On Monday (June 11), mutual funds (MF) worth nearly a million dollars were bought on BSE StAR MF. A dedicated distribution platform for MFs at India’s oldest stock exchange, it has seen its total turnover grow at a compounded rate of 114% in the last four years. And among the many strategies that have helped boost this business is the bourse’s use of Telegram, the cloud-based instant messaging platform.
About 4,000 mutual fund distributors are part of a Telegram group of the same name, BSE StAR MF, which they use for everything from trouble-shooting to knowledge-sharing. It began as an informal group of four distributors about a year ago and is now, as BSE claimed in a statement last week, “the largest and the fastest growing group of independent financial advisors or mutual fund distributors on social media in India.”
While it still is an informal group, the stock market on its part has extended a certain degree of legitimacy to it by getting its officials to join the platform, addressing issues almost instantly. Even Omkeshwar Singh, head of mutual funds at the exchange, responds to distributors’ queries in the Telegram group. Sometimes, it can be simple things. For example, a new mutual fund buyer was recently unable to register before making a purchase because his photograph that was to be uploaded wasn’t up to scratch. The BSE staff was quick to specify the size of the picture, resolving the problem.
“It is better than the toll-free number. We get our queries addressed within minutes at any time of the day,” Milind Shah, a 38-year-old mutual fund distributor based out of Ahmedabad, told Quartz. “People respond even after business hours. We don’t have to wait till the next day,” Shah.
There are other such groups, too. Shah himself is the administrator for eight of them on Telegram, each with anywhere between 1,000 and 3,000 members. He is also a member of similar groups initiated by the National Stock Exchange (NSE) and MF Utilities, a shared services platform for firms that operate mutual funds.
Meanwhile, as the size of its Telegram group expanded exponentially, the BSE StAR MF accounted for a fifth of all new mutual funds sold in financial year 2018, BSE said in a statement last week.
The distributors, too, have benefited. For instance, they leveraged peers in the group, who are from other cities, to get paperwork done on their behalf with clients in their respective locations, without having to travel themselves. Besides, relevant news and notifications are posted in the group almost in real time.
The choice of Telegram over the much more popular Facebook-owned WhatsApp messaging platform may baffle many, but Shah has his reasons. ”There are too many distractions on WhatsApp. There are also restrictions on the size of the group, the kind of content we can share. That’s why we chose Telegram,” he said.
BSE’s Telegram efforts may be timely and a lesson for its peers. India’s mutual fund industry is growing by leaps and bounds as the country’s small savers are turning to the financial markets in hordes. A staggering Rs87,400 crore ($13.2 billion) was invested in MFs in April and May, despite the volatility in the share market.