investors. We will have to talk about it in some metrics. Since PAN is unique for each investor we can identify each of them. In respect of the account holder, our experience tells us that each investor typically has two accounts.

Because in MFs your account remains as it is. In terms of usage of online services, we have one lakh hits on our website. Many of them look for CAMS services and information related to mutual funds. Investors who visit the site for transactions log in lesser than thousand transactions in a month. Most of them use it for other services. In addition to these hits, we also have people who are seeking mail-back services which run into 50,000 statements every month which are served to various investors.

ML: Is there fear among investors over security of online transactions?

NK: I would not call it fear. People traditionally invested with an instrument along with an application, and many people are comfortable doing that. The younger generation on the other hand is equally comfortable transacting online. Many of them take multiple channels so the population gets divided. We have ICICIdirect, fund house websites and the CAMS website. So it depends where investors want to go. But this entire population put together is a very small percentage of the total transactions even now.

ML: You launched FinNet in 2005 which is very economical as compared to other software available in the market. How has been the response to FinNet so far?

NK: It was called Fundsnet when it was launched but it morphed into FinNet. Initially it was called a distributor-centric platform to provide transactions, execution and customer service along with settlement capabilities. Online distributors said that they need the interface to hook it (up). Many Independent Financial Advisors (IFAs) said that they wanted to transact from home. So we provided all the functionalities and over a period of time we have 2,000 members.

Many of them use it extensively for customer service and for mutual-fund transactions. We get around 3,000 transactions every month. It's a powerful platform with rich features which eliminates a distributor's work. They don't have to take a fresh application form. They can pull the data from the existing database and decide which scheme they wish to invest in and create a new folio. Then they just have to print it out and take a signature of the client. Secondly, they (IFAs) don't have to go anywhere. The bank representative comes and collects the cheque from the distributor's office. So the cost of distribution and servicing the investor is very less. They can also give a holding statement, a portfolio statement to investors.

ML: Are banks and national distributors part of this?

NK: Many of the banks have built their own platform. These are mostly an extension of their wealth-management platforms. A mutual fund is a third-party product. So they have evolved their own platform over a period of time. They (banks) wanted to make use of their own system for internal use. But they need somebody to hook into to submit their transaction database. So we have provided these interfaces traditionally from the last 12 years. Banks which have recently entered the mutual fund business have two choices. They either have to use their own platform or existing software. The existing platform exists for only CAMS funds. So the bank gets to sell only those funds which are serviced by CAMS.

However, banks would like to typically sell all mutual funds. Since now FinNet is jointly provided by CAMS and KARVY there is some interest among banks. Nobody wants to use two systems.

ML: Are you planning to expand your operations?

NK: Yes, we are planning to target not only IFAs but also national distributors and particularly PSU banks because PSU banks are new to third-party distribution business.

ML: Wouldn't it be logical to say that FinNet should expand into providing a bouquet of products other than mutual funds?

NK: Yes, eventually we would like to do that. We have realised that the features of this software could potentially serve other products. There are some components which are not available currently. For example, investment advisory functions where one can relatively evaluate various mutual fund schemes, competitive products, risk assess the customer and give a valuation based on that.

All this is not available at this point of time. Currently (the) customer database is available which reduces the time and effort. If a customer walks into a distributor's office at 2.55PM he can still invest on the same day. In the past, the customer used to give the transaction slip to the IFA at 1PM or 1.30PM and the distributor in turn has to reach AMCs or the CAMS/KARVY branch which took lot of time. Now they can transact on a real-time basis.