MFCentral (mfcentral.com), a mutual fund transactions platform jointly run by Computer Age Management Services Limited (CAMS) and KFin Technologies Limited (KFintech), has finally been converted into a separate joint-venture company.
The platform, which has 2.5 million users, is run by registrar and transfer agents (RTAs) – Sebi-registered firms that provide services to mutual fund companies and investors – and allows investors to buy or sell any mutual fund.
In an interview, Sreekanth Nadella, MD & CEO of KFintech, told Mint what MFCentral has in store for retail investors and mutual fund distributors. He also explained how the platform is different from others and why it hasn’t had the success of similar apps.
If you created a mandate of ₹20,000 every month on a third-party app, you could split it across various asset management companies (AMCs). But if you went to the MFCentral platform before the joint entity was formed, you had to create a separate mandate for each one. Now this issue has been fixed and investors can seamlessly transact across all funds under one mandate.
That’s just one part. We have lots of innovations in the pipeline for investors. For the immediate future, we are working on a solution to lock folios. Many people travel outside the country for work. Let’s say somebody is going to the UK for two years. With this feature, they can lock their folios when they’re abroad to reduce the risk of fraud or misappropriation of funds through impersonation.
MFCentral is the only platform where you can get consolidated account statements across all AMCs. Other fintech apps usually only show the investments you made through their platform. If you’ve invested through other platforms, other forms such as demat, or through a distributor or a registered investment advisor (RIA), you may not be able to see all your investments in one place in real time. The depository participants have a consolidated account statement (CAS) but that’s not updated in real time.
While this function already exists for investors, we are planning to introduce a similar feature for mutual fund distributors. Imagine you are a mutual fund distributor with 50 clients who have invested across 50 AMCs. At the end of the month all 50 AMCs will send you a ‘commission slip’. That’s like a pay slip, but instead of getting one every month the company gets 50 of them. We want to make life a little easier for them by consolidating them all into one CAS.
We’ve also started offering loans against mutual funds and have extended the feature to various non-banking financial companies. MFCentral makes that easy because it has the participation of both CAMS and KFintech.
MFCentral is the only platform in the world where all fund houses have come together by leveraging RTAs to allow investors to transact in all mutual fund schemes. It’s the only platform where you can do non-commercial transactions for all your mutual funds in one place.
If you want to add a nominee, change your address, or change your mobile number across all your mutual fund investments and all AMCs, MFCentral is the only platform in the world where you can do this.
If you see other fintech apps offering this service, its because they are simply taking the order and routing it through us using APIs, which we resolve and send back. (An application programming interface or APIs is a set of rules and protocols that allows software applications to communicate with each other and share data.)
That said, MFCentral was launched in 2021 to improve the ease of doing business for retail investors. It’s designed for ease of conducting transactions but is not an engagement platform. That’s probably why it hasn’t picked up like the popular fintech apps.
It’s not a platform where we upsell or cross-sell NFOs (new fund offers) or the latest IPOs. We don’t say ‘this fund has given this many returns and you should look into it’. We are not designed to be that way. We are neutral and dispassionate about cross-selling and are purely a transactional platform.
If you are looking for more information or advisory services, this may not be the right place for you. But if you’re an informed investor and you know exactly what you want, this platform is the place to be.
So far there are no profits. The losses are being incurred in a 50:50 partnership between CAMS and KFintech. The revenue model is largely in the form of giving access of our APIs to the fintechs who then use it to provide their services to their customers.
We also intend to expand this into the distribution channel which will be akin to MFU and other such platforms and hope to make some revenue out of that in the future. Then there’s the MF capital gains statement which we provide and that can be integrated with tax filing platforms like Cleartax for seamless tax filing, loan against the mutual fund, and CAS for distributors' earnings, which we hope will bring in some revenue in the future.
Today, investors at MF Central don’t pay anything for transacting.
At KFintech, we recently launched a platform called the ‘Guardian’. This software seeks to reduce the incidence of insider trading using the AA framework. Some employees in public companies cannot trade in their employer’s share during the blackout period as defined by Sebi. Companies get to know of such transactions by designated persons mostly through voluntary disclosures or sometimes the regulator catches it through various sources.
In the AA framework, we are a technology service provider and we use that system in ‘Guardian’. Basically, if a company subscribes to our services, they will get to know the transaction history of the employees and their relative’s transactions without having to submit anything by the employee themselves. The employee needs to first provide two-factor authentication. This system removes the need to submit transactions separately but at the same will also be able to track trading patterns more closely.
We track data from the depository participant level, where the securities are stored. This means the system will get to know when a share is transferred from one broker to another or when it was transferred to a friend’s or family’s account and how it was eventually disposed or sold in the market. The platform will directly inform the company of such transactions.
Apart from this, we are also already using AA in our wealth management platform. Registered investment advisors (RIAs) can use our platform and AA to gain a bird’s eye view of all financial assets and liabilities their clients have to efficiently craft a suitable financial plan for them.
We give our employees some kind of gift every Diwali, but three years back, we thought, why not give them something useful – a pension amount in NPS instead of a box of sweets? We ended up creating a PRAN account, needed for opening an NPS account, for all our 6,000 employees. On top of that, we allowed them to contribute monthly amounts just like a mutual fund SIP.
That’s how we got the idea of starting ‘FUTU ₹’. It’s a platform that will allow corporates to make it easier for their employees to opt for the NPS scheme. For state and central government employees, the NPS is mandatory, but many private employees don’t even know it exists. The few that are subscribing to the NPS do through their own account, and not through their employer/company. Most companies don’t even inform employees that they can do it through them. In fact, if your employer contributes to NPS as part of your salary, you can claim a tax deduction under section 80CCD (2).
With this platform, we can make it easier for big companies to offer NPS as a readily available option for all its employees. Currently, most companies don’t do it since it’s not compulsory and because it's a big operational challenge to implement it in the backend. But imagine if all big corporates start offering NPS to lakhs and lakhs of its workers. This can be voluntary, but there is currently a lot of scope to make it easier for employees to choose NPS through their employers.
We’ve launched this about seven months back and 4 corporates are live on it. This way, we can make India a pensionable society over a period of time.
