I belong to the generation of mutual fund investors who started with paper forms in an era when banking, cheque clearing, record keeping, unit transfers etc., were also paper-based. I suspect that most of my readers here would also have started during that time.
Unfortunately, many fund investors are still stuck in that era, and primarily for no fault of their own. If you go to the service centres of registrars CAMS and Karvy in any city, you will still see people lined up with paper forms and cheques. This is still happening in part because a simple, unified method of directly dealing with all fund companies through a common portal simply did not exist till now.
Even two decades ago, at the dawn of the consumer internet, it was clear that complete computerisation and direct networked access to mutual fund investors were the only way forward. And yet, if you had told me back in the day that such access would be available for summoning autorickshaws and ordering food from your neighbourhood restaurant before it would be for mutual funds, I wouldn't have believed you.
Still, better a bit late than never, especially if the solution that has finally emerged is as promising as the newly launched 'MFCentral' is. Since you are reading this column, you are indeed a fund investor. So, you should take a break now and spend a couple of minutes (that's all it will take) to register at https://www.mfcentral.com/. Look around the various parts of the site and see what all you can do. You will be able to see your mutual fund holdings by AMC and by broad fund type. You can also initiate non-financial transactions. The fund-investment data is not analytical like that on Value Research but provides an aggregated unified view across all AMCs that was not available earlier.
The non-financial transactions available are change of address, phone number and email, bank mandate, etc. However, this is just the launch version of the service. Over the next few months, actual transactions will be available, as well as an app for easy mobile access. Some facilities for intermediaries will also be added. All things done, a single unified portal for almost all interactions that a mutual fund investor has to make will be available.
However, the most significant thing about MFCentral is not what I have described to you so far. It's not directly in the features of the service or the convenience that it will bring. Instead, the real significance lies in what one might call the second-order effects of such a service, in how it will change the quality of your investment as well as your very propensity to invest. Till now, a major part of the mental and physical effort of investing gets spent in the mechanics of investing. If these are physical, that's a nightmare, of course, but even digital means dealing with many AMC websites, each with its different interface and problems. For many investors, the solution is to go through an intermediary (digital or physical) who, apart from handling the mechanics, also exerts an influence over your investment choices. People are so mentally overloaded by the procedural part of fund investing that the part that really matters - the investment decisions - get less attention than they deserve.
Much of the infrastructure of a truly digitally enabled mutual fund investing system is already in the form of widespread internet access and digital banking. The last piece of the puzzle is integration with the mutual fund transaction system, and that's finally happening.