Mutual funds step into the robot realm
Artificial intelligence and fintech tools have ushered mutual fund investment into a new dawn, where the possibilities are endless. Yet trust and personal communication are still longed for amid greater digitisation of investment products.
The mutual fund business has gained advantages from fintech and robo-adviser tools, according to industry executives. From penetrating tech-savvy investors and expanding the customer base to improving service quality, the benefits that come with technology adoption for the industry continue to unfold.
Jessada Sookdhis, co-founder and chief executive of Finnomena, a Bangkok-based fintech startup, says robo-advisers provide proficient investment strategies that are compatible with securities companies and asset management firms.
Founded in 2016, Finnomena was established with the goal of unlocking investment potential for Thais who have little time or investment know-how to expand their fortune. This is done by providing tools, knowledge and advisory services in terms of investing and personal financial planning.
"Our assets under advisory (AUA) are counted as assets under management (AUM)," Mr Jessada says.
According to the Association of Investment Management Companies, the total number of mutual funds was registered at 6.66 million accounts at year-end 2018. The figure climbed from 1 million accounts logged in 2006 and contributed to 6.7% of total bank accounts in 2018, up from 1.6% in 2006.
But the importance of human communication and trust still remain in an industry where technology has seeped into the veins of core operations.
"[Robo-advisers and fintech] support our business and customers," says Peerapong Jirasevijinda, chief executive of BBL Asset Management. "Most customers prefer relationship managers to assist them, even in developed countries such as the US and Singapore."
While fintech can help fund managers reduce the time for analysis and digest data at a faster pace, there are some facets that still require a human touch, such as company visits or management interviews.
Robo-advisers might be able to serve mass customers who cannot reach relationship managers, but the crux of wealth management relies on trust and person-to-person communication.
"We cannot allow machine learning to engage in trial and error with customers' money, according to the fiduciary duty and regulations of the Securities and Exchange Commission," Mr Peerapong says.
Many existing mutual fund companies have also developed their own applications to embrace new innovations and avoid being left behind by the technology bandwagon.
Examples of this are K-My Funds by Kasikorn Asset Management (K-My Funds), Poems Mobile and Phillip Fund SuperMart by Phillip Securities Thailand, and Bualuang Fund by BBL Asset Management.
Suradech Kietthanakorn, managing director at Kasikorn Asset Management (KAsset), one of the two largest firms in Thailand's mutual fund industry, says fintech tools have helped the company to expand with a new base of investors.
KAsset has three digital channels, including K-My Funds application, the K Plus app and K-Cyber Invest, an online service for investment in Kasikorn mutual funds.
In 2018, digital-based users of KAsset contributed to 57% of the company's total mutual fund accounts.
The company aims to increase the contribution of digital-based users to 65% of total customers by year-end 2019.
"Technology has not disrupted our business yet, but fintech tools have helped us expand into new investors and improve services," Mr Suradech says.
The testament also holds true for fintech startups: new cutting-edge investment tools are helping them expand into a new generation of customers.
For instance, Finnomena's customer profile marks a stark contrast from that of asset management firms, wherein the age range of customers is 25-40 years old and 60% of them have an annual income below 1 million baht.
While the portion of male and female investors is balanced at 51:49, 50% of customers are identified as investing for the first time. Finnomena has about 10,000 accounts.
"Many of them began investing with us with their first salaries after following us for many years, since they were university students," Mr Jessada says.
The company's use of social media platforms also contributes to growing investment interest among first-jobbers.
Finnomena manages total AUA worth 6.3 billion baht.
The company has also partnered and supported several asset management firms in Thailand.
"We hope that the penetration rate [mutual fund accounts per bank deposit accounts] will reach two digits over the next 5-10 years, supported by fintech adoption and fintech tools among existing players in the mutual fund and asset management industry," Mr Jessada says.