Reliance Jio’s Fintech Play May Include Mutual Funds

After ecommerce, Reliance Jio is ready to strengthen its fintech play. Mukesh Ambani-led Reliance Jio is reportedly looking to launch mutual funds among other financial products.

A Livemint report cited industry officials saying that JioMoney may be used to sell mutual funds. It is to be noted that at present, JioMoney allows users to donate, send and receive money, in addition to paying bills and recharging mobile phones and DTH connections, among other services.

The report added that Reliance Jio has been working on rolling out financial services for a few months now. The company plans to launch these products in 2020. A Reliance Jio official reportedly said that the company has been beta-testing its offering among employees for a few quarters now.

Further, this would allow it to test its network and infrastructure, besides plugging loopholes before a formal launch. Jio has reportedly obtained an account aggregator (AA) licence from the Reserve Bank of India (RBI) through Jio Information Solutions Ltd.

To be noted that AAs are entitled to collect and share financial information with third parties after getting the user’s consent. The information can pertain to sectors governed by the RBI, besides three other regulators, including Pension Fund Regulatory and Development Authority (PFRDA), Insurance Regulatory and Development Authority of India (Irdai) and Securities and Exchange Board of India (Sebi), which regulate mutual funds.

The report added that Jio’s AA system is still at a nascent stage and a full-fledged launch is expected this year.

Mutual funds even with all its skepticism are one such tool that has gained massive attention of users. Retail AUM (assets under management) in mutual funds have grown by 16% in 2019 as compared to 2018 and currently stand at INR 6.53 Lakh Cr.

On the other hand, direct mutual funds have been driving retail AUM with a 40% growth. Direct contribution to retail AUM has also increased by 210 basis points in the last year. In other words, digital investing is growing and growing well.

There are few startups who have hopped on the bandwagon for the digital investment opportunity and are making investing easier, especially for millennials in India. According to Karvy Wealth Report, individual wealth in India is expected to grow at CAGR of 14.19% till FY23 and is likely to nearly double in size to INR 762 Lakh Cr by that year.

Further, the Deloitte India 2019 Predictions said, “Of every rupee invested in mutual funds and fixed deposits by the end of next year, at least 21 paise is likely to be invested using a digital channel.”

Deloitte India has estimated digital-invested assets under management (AUM) to grow by around 80% from approx INR 250 Bn in 2018 to INR 450 Bn in 2019. In other words, digital investing is expected to grow at more than double the rate of overall investment in mutual funds.

According to DataLabs by Inc42, the country’s adoption rate for fintech products stands at 59%, the second-highest pace worldwide, and significantly higher than the global average of 33%.

The likes of homegrown Paytm, Phonepe, PolicyBazaar, LendingKart, among others are already disrupting the financial segment in the country.

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