Master Talk: Digital Transformation in Asset Management
Join us for the conversation “Digital Transformation in Asset Management and Role of Technology in harnessing data” with Swarup Mohanty, CEO, Mirae Asset Investment Managers (India) Pvt. Ltd.
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Transcript
00:00 (upbeat music)
00:02 - Good evening, everyone.
00:25 Hope you're doing well
00:26 and really taking good care of yourself.
00:28 Welcome back to the fourth episode of MasterTalk series.
00:31 Today, we will try to understand from our esteemed guests
00:34 as to how technology has transformed
00:36 India's asset management industry.
00:38 But before we get started,
00:39 let's look at some of the key stats
00:41 around our asset management industry.
00:43 The asset under management
00:46 was stood at rupees 7.3 trillion as of July, 2011,
00:50 has now grown to rupees 35.3 trillion
00:53 at the end of July, 2021.
00:55 This is almost a five-fold increase over the last 10 years.
00:59 The total number of accounts or folios,
01:01 as we commonly call them in mutual fund parlance,
01:03 stood at 105 million at the end of July, 2021.
01:07 Having said that, for a country with 1.4 billion people,
01:13 it still translate into a very low penetration level.
01:15 India's mutual fund AUM to GDP ratio
01:18 remains significantly low at 15%
01:21 compared to a global average of 60%,
01:24 presenting itself as a huge opportunity for future growth.
01:27 If mutual funds have to reach the masses,
01:30 technology will play a very impactful role
01:33 in the whole journey,
01:35 right from creating strategies
01:37 to making it sure that these reaches to the end audience.
01:40 In fact, today, one can buy mutual funds sitting at home,
01:44 which was absolutely impossible to do a few years back.
01:48 On that note, let's start today's episode
01:52 on the MasterTalk series on digital transformation
01:55 in asset management and role of technology
01:57 in harnessing data.
01:59 This episode is powered by Refinitiv, an LCEG business,
02:02 one of the world's largest providers
02:03 of financial market data and technology,
02:06 in association with Outlook Money.
02:08 I'm Harish Toshnival, your host for the session.
02:11 I'm customer success lead for the investment solution team
02:14 at Refinitiv South Asia.
02:16 And it's an honor for us to have Mr. Sourabh Mohanty,
02:19 Chief Executive Officer at MIRE Asset Global Investment,
02:21 India Private Limited.
02:23 Let's talk to him and find out his views
02:26 on the current market scenarios
02:27 and the winning strategies that he has been deploying.
02:30 Mr. Sourabh, India is definitely shining
02:34 as far as the growth of asset management industry is
02:36 concerned and the potential looks pretty huge.
02:39 At the same time,
02:40 we are seeing some pocket of challenges as well.
02:43 We have seen pressures on margins, increasing regulation,
02:47 shift from active to passive investments.
02:49 And very recently we have seen growth of sustainable
02:52 investing in the Indian market.
02:54 And most importantly,
02:55 the impact of the coronavirus pandemic resulting in
02:58 buy side firms accelerate their operational changes
03:01 and digital transformation.
03:03 So with that background,
03:06 I'd like to understand from you, Mr. Mohanty,
03:08 what are the current trends of digital transformation
03:10 that you are witnessing
03:11 in the Indian asset management industry?
03:13 - Hi Harish, thank you so much for having me on the show.
03:18 Yes, these are very interesting times
03:20 and I think you put them in the right perspective.
03:24 I won't call them challenges, the ones you enlisted.
03:27 I would say these are progression of the industry.
03:30 And as we progress towards a mature industry,
03:33 these are the stepping stones that one go through.
03:37 Yes, one of the startling ones has been
03:39 the digital transformation.
03:40 I remember when I joined Mirai Assets some 10 years ago,
03:44 it used to be a completely physical world
03:46 of transacting.
03:49 And one of my bosses had told me,
03:53 how long will it take for your product
03:54 to be known across the country?
03:56 And I thought that was a very weird question coming to us.
03:59 And I asked him, how long does it take in South Korea?
04:02 And he said, 45 minutes,
04:04 because everybody has a smartphone,
04:05 we'll reach everybody in 45 minutes.
04:08 And that's when it dawned to me that
04:10 we are on this threshold of change as we speak.
04:13 And a bulk of the change across the segments of work
04:17 that we do will be digitally driven.
04:20 And if you look at us since then,
04:23 we are housed in about 14, 15 cities,
04:25 and we have no wish to be there in 200 cities,
04:27 because fundamentally we believe
04:29 that the penetration will happen digitally.
04:32 And whether it's mutual funds or across our lives,
04:35 you've seen, we started buying vegetables online.
04:37 So mutual funds are a matter of time, right?
04:40 So I think that's something
04:42 which was supposed to happen,
04:44 but the pace at which it's happened in the last two years
04:47 has been pretty phenomenal.
04:49 I mean, from starting getting, say, a basic VPN
04:52 for all our members of the team,
04:57 to say, moving to cloud at the backend
05:00 from the server capacity, to transacting online.
05:03 Let's face it, during the COVID, by regulatory consent,
05:07 we were working from home digitally.
05:09 There was no acceptance of physical transaction
05:12 across the country.
05:14 And you've sort of shown the kind of growth
05:16 the industry has shown.
05:18 See, the adaptation that happened during this phase
05:21 has been phenomenal, not only from the asset managers,
05:23 but from the overall environment as such.
05:26 And today, communication is now digital.
05:29 I'm pretty sure when we get out of all this,
05:32 we will all long to go back to that physical connect.
05:36 But the mass scale at which one can communicate
05:39 with people on the digital side
05:41 is something which has been a learning in this phase.
05:43 So, like I said, in totality,
05:46 the pace that has happened in the last two years
05:48 has been phenomenal.
05:50 And it's been a joy to watch this transformation.
05:53 And I feel we are at the beginning of something
05:56 which will just, I think something
05:58 which is not known to me personally.
06:00 I'm just enjoying this transformation.
06:02 - That was very insightful, Mr. Mohanty.
06:05 And you kind of rightly said it,
06:07 it's kind of evolution.
06:09 Or you can say the revolution has just started now,
06:12 and there's a lot to see, a lot to experience
06:14 over the coming years.
06:16 All right, so I'll kind of shift gears a bit
06:18 and I'd like to understand, right?
06:21 Even if I talk from my own personal experience,
06:23 we have seen buy-side firms acknowledging the value
06:26 of working with the single open architecture platforms
06:29 that connects workflows between sales side analysts,
06:32 buy-side analysts, and portfolio managers.
06:35 It kind of provides a seamless research
06:37 and investment decision-making process.
06:39 So what are the things that you are witnessing
06:41 when it comes to buy-side analysts evolving
06:43 and how is it availability and access to financial data
06:46 shaping up the evolution process?
06:48 - See, essentially buy-side analysts will determine
06:52 how promising an investment seems
06:55 and how well it coincides
06:56 with say the fund's investment strategy.
06:58 They'll then base their recommendations on this evidence.
07:02 These recommendations are mostly exclusive
07:05 for the benefit of the fund that pays for them, right?
07:08 And these are typically not available
07:10 for anyone outside the fund.
07:12 That is how it works.
07:13 I see they can provide enormous information
07:16 about a company's revenue, expenses, profitability,
07:21 debt loads, and the ability to meet its short-term
07:25 and long-term financial obligations.
07:27 Financial data is important as it helps one's,
07:30 what can I say,
07:32 determine and identify financial strengths,
07:35 weaknesses, and relationships that exist.
07:38 These numbers and analysis are in a way an opportunity,
07:41 if I look at it,
07:43 to make transformed or informed decisions
07:46 regarding investing.
07:48 That is what is happening in my view.
07:50 - Very nice insights, sir.
07:52 I'd like to add the fact that Refinitiv
07:56 has kind of collaborated with customers across the globe
07:59 to develop an application called Workspace for Analysts
08:03 and Portfolio Managers,
08:05 an AI-based platform offering fast access
08:07 to required Refinitiv content.
08:10 In addition, the platform aggregates industry data,
08:12 deliver proprietary analytics,
08:14 and automates critical research
08:16 and portfolio management workflows.
08:18 So that kind of brings different pieces together.
08:21 Anything you want to say, sir, on that?
08:23 - No, see, that is the transformation.
08:25 I mean, earlier, what used to happen man-to-man
08:28 will happen through a machine-to-machine.
08:30 And it is seamless integration, faster integration,
08:33 and access to far more data
08:35 than one could possibly do earlier.
08:37 And that's something which is being witnessed as we speak,
08:41 and it seems to be growing by the day.
08:43 - Right, absolutely, sir.
08:45 So shifting gears a bit,
08:47 Refinitiv did an inaugural survey
08:49 of financial business leaders and data scientists
08:52 published in the year 2019.
08:54 It verified that the industry is growing reliance
08:57 on artificial intelligence and machine learning.
09:00 I would like to understand from you, sir,
09:01 how are investment managers leveraging cloud-ready data
09:04 and AI, machine learning tools and techniques
09:07 to build unique portfolios
09:09 and overall improve the performance
09:11 and create that alpha that everybody is looking forward to?
09:14 - Yeah, I think the market is leveraging a lot
09:16 in terms of AI-driven investment strategies.
09:19 There were the cases,
09:22 there are many cases how AI-driven hedge funds
09:26 are outperforming the actively managed funds.
09:29 There is enough research one can Google
09:31 and get these datas out now.
09:33 From a broader perspective,
09:35 artificial intelligence and machine learning
09:38 help not only in crunching numbers and taking calls,
09:41 but they also bring in the analysis from market completely
09:46 and help the fund manager gain the sentiments
09:49 of a particular stock in the market.
09:51 Thanks to, you know, say the social media
09:53 and the chatter that happens on the blogs,
09:56 these become also a factor
09:58 from a secondary info perspective.
10:00 This technology in future will help the fund houses
10:03 in predicting the behavior of an investor
10:06 in managing the liquidity of the seed,
10:08 that also can be factored in.
10:10 And AI will be a massive boon to the passive funds,
10:13 like you rightly pointed out, Shant.
10:15 And these passive fund strategies
10:16 will help us reduce the tracking error further
10:19 and then will replace people dependency
10:22 in times to come is a firm belief.
10:25 Very, very interesting insights again, sir.
10:27 I'll kind of ask you a question about, you know,
10:31 I mean, like one of the pocket of challenges
10:33 I spoke about in my inaugural monologue
10:36 was that, you know, there's a shift from active to passive.
10:39 And with technology, data and analytics,
10:42 research analysts can now determine the secret factors
10:45 or what is called as the secret sauce, you know,
10:47 the different factors that come at play,
10:49 which create alpha in a very rule-based
10:51 and transparent manner.
10:53 However, when it comes to India, active is still very active.
10:57 Do we expect this trend to change over the coming years?
11:01 - See, India is at a very interesting threshold.
11:04 I never say that, you know,
11:06 very fortunate to be working in India
11:08 at this point of time in the asset management space,
11:11 because there is space for both.
11:13 You know, good active fund managers
11:15 can continue to create that alpha,
11:17 which is something over the market returns.
11:21 And at the same time, the advent of rule-based
11:24 passive investing is catching on in the country.
11:27 And both have space in India, in the country,
11:30 which is very unique to us,
11:32 because if you see the rest of the globe,
11:34 the rest of the globe has migrated to passive investing
11:37 or rule-based investing in the incremental money.
11:40 Whatever AUM you see broadly across the globe
11:42 on the active side is mostly legacy money.
11:45 But that is not so in India.
11:47 I mean, there is still a lot of scope
11:49 for people to go into their secondary level thinking
11:52 and find either trends or stocks,
11:56 which can beat the market.
11:57 And I do believe that we are still some time away
12:01 from a time when we can say that, you know,
12:04 passives will take over completely.
12:07 While if you see at the globe,
12:08 the globe, you know,
12:10 there is a fair amount of active thinking coming back
12:12 and there is a fair amount of alpha being discussed.
12:15 I would now believe that these are also cyclical in nature.
12:18 As we stand in India, yes,
12:20 it's great to see that both the active side
12:23 is getting money and there are some good managers out there,
12:27 very talented managers out there
12:29 who come and give you the desired alpha.
12:31 At the same time,
12:32 what we are seeing is the birth of some phenomenal
12:36 and great ideas.
12:37 And please understand when we look at passive investing,
12:39 though I always ask myself,
12:41 why is it called passive investing?
12:42 Because a lot of active thinking
12:44 goes into forming a passive product,
12:46 because once you make the rule-based product,
12:48 you can't go back.
12:49 Unlike active where you can make some changes.
12:51 In passive, it's a rule-based, it's an index,
12:54 and you buy the rule.
12:55 So there's a lot more thinking that goes into
12:58 forming a passive product at this moment.
13:00 And let's look at it from the regulatory perspective.
13:04 After the semi-categorization of funds,
13:07 there is a limitation of ideation on the category
13:10 and the fund that can come is a reality.
13:12 It's been laid down.
13:13 So we will definitely see far more ideation of new ideas
13:17 on the passive side.
13:18 So it's a great time to be, both are correct.
13:21 We've done some backtesting
13:23 and you can form portfolios with a mix of both.
13:28 In fact, a mix of both can lead you better portfolios
13:30 with better cost advantages.
13:33 So great time to be in India where both can coexist.
13:36 - Sure, sir.
13:38 And when you talk about like returns,
13:41 I mean, do you think multi-asset investments
13:43 will also kind of become a prominent feature in India?
13:47 I mean, right now it's either mainly focused on equity
13:49 or debt, but do you see multi-asset products
13:52 also featuring in India's portfolio of book your products
13:55 that exist?
13:57 - That's again a progression, right?
13:59 You know, finally we will move towards solutions
14:02 and worldwide solutions take over
14:04 and solutions are allocations across asset classes.
14:08 It's just that, you know, we've been so heavy
14:11 on two fixed assets in our past in our allocation
14:14 that is real estate and gold.
14:16 And once these become financialized like they have now,
14:21 the liquidity of these asset classes also increases.
14:25 Hence the possibility of giving solutions
14:28 across these asset classes becomes very evident.
14:31 And that's where the progression will be.
14:33 There is no doubt or debate in my mind
14:36 that the solutions might start on debt and equity
14:40 being formed as solutions, which has already started.
14:43 Some parts of the market work very well,
14:45 but sooner or later you will see the other asset classes
14:49 also forming and the investor will only gain
14:52 from these solutions which come in
14:53 and these can be backed by data, can be backed by AI,
14:57 can be backed by machine learning,
15:00 will be technologically driven.
15:01 And so the human element might go out.
15:04 Once the human element goes out, the rule takes over
15:08 and then the market movements become irrelevant
15:11 and timing of the market, which is the biggest folly
15:13 of most of the human element that takes over
15:17 goes into a backstage and then discipline
15:19 and investing comes in and hence solutions
15:22 over the long run work better if it's rule-based.
15:26 - Right, sir.
15:28 I mean, you just spoke about reduction in manual efforts
15:31 or manual intervention.
15:33 Should the industry worry about
15:35 a lot of automation happening?
15:37 Will it result in loss of jobs for many of people
15:39 who are part of the industry?
15:41 - Yeah, Arish, if you ask me, you should worry about things
15:44 which you can work on.
15:46 This is a progression.
15:47 If you worry about it, you are fighting a losing battle
15:50 if you ask me.
15:52 So it's better to embrace it and learn it
15:54 because there is so much to learn
15:56 and upgrade it yourself.
15:57 If you don't, then you will be left out as a reality.
16:01 - Right, absolutely, sir.
16:02 I think that's a very important message
16:04 to all the viewers, right?
16:05 I mean, you have to transform yourself
16:07 along with what the market is asking for.
16:09 You cannot be-
16:10 - The world is not going to wait for you.
16:11 It will move on.
16:13 What happens is a very interesting thing.
16:15 If the transformation in the external world
16:18 is faster than yours, then you are getting obsolete.
16:21 - Absolutely, sir.
16:23 Completely agreed.
16:24 So that's a great message for all the viewers out there.
16:27 Moving on to my next question for you, Mr. Mohanty.
16:32 The piece that is charged by asset management industry
16:34 in India has been scrutinized over and over again.
16:38 And we know for a fact,
16:41 we have heard from different research organizations
16:44 that India charges one of the highest fees across the globe.
16:48 And again, for various reasons.
16:50 I mean, I don't want to kind of talk about it right now,
16:52 but with the automation in place, AI,
16:57 and all things that we are speaking about right now,
16:59 do you think it will bring some benefits of scale
17:02 and the ultimate beneficiary of all of that
17:04 will be the end investor,
17:06 will get the benefit of reduced fees over the long run?
17:10 What do you think about that?
17:11 - Harish, a price or a fee is decided by the marketplace.
17:17 It's where the buyer and the seller meet.
17:19 You talked about us charging a fee in the past
17:23 is a factor on the alpha that we have been generating.
17:27 And hence the fee, right?
17:28 If you look at both equity and debt,
17:31 the answer already is there in front of us.
17:33 On the debt side,
17:34 while we are allowed to charge a full fee,
17:36 none of us charge the fee
17:37 because the beating of the benchmark does not come.
17:40 Hence the market has aligned itself to a fee,
17:44 which is acceptable both to the investor
17:46 as well as the asset management company
17:48 and the distribution community at large, right?
17:52 In the equity side, we continue to do that
17:54 because the alpha generation is still there, right?
17:57 Till the time it is there, the fee will be there.
18:01 Once that reduces,
18:03 then this part will also fall into place.
18:06 People think that it is mostly regulatory driven.
18:10 I give back the example of the debt side of our business.
18:13 There is no regulatory intervention,
18:15 but the fees have been mitigated by itself
18:17 by due to market forces, right?
18:20 That is what happens.
18:21 If some of the alpha generation comes down,
18:24 then this will also come down.
18:27 I just hope and pray the alpha generation remains
18:29 for the sake of investors.
18:30 Fees are secondary, right?
18:32 But if there is a question on that,
18:35 there will be a question mark on this.
18:37 Yes, when efficiencies like these come in,
18:41 it brings about more and more efficiency of fees
18:44 and then the margin scope of margins do increase.
18:46 It'll be interesting to see
18:48 whether the asset managers pass back that margin
18:50 to the investor or retain it in the advent of falling fees.
18:54 That will be a story which will be,
18:56 again, decided by the market.
18:57 I'm too small a man to comment on that.
18:59 So that is how it will progress.
19:02 And as I said, these are very interesting times for,
19:07 even on the passive side, let me make something very clear.
19:11 A good idea on the passive side
19:13 will also have the scope of commanding a good fee.
19:16 Not all passive funds necessarily be low cost.
19:22 If it's a good exclusive idea being got
19:25 by an asset manager, he or she will command a fee.
19:30 Mark my words on this one.
19:31 - Sure, sir.
19:33 No, absolutely.
19:34 Coming from you, we believe in every single thing
19:36 that you're saying to us.
19:38 All right, I'll kind of now switch
19:41 to another very interesting topic
19:42 that we are seeing in the Indian market very recently.
19:46 So small case from Zerodha has kind of become very popular
19:50 amongst especially the millennials, right?
19:52 They can invest in various kinds of schemes
19:55 and themes and ideas through their mobile phone.
19:58 Do you think this has become possible
19:59 due to the digital revolution that we are seeing
20:02 within the asset management space
20:03 where anyone can generate an idea, back test it,
20:07 invest, make investment possible,
20:09 rebalance the portfolio
20:11 and then monitor it on a regular basis?
20:13 Do you expect this momentum to continue, sir?
20:16 - See, I think when you look at small case,
20:19 it's a phenomenal example.
20:21 And it just shows the change in demography in India
20:26 and how the younger lot of India
20:28 will behave very differently from the earlier lot.
20:32 Because when you look at say my generation
20:34 and previous to me, my parents,
20:37 that generation did come about
20:38 of a very strict kind of economic constraint.
20:43 India was not a rich country.
20:45 Now, when you reflect that to the next generation,
20:48 there is a fair amount of economic strength
20:50 when it comes to that generation.
20:52 So the way they will behave with their surplus
20:56 is very different from the way I will behave
20:58 with my surplus because I have seen a shortage of money.
21:01 I'm not saying there is too much of surplus,
21:04 but at least the way they are leading their lives
21:06 is dramatically different to the way
21:09 my generation has led its life.
21:11 So a change in behavior was predicted.
21:16 What small case has been able to do
21:19 is sort of give a good platform for that creativity.
21:23 It allows so much more thought
21:26 to go into providing solutions.
21:28 Again, coming back to our earlier discussion,
21:30 it provides some very differentiated solutions.
21:34 And to people who can take the risk
21:36 and are willing to take the risks,
21:38 these are very good opportunities.
21:40 And add to the fact that it's led
21:43 by a digitization of the country now.
21:45 I mean, a small thing.
21:47 Earlier, we thought opening a DMAT account
21:52 was such a big issue.
21:54 Now you can open it on the click of a button.
21:56 I mean, that's a sea change to what used to happen, right?
22:00 With the integrations of your others
22:02 and everything to your accounts,
22:04 going back and verifying a customer
22:07 has become easier by the day.
22:09 So the seamlessness of the process of buying or selling
22:16 has become far easier.
22:18 And you look at your own life.
22:21 Like I said, if you're going to buy vegetables online,
22:24 and that would be the last thing on my mind to buy online,
22:27 because it's tangible and it can go far in two days,
22:32 how can you not extend the same way to your investments?
22:36 And I'm very happy and very...
22:39 I met Vasant Kamath very early in the starting days
22:43 of the small case story.
22:45 And I'm so happy that they've done so well.
22:48 And I feel it's the beginning for them.
22:51 - Right.
22:52 You very nicely put it, sir.
22:54 Just a start for them.
22:56 So do you think in the long run,
22:58 it could be a potential threat to some of the existing
23:01 asset managers within the country?
23:05 - I think, Harish, if you look at the penetration
23:07 that we are standing at,
23:09 we could have 10 more such people.
23:13 You know, the potential of the country is so large.
23:15 Our numbers are so huge, if penetrated well.
23:19 I don't think anybody is a threat to anybody in our line.
23:23 At the end of the day, a good product
23:25 finally reaches the customer.
23:27 If our products are better,
23:30 it's not about our meaning,
23:31 all of us put together, including small case.
23:34 That is the only way we will reach customers.
23:37 And the customers out there have not been touched yet.
23:40 So I don't think there is any threat.
23:43 These things only, such cases only enhance
23:46 the investment surplus of the people,
23:49 bring more people to the market.
23:51 And if they come to the market,
23:52 then you know the other products
23:54 can also get acquainted to them.
23:57 So I don't see anybody as any threat.
23:59 In fact, the current status that we are in,
24:01 all of us should be together to penetrate deeper.
24:05 And if I look at some of the digital penetrations
24:08 in other sites, let's face it today,
24:10 and this is what my wife told me,
24:11 which has been a very eye-opening thing for me,
24:15 that today, if you want to take a COVID jab,
24:18 you have to register on COVID app or COVID website.
24:22 That means the country is already digital savvy.
24:26 You have to reach them,
24:28 and you can reach them by good solutions like this,
24:31 whether it's from small case or from AMC or from anybody.
24:35 So it's not a time for any threat.
24:38 The market is not yet made.
24:40 - Yeah, no, I think that's a valid point, right?
24:42 With 15% penetration at this point in time,
24:46 the market presents a very huge opportunity,
24:49 and everybody, they have a level playing field
24:52 at this point in time.
24:52 And it's, yeah, I mean, you rightly put it, right?
24:55 Opportunity creates opportunity.
24:56 People get into the market,
24:58 they'll maybe explore other products as well.
25:00 - Absolutely.
25:01 - No, absolutely, thanks for that insight.
25:03 Yeah, you were saying something else.
25:05 - No, no, no, I was just saying that,
25:06 you know, let's make a bigger market,
25:08 and then there is space for all of us.
25:10 - Absolutely, point noted.
25:12 See, I mean, one thing that we all have seen is,
25:15 you know, this COVID pandemic has changed the way,
25:18 you know, digitalization or digital transformation
25:21 has shaped up, right?
25:22 It was kind of pushed, you know, on us.
25:26 How do we change ourselves during this difficult time?
25:29 Do you think once things becomes back to normalcy,
25:33 you know, it goes back to normalcy,
25:34 some of the digitalization that we have seen,
25:36 some of the efforts that have been undertaken
25:38 over the last two years,
25:39 that will start to kind of go down a bit,
25:41 because now things, when things will become,
25:44 start getting back to normalcy.
25:45 What do you think about that whole thing?
25:47 - See, I mean, I keep on saying this,
25:50 that there is before Christ and after Christ.
25:53 That is how we used to look at eras.
25:55 Now there is before COVID and after COVID,
25:58 that BC and AC is completely changed.
26:01 And this is permanent,
26:03 whatever has happened to us in the last one,
26:05 one and a half years.
26:07 I would say should have been a trigger
26:09 for healthcare increase in our country,
26:13 but has triggered digitalization in the country.
26:15 And that's a fact.
26:17 I don't think this is there to stop.
26:19 In fact, some of us who've gone through this transformation
26:22 and we are getting transformed by the day,
26:25 will not leave this at all.
26:27 The efficiencies that we have seen, let's face it.
26:30 I mean, before this, if we were to reach out to customers,
26:33 we would call them out into a banquet hall, say,
26:36 large meet, we would call them.
26:38 And if the banquet hall had 700, 800 people,
26:42 we would be excited.
26:43 A good meet was 150, 200 people.
26:46 Today, if we do a live broadcast,
26:50 and if it is seen by 200 people,
26:52 it is supposed to be a disaster.
26:54 That's a reality.
26:56 Any of our videos don't hit 75,000 hits
27:01 or a lack of hits, we feel we have not penetrated.
27:03 Look at the change in numbers.
27:05 I don't think that will ever change.
27:07 Now the physical meetings will have to be done
27:11 with a purpose, will have to be put at a premium.
27:15 The normal mundane communication will continue to be done
27:19 on the digital mode, which is a huge change.
27:24 And if we are to meet, suppose just from our example,
27:27 how the times our fund managers used to visit cities
27:31 to give a market view.
27:33 A market view will be done digitally permanently.
27:36 If the fund manager has to travel and meet people,
27:40 it has to be with a deeper purpose
27:43 than just a broad market.
27:45 And that's what this has done.
27:46 I mean, I don't think the physical transaction
27:48 people who have graduated to the digital mode
27:52 of transacting will come back to physical ever
27:54 because now they see the efficiencies that are there.
27:58 And world has moved to the smartphone.
28:01 This laptop that I'm talking on at this moment
28:04 is for the camera and for the efficiency
28:07 of it being in front of me.
28:08 Otherwise life has already moved to the smartphone
28:11 and it will only go on from there.
28:13 And where it can go is unbelievable.
28:17 And that's something which all of us are going through
28:20 as we speak.
28:21 We thought we were digitally savvy
28:23 before this COVID thing started.
28:26 Within the first month, I realized that I knew nothing.
28:30 And then look at the efficiencies that are coming in,
28:32 especially say from our backend.
28:34 Today, the backend storage and what has happened
28:38 is the consciousness of the safety of this data.
28:41 The increased investments that are going in
28:45 into just preventing any kind of fraud
28:48 or any kind of hacking that comes into our data.
28:51 Then our data is now not small.
28:54 We are finally qualifying for what they call big data.
28:58 That's how large the industry is slowly but surely becoming.
29:01 So these are factors which developed only
29:04 during the last one and a half years.
29:07 And it's only for the better.
29:09 I don't think we'll go back ever.
29:10 We'll only build on this.
29:12 - Sure, sir.
29:14 So you touched upon a very important part
29:16 around risk surveillance.
29:18 So now, since all these strategies are running on AI clouds,
29:22 do you think there's definitely a threat to the data as well?
29:26 Or do you think we have kind of come to a state
29:29 where it's not a worry at all
29:30 for the asset management industry in India?
29:33 - Whenever something becomes precious,
29:36 there is always a threat.
29:37 And today, future, I mean, the asset is data.
29:43 And it's one big part of our fiduciary role
29:48 apart from managing money
29:50 is also safeguarding a person's personal data
29:52 because these are the financial data.
29:55 And if we don't step up to it,
29:56 then something we are not doing justice
29:58 to our fiduciary role.
29:59 It just does not restrict itself to just managing money.
30:03 It's also managing somebody's personal financial data
30:07 which he or she is giving us.
30:09 So if we are not stepping up and act on this one,
30:11 then we are not doing our work well.
30:15 Hence, the enhanced,
30:17 and I think the regulator has also stepped up on this
30:19 to be fair.
30:20 I think the enhanced focus on cyber security,
30:25 the insurances that are developing
30:27 behind cyber security is just been fantastic to learn.
30:32 I mean, as a person, I'm learning that by the day.
30:37 And the sooner we put a good comprehensive mode
30:41 around ourselves, and it can be penetrated
30:44 because somebody else is building efficiencies
30:47 far better than us.
30:48 So it's not something which is done and dusted.
30:51 You have to completely be at it on a 24/7, 365 day
30:55 kind of an effort.
30:56 And that's what makes this so exciting
30:58 and so on your toes kind of a thing.
31:02 So yes, this will only increase.
31:05 We have to step up our act.
31:08 - So since you mentioned about that, sir,
31:09 I mean, Mirae Asset Management,
31:12 how are you coping up to the digital transformation
31:14 within the industry?
31:15 What all things that you are doing?
31:18 - See, actually we had, I mean, to be fair to us,
31:21 by construct, we had built our business plan 10 years ago
31:25 that a digital transformation will come.
31:28 While AMCs build on a brick and mortar sort of structures
31:32 in 70, 80, 100 cities, we work only in 15, 16 cities.
31:36 And we had said that this will play out.
31:38 I'll give a small example.
31:40 While we differ from the market,
31:42 I don't know whether I'm right or wrong,
31:44 but we feel the third party say apps will play
31:46 over a single AMC app.
31:49 Where we are not there in that market
31:50 because going forward, why should an investor
31:53 come to 10 different AMCs in 10 different apps?
31:56 He has to go to an aggregator, right?
31:59 And then so that is looking at the future in mind.
32:02 So we had geared ourselves up,
32:05 but I must say the external market
32:08 is also moving very fast.
32:09 So sometimes we are behind the curve.
32:12 Sometimes we go ahead of the curve.
32:14 But I think the amount of investments we've done
32:18 internally into this side of the business
32:20 would be one of the largest post-fund management
32:24 infrastructure expenses.
32:26 So we are on the job, but the only point I'm trying to make
32:29 is it's an incredible thing to keep pace
32:33 with the way that part is supposedly unfolding.
32:38 So sometimes we feel we are catching up.
32:42 Sometimes we feel, okay, this one we've got right.
32:44 But it is after fund management,
32:46 probably our most focused area.
32:47 - All right, sir.
32:50 I mean, these are very interesting insights.
32:52 And if I ask you, three years down the line,
32:56 how would you imagine this whole thing in pan out?
32:58 What's your vision for that would be?
33:01 - See, today I can safely say that,
33:03 you can run an asset management company digitally.
33:06 And mark my words, there will be somebody
33:09 around the corner doing that.
33:11 So I'm surprised somebody isn't yet,
33:14 but the brick and mortar is dismantling.
33:18 That dismantling is happening for sure.
33:22 The new investors and by sheer number of India,
33:26 numbers of India, the new investors
33:28 or the number of investors will quickly outpace
33:31 our collective investor base so far very quickly
33:34 because of the changing demography of India.
33:37 And in the next five years for sure,
33:40 the numbers which you talked about at the beginning
33:42 of our discussion will be destroyed very soon as we speak.
33:47 - Absolutely, sir.
33:50 And we're looking forward to that.
33:51 We really want to see the industry go
33:53 in leaps and bounds, right?
33:54 - Absolutely. - All right.
33:56 So sir, if we ask you,
33:58 what will be your final closing remark for the audience
34:01 we have in front of us today, what would be that?
34:04 - I think the best thing that could have happened to us
34:06 through the digital transformation is ease of living.
34:11 I mean, make it a means of your growth path.
34:15 Don't become slaves to it is my humble submission.
34:18 I come from the old school of thinking.
34:20 And that's where, use it as a means.
34:25 Don't succumb to the aura of it
34:27 and it can be very corrupting.
34:29 And use it to find your own goals
34:33 rather than it becoming your goal is my basic submission.
34:37 - Thank you, sir.
34:39 Very, very interesting insights.
34:40 And I'm sure the viewers will have learned a lot
34:43 from this conversation with you.
34:45 So with this, we come to the end of this episode
34:49 of MasterTalk today, presented by Refinitiv
34:51 in collaboration with Outlook Money.
34:53 Thank you, Mr. Sourav Mohanty for joining us today
34:55 and sharing your valuable thoughts with us.
34:58 Viewers, we hope you enjoyed our conversation today.
35:01 And if you have any comments, suggestions,
35:03 or any questions for our esteemed guests,
35:07 do write to letters@outlookmoney.com.
35:10 Have a great day and happy investing.
35:13 (upbeat music)
35:15 you
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