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How FinTech is Rewriting the Rules of Mutual Fund Investing in India – And What Lies Ahead
How FinTech is Rewriting the Rules of Mutual Fund Investing in India – And What Lies Ahead

June 24, 2025

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This blog examines how fintech is changing mutual fund investments in India, emphasizing how it can streamline investment procedures, lower transaction costs, and enhance financial inclusion. Indian mutual fund investors exhibit a high level of fintech awareness, according to a thorough study done between January and December 2024. Digital platforms are crucial in increasing capital flows into mutual funds. Notwithstanding the advantages, issues with data security and the requirement for investor education continue to be major obstacles. To make investing easier, the blog highlights the value of utilizing fintech tools such as mobile-based platforms and robo-advisors. It ends with suggestions for enhancing cybersecurity defenses and encouraging wider use of mutual fund products powered by fintech.

The Indian mutual fund industry has seen substantial change as a result of the rise of financial technology, or FinTech. Previously available only to urban elites, mutual funds are now accessible to millions of people in small towns and rural areas. However, given that mutual funds currently have a 15% market share, there is plenty of room for growth (AMFI, 2025).

Let's examine how FinTech is impacting investments in mutual funds and what is needed to enable the next phase of financial inclusion.

1. Democratizing Access: Simple and Easy Investing

• Fintech platforms like Groww, Paytm Money, and Zerodha Coin have eliminated traditional barriers to entry. With their mobile-first interfaces, e-KYC, UPI-based savings, and no brokerage fees, they have simplified and reduced the cost of onboarding.

• Impact: Less paperwork, quick account creation, and low minimum investment thresholds.

• Supporting Trends: The Reserve Bank of India reports that digital payments are presently growing across the country. UPI transactions have reached record highs, according to NPCI data, making investing simple. As a result of this shift, new investors have entered the market, particularly Gen Z and millennials who are comfortable managing their portfolios with smartphones.

2. Hyper-Personalized Portfolios: AI Meets Investor Needs

Highly personalized portfolio recommendations are being made using machine learning and artificial intelligence (AI) in accordance with each individual's goals, risk tolerance, and behavioral patterns.

• One excellent example is Zerodha's "Nudge" feature, which employs behavioral insights to promote long-term discipline and deter panic selling.

• Development of Trends:

AI is a key driver of FinTech innovation in India, according to NOSSCOM.

Zerodha Varsity's learning resources help users comprehend the logic behind automated decisions. These tools enhance investor trust over time in addition to improving user experience.

3. Gamified Learning: Building Confident Investors

Especially for newbie investors who have little experience with concepts like SIPs or NAVs, investing might be intimidating.Gamification—badges, infographics, and quizzes is used by platforms such as Kuvera and ET Money to accelerate financial education.

• Impact: Better decision-making and more participation are consequences of increased financial literacy.

• Encouragement of Trends: According to Kuvera's blog, users who interact with gamified modules have higher retention and repeat usage rates; the World Bank highlights the significance of financial literacy in accomplishing national economic goals.

Gamification is essential for reaching younger audiences and first-time savers because it makes learning enjoyable, engaging, and relevant.

4. Bharat Goes Digital: Reaching Tier 2 & 3 Markets

Finally, the heartland of India is going online. FinTech apps are reaching out to non-metropolitan audiences by associating with local influencers and introducing support for regional languages.

• Challenge: Despite increased knowledge, many people still have trouble trusting and becoming digitally literate.

Supporting Patterns:

• Rural internet users are rapidly increasing, according to IAMAI-Kantar's research on internet adoption in India.

• The significance of vernacular material in promoting broad acceptance is highlighted by Google-KPMG's study.

To expand this reach, offline support, voice-based navigation, and localized user interfaces will be essential.

5. Goal-Based Investing: Aligning Money with Life Milestones

By linking SIPs to life events like a child's graduation, marriage, or retirement, contemporary FinTech apps assist consumers in investing with a purpose. These features include auto-adjustments depending on inflation or life changes, milestone reminders, and progress monitoring. • Impact: Makes investing actionable and emotionally relevant.

• Encouragement of Trends:

ET Money's planning tools demonstrate how visual dashboards boost user motivation and stickiness, while Morningstar India promotes goal-based investing as a more sustainable methodology. With this method, the focus is shifted from numerical figures to actual results.

What’s Holding Us Back?

Trust Deficit, cybersecurity issues, fraud threats, and ambiguous grievance redressal procedures all undermine customer confidence in spite of these advancements.

• Resolve the issue more transparently and apply SEBI's Cyber Security Guidelines more strictly. Overload of Information Overwhelming new investors are too many alternatives and complicated lingo. One potential solution is to streamline product descriptions and implement well chosen investment routes according to objectives and life stages. AMFI's investor awareness initiatives are an

excellent place to start.

Digital Disparity In India, more than 400 million people still lack dependable internet connection and digital skills.

The answer is to increase rural connectivity and digital literacy programs under NITI Aayog's Digital India plan.

What We Need Next ?

To sustain momentum, the industry must evolve along four key dimensions:

1. Stronger Data Privacy & Grievance Redressal

Building trust requires effective complaint resolution procedures and strong data protection regulations. • Policy Link: The Framework for Investor Protection by SEBI

2. Cross-Sector Collaboration

Innovative and inclusive products can result from cooperation between FinTechs, banks, asset management firms (AMCs), and regulators.

NPCI's initiatives to increase financial inclusion by facilitating UPI interoperability are highlighted in the Initiative Spotlight.

3. Local Language Content & Simplified UIs

Telugu, Tamil, Bengali, Hindi, and other regional languages should all be supported via apps, which should also have user-friendly designs for consumers who are not as tech-savvy. The An Analysis of the Google-KPMG Report on Internet Adoption and Indian Languages

4. Financial Literacy in Schools

Embedding financial education early in school curricula can create a generation of informed investors.

Initiative Spotlight: NCERT’s Financial Education Curriculum

 

Final Thoughts

FinTech has already made mutual fund investing faster, cheaper, and more inclusive. But the journey toward full financial inclusion requires addressing gaps in trust, language, literacy, and user experience.

The future lies in inclusive design, community-driven engagement, and policy-enabled collaboration . As India continues its digital leap, FinTech has the power to turn every citizen into an empowered investor.

What’s your take on FinTech’s role in reshaping mutual fund investing in India?

Have you seen success stories in your community?

What challenges do you think need urgent attention?

 

Share your thoughts with us in the comments section or on our Nasscom Communities platform!

References & Further Reading:

Association of Mutual Funds in India (AMFI)

SEBI – Cyber Security Guidelines

Paytm Money

Zerodha Coin

Groww

Kuvera

ET Money

NITI Aayog – Digital India

RBI – Financial Inclusion

IAMAI – Digital Adoption in Rural India


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SOUMYALIN SANTY
ASSISTANT PROFESSOR

I am a finance professional and educator with expertise in investment banking, portfolio management, and FinTech. I have presented research on leveraging technology to enhance mutual fund investments and is actively involved in academic and industry discussions on financial innovation.

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