Page 53 - Banking Finance July 2025

ARTICLE

5. Building and Maintaining Trust: Amidst inherent mar-
ket volatility, consistently building investor trust through
transparency, fair practices, and effective communica-
tion is paramount. Product complexity can also be a
deterrent.
6. Cost Pressures: The shift towards low-margin passive
funds creates fee compression for AMCs, particularly
those reliant on active management fees. Simulta-
neously, costs associated with regulatory compliance,
technology upgrades, and enhancing cyber security are
rising. Balancing these requires a strong focus on op-
erational efficiency.
7. Navigating Market Volatility: Managing portfolios ef-
fectively during periods of market stress (like the drop
seen in early 2025) to deliver consistent returns and
retain investor confidence is an ongoing challenge. Pro-
tecting smaller investors during such times is a key re-
sponsibility.
jections like USD 33 trillion and an AUM-to-GDP ratio
8. ESG Integration and Climate Risk: The industry faces
exceeding 100%. Realizing this goal necessitates inten-
criticism for lagging in meaningful integration of Envi-
sified efforts in B30 cities and rural areas.
ronmental, Social, and Governance (ESG) factors and
climate risk assessment. Many AMCs have low climate 2. Prioritizing the Investor: A fundamental shift towards
preparedness scores, limited disclosure (especially on an investor-centric model is essential, designing solu-
financed emissions), and continue significant exposure tions and communication strategies that resonate with
to high-emitting sectors, potentially posing risks to in- the diverse financial realities, cultural contexts, and
vestors and hindering alignment with national behavioral patterns across India.
sustainability goals. 3. Enhancing Simplicity and Access: Continuously refin-
ing digital platforms for ease of use, incorporating ver-
9. Demand for Personalization: Investors increasingly ex-
nacular languages, and simplifying financial terminology
pect tailored solutions and advice, requiring AMCs to
are crucial. Exploring offline or hybrid models for low-
invest in data analytics and sophisticated advisory ca-
connectivity areas and further streamlining on board-
pabilities beyond standardized products.
ing processes remain important.
4. Innovating Relevant Products: Creating investment so-
The Way Ahead: Guiding Towards Finan-
lutions tailored to life stages (e.g., retirement SWPs,
cial Wellbeing education savings plans), specific goals, cultural prefer-
Looking towards 2047, the Indian asset management indus- ences, and emerging trends (like ESG or thematic in-
try aims to transition from facilitating financial inclusion to vesting) will broaden appeal. Technology can enable
dynamic risk management and potentially tokenize tra-
actively fostering financial wellbeing for all citizens. This
entails empowering individuals with the control, resilience, ditional assets.
goal-orientation, and autonomy needed for a secure finan- 5. Championing Inclusivity: Proactively designing acces-
cial life. Achieving this ambitious vision requires strategic sible platforms (e.g., for visually impaired users) and flex-
focus on several key areas: ible products (e.g., for gig workers) is necessary. Utiliz-
1. Accelerating Penetration: The industry aspires to sig- ing visual and audio communication aids can reach in-
nificantly boost participation, potentially reaching 15% dividuals with limited literacy.
of the population by 2047, driving AUM towards pro- 6. Driving Behavioral Change: Employing insights from

48 | 2025 | JULY | BANKING FINANCE