Digital Access Could Expand Mutual Fund Investor Base to 200 Million

India’s Mutual Fund Opportunity Hinges on More Than Digital Reach

The industry’s next growth phase will depend on turning easier access into durable investor participation and better outcomes.

Products must fit how people earn

The scale of the opportunity is clear, but reaching a much larger investor base will require more than making investment platforms available online. Executives at the BFSI Insight Summit pointed to rising household incomes, product innovation and greater confidence as important conditions for growth. Kuvera founder Gaurav Rastogi said broader participation would depend in part on wealth spreading deeper across the country as India becomes richer.

PhonePe Invest head Nilesh Naik argued that products should also reflect the way people receive income. A conventional monthly investment schedule may not suit self-employed people or workers with daily cash flows. PhonePe’s daily systematic investment plan (SIP), designed for that audience, acquired nearly 500,000 customers within six months, Naik said. The example illustrates how adjusting the investment mechanism can make regular investing more practical for some households.

The next test is investor outcomes

Expanding account access is only one measure of progress. Rastogi said the industry’s focus over the past decade had largely been on access, while the next phase should give greater weight to customer outcomes and the quality of financial advice. He also identified separate know-your-customer requirements for banking and investing as a source of friction, calling for a unified framework.

That shift matters because investors may enter during strong markets but be less prepared for extended periods of weak returns. Bajaj Capital chairman Rajiv Bajaj said subdued performance can make it harder to maintain confidence, particularly when investors judge funds by recent results. Education and handholding, including explaining how markets have behaved in past downturns, could help investors better understand volatility. For households, the distinction is important: easier access does not by itself ensure that investments remain aligned with long-term goals.

Technology may widen advice, not replace it

Technology could help providers understand customers, lower costs and make small-ticket investing more viable. JioBlackRock Investment Advisors chief executive Swapnil Bhaskar said platforms should simplify the investment journey and communicate in regional languages, while complementing rather than replacing distributors.

The need for scalable support is underscored by the distribution of assets: Naik said the top 10 per cent of individual mutual fund investors account for nearly 55 per cent of assets held by individuals. Serving investors with smaller portfolios through traditional, high-touch advice may be difficult commercially, making technology-enabled assistance a possible part of the answer. But digital tools will need to address investor behaviour as financial needs change over time, not simply make transactions easier.

Artificial intelligence could add another layer of support. Bajaj said investors could use AI to cross-check financial advice, while noting that accountability remains a key distinction: a human adviser can be held responsible for recommendations. His firm’s AI-based portfolio analysis product, WealthLens, had 85 per cent of its initial users coming through direct plans, he said. The figure points to potential reach beyond traditional customers, but does not by itself establish how the tool affects investment decisions or outcomes.

Highlights for investors

• India’s mutual fund investor base has risen from around 10 million to about 65 million over the past decade.
• Industry executives see 200 million investors as possible, with growth linked to incomes, product design and confidence.
• PhonePe’s daily SIP feature attracted nearly 500,000 customers within six months, according to Naik.
• Improving investor outcomes and reducing onboarding friction are emerging priorities alongside digital access.
• Executives see technology and AI as potential support for advice, while stressing the continuing role of human guidance and accountability.

Investor Note: A larger mutual fund investor base could broaden participation in financial markets, but scale alone is not a measure of investor success. Retail investors should assess whether a fund, investment plan or advice service fits their goals, risk tolerance and cash-flow needs, and avoid treating recent returns or digital convenience as a substitute for informed decisions.