Investment Fund Companies (TFIs) have not gone digital. What is worth improving

Investment Fund Companies (TFIs) have not gone digital. What is worth improving?

The year 2020 surprised probably everyone. At the beginning of the year, the market was shaken by the information about an impending pandemic. Then CD Projekt postponed the Cyberpunk premiere from April 16 to September 17. Lockdown of the economy, empty streets and streetcars. Cities have died out and become like Ghost Towns. Employees, those who could, worked from home. They also started to buy more from home, as almost all trade moved online. In the meantime, the Monetary Policy Council cut interest rates three times, finally bringing them almost to zero, to a symbolic value of 0.1%. We have never had such low interest rates before in history.

And on the one hand, people with loans, be it cash or mortgages, had their installments reduced, but on the other hand, people with savings faced a big challenge. Investing money in times of zero interest rates. And what's supposedly difficult about that, someone might ask? The main reason is that solutions such as deposits or savings accounts have almost disappeared from the market. They disappeared because I consider interest rates up to 0.5% per annum to be negligible, and unfortunately most of them are close to this value.

And what to do with cash, which overnight stopped generating additional income? Profits from deposits and savings accounts were not there anyway, because inflation ate them up.

The shock is accelerating the change

Investment Fund Companies (TFIs) come to the rescue in these difficult times. But before it was good, first it had to be bad. In March 2020r. more than PLN 20 billion flowed out of the investment funds (according to analyses.The number of investment funds in Poland has risen from 0.5% to 0.5% per annum (see chart 1), and at the end of March the assets in investment funds amounted to 238 billion PLN. At the end of November, there was already PLN 279.7 billion in all funds including PPK. Just as you can see in the chart below, the balance of deposits and withdrawals in the last 7 months is higher than in the same period of 2019 and 2018.

Shock accelerates change

TFIs record increased inflows. Representatives of the companies with whom I spoke are still expecting net inflows into their funds and are hoping that the "golden times" are still ahead of them. On the list of registered Investment Fund Companies there are currently more than 50 entities, of which with the offer of open funds there are nearly 30. What is very interesting, only 5 of them provided their clients with a dedicated mobile application. I do not count here the banks, which in their banking applications have functionalities related to Mutual Funds.

Some TFIs, to their horror, do not even provide the possibility to buy their funds online, but only redirect to meetings with agents, representatives or distributors. And I will add that not all distributors have the ability to buy online, and thus, in these "golden" times, some TFIs are closing their way to customers.

Why TFIs need a mobile app or online shopping

The mobile channel, even before the pandemic, accounted for more than 60% of web traffic. Today it is already approaching 70%. In some stores, before the pandemic, the share of online sales was only 15%, and today it is more than 65%. The exponential growth of online shoppers can be compared to the share price of CD Projekt when Keanu Reeves appeared on stage as Johnny Silverhand at E3 in Los Angeles.

TFIs and their methods to discourage customers

Not all distributors and not all TFIs provide the option to buy online, which in my opinion is self-limiting business. Some TFIs use systems that remember Próchnik's debut on the WSE. Maybe not so much, because at that time the orders were submitted on paper, but still they do not inspire confidence and deter the potential customer. Why? Below are examples:

Logging in through such a website makes me, as a layman, wonder whether I am logging in to TFI or to some fake website. PSAT, MOVENTUM, not the TFI website? I am not insulting the companies that created these systems, but I am paying attention to the way the client looks at things. Apparently in the name on the bar is the name of the TFI (intentionally covered), but if I am not sure, I do not open an account and do not buy. The client has just left. Good thing there is an https protocol, although that still won't save the situation. I'm leaving aside the fact of aesthetics, as both of these websites surely remember Tonsil's debut, but still, it's all about safety and trust. Let me just mention that I submit sensitive personal data there, including data from my ID or account number. And finally a gem. If someone doesn't know how to take care of a website and understandable messages, how is he supposed to take care of my money.

Another TFI also has an option to buy funds online. A well-known and very reputable company. Not some bush company. Instead, he is redirected to the partner's website and a message appears.

Bravo. I want to entrust you with my money, maybe even big and maybe even for years. And TFI, before I even buy funds, is no longer responsible for technical problems of the partner. Imagine such a situation while logging in to Internet banking and such a message. Something is wrong, I'm not passing, I'm not buying. Another client has left.

Let's assume that I did not notice the bar or reflexively clicked further without noticing the message above. I went through the MIFID questionnaire, filled in my sensitive personal data, gave my account number. The stairs are just beginning. I will only get access to the account set up to see how management will look like and what options I will have once I deposit money. I understand that this is to prevent empty registries and reduce costs. Unfortunately, without this the TFI will not gain the trust of the customer. Sometimes it is so that the customer needs to see the system, get used to the system or application, get some push’y, or just read the news provided. Another client has left.

And so before the customer buys, a large part of them abandons the purchase, precisely because of the inadequacy of technology. From the information I have gathered from TFI, the channel for purchasing funds online (where the systems outlined above are) is practically non-existent. The case of? I do not think.

And it does not surprise me that some TFIs do not record an inflow of assets during the pandemic, even though market sentiment is really good. Below is a summary of inflows to TFIs in November 2020. and total net asset value.

Mobile or web application

For comparison, the situation with a dedicated mobile application would look quite different. The customer downloads the application from Google Play, App Store or App Gallery. I immediately get access to the basic functions. Initial access to a training module for beginners or intermediate. It also has access to commentaries, reports and expert knowledge. Push’e or emails inform him of upcoming webinars and important market information. In the summary of the day section, he can read or see a video of the most important topics of the past day, and in the calendar section, info about upcoming important events. This approach also has a very important educational aspect for customers. For many of them, the transactions this year are the first in the investment market or the first after the crisis of 2008, so it is important to this initial stage. Access to information distributed directly by TFI by sending push’e or posted in news sections in the app, will give security. On the one hand, the lack of fake news, access to reliable information and analysis, and on the other hand to protect customers from the temptation to look for information in the Internet and forums. And there to find reliable and verified information is like finding a needle in a haystack.

The purchase process? Simple as a cash fund chart (at least in theory)

The purchase of funds will only take place when the customer is ready. Then the client opens a free account and completes the MIFID questionnaire. Clear messages will guide him through the questions, and at the end the application will explain to him what the assigned profile means. The customer in the app can buy funds that fit his profile, and if he chooses a fund outside the target group, he will get a message warning him of the fund's inadequacy. Purchasing a chosen fund immediately informs about the minimum amount. After entering the amount, the customer uses fast, mobile payments, which also at the first transaction serve to authenticate the customer's identity. The purchase process as the customer knows it from online stores. I know, I trust, I buy.

In the application the customer gets not only the opportunity to buy, but also to sell and convert. In the application the client logs in e.g. with a fingerprint or a 4-digit pin – as it is in banking applications. Purchase of new units, sale or conversion is carried out in a simple and intuitive way, displaying information to the customer about the profit realized and the value of tax to be paid – outside IKE or IKZE, then the customer receives information on how much tax they would pay if they chose another form. The client can also receive information that moving between funds in the umbrella will not result in a tax charge. Of course, this information is neutral from the point of view of MIFID2, because it only reminds the client of the possibilities that he has within the framework of the CIF.

Interactive preview of the portfolio

The problem I encountered with the presentation of the portfolio is often the same in many TFIs and investment products (OFE, PPK, PPE). Well, the results presented by the portfolio often do not show the results of my portfolio, but the results of the fund. To put it bluntly, what does the client care that the fund has an annual rate of return of 10% if he has only just invested in it. What matters for the client is how much he/she earned on it. Therefore the presentation of last 1m/3m/6m/12m results should relate specifically to the client's investments. In addition, the rate of return on an annual basis, so that he/she can compare the results and the result in PLN. Unfortunately, it is difficult to find this information even in the banking systems of TFIs.

The problem with evaluating the results of an investment is compounded when the client e.g. It makes cyclical additional payments, IKE, IKZE, PPK, PPE, OFE. Calculating the rate of return by the customer himself is rocket science there. The payments are irregular, the amounts vary from month to month. Wouldn't the client feel safer with his investment if he knew that his average annual rate of return on OFEs was 5-7%?? Wouldn't he be more eager to join PPK if he knew that OFE (despite its drawbacks) brings him concrete profits?? Which customer is aware of the fact that Open Pension Funds have generated an average of 300% profit for 20 years?

Clear, easy-to-understand portfolio presentation should be created for customers and with customers. The client will not log in to the funds account as often as a brokerage house client, therefore it is so important to see the account balance, the chart of changes in the portfolio value and individual positions at a glance. User Expirience is also an element that gets customers used to it and keeps them for longer.

You don't have to be mBank to send Push messages. You just have to use it differently. We live in the information age. Information is nowadays crucial for making decisions. A client can receive a push message with just selected information from the market. At a time when TV and press are trumpeting: "there is a big crisis coming", or "there was blood on the stock market", or "CD Projekt is the biggest failure of the year", the client needs reliable information. An invitation via push message to watch a short commentary by an expert on current events increases the customer's sense of security and their trust in the company.

TFIs often organize webinars where they provide market information, monthly or quarterly summaries or comments on current events. I have been there, so I know that there are no crowds. And sharing knowledge leads to trust. A personalized message directly to the phone first with an invitation and then with a reminder about a valuable webinar, in hours adjusted to the clients' work (more 18-20 than 12-13), can increase attendance. Why there are more visitors to marketing or sales webinars than wealth management webinars?

Push messages can also be used for sales. But how to sell? A MIFID2? Of course, you can not advise the client, buy fund x, and you will earn 10% and be rich. You can send information: do not pay the tax belka, use IKE. Do not pay PIT, deduct even 2007 PLN from your tax, using IKZE. A client may also receive a message, when TFI introduces a new fund to its offer. At Brokerages, clients set themselves alerts when a particular asset reaches an assumed price. In the case of funds, also the client should be able to set himself an alert. A client who does not have information is a client who feels unprotected, and these days no one can afford that.

Each TFI on the market will define as its best, target customer: a customer 50+, a high earner, educated, aware, a senior manager or a company owner. And as on financial or professional issues TFI has no influence, but on issues of knowledge and awareness it already has. Customer interest in the investment process is usually initiated by distributors or are bank customers (nota bene also a distributor). And I don't mind. However, TFIs could initiate the awareness building process. I will mention here the distributors (I will not name them although they deserve praise) who put emphasis on education. Valuable webinars, quality content and finally knowledge that helps to make the right decisions.

Providing an e-learning platform for clients, divided into categories and stages of advancement could definitely influence the level of knowledge of Polish investors. Certificates issued upon completion of training would be of value to young, ambitious people. It would give employers information about the level of knowledge and awareness of processes. Finally TFIs would gain educated and grateful for the knowledge, current or future customers and the opportunity to promote their training in a wide media. Access to knowledge is the most valuable thing in these difficult times.

What counts more than the customer's opinion?. Technology is conducive to gathering such information. A customer logging into their dashboard, whether through the website or mobile app, can receive a survey. With a short question, we can explore what might interest customers more. E.g. we are planning to launch a new fund. Which fund do you think would be more interesting? Gold, US bonds or Chinese stocks.

The analytics I have in mind is not only analyzing what customers expect, but also analyzing what customers do. Today, technology can study the functions that customers use most often, the places on the application screen that they are most likely to click, or what the customer's movement looks like step by step on the page. Why collect and analyze such information?? In order, on the one hand, to adjust User Experience to users' expectations, but on the other hand, to be able to prevent certain, unconsidered actions of the client. Artificial intelligence can verify how often a customer logs into their account and what information they are looking for in the portal. E.g. A system administrator may receive information that client x logs into the system three times a day, checks his account balance and looks for information on redemption of funds. It is worth to pass such a contact to the call center, call the client and ask if he/she needs any technical assistance. Perhaps he wants to make a sale, but does not know how to do it? Perhaps he sees information on TV that "blood was shed on the stock market" and would like to know what impact this situation has on his portfolio, etc. Such contact will make the customer feel taken care of and will make him feel more secure in the given TFI.

Well-planned site analytics would also help TFIs understand that customers want to buy funds directly through their site, but turn back when they see site quality or unfriendly messaging. Online stores have long been analyzing why a customer abandons a shopping cart, at what point in the registration process they abandon further data entry, or finally, how much time they spend on a website. All of these activities are designed to increase revenue and maximize conversions.

Video content

An app or trading site, is not just an operations center, but also a hub for deep learning. Today's media are dominated by video. Advantage because users are definitely consuming them better and more often. If a user has a choice between a 3 minute text to read and a 3 minute video to watch, they will choose the video. Video served in an interesting form engages attention and conveys content in a friendly way. If the content provided by TFI will be interesting e.g. In the form of a 3-minute teleexpress summarizing the day on the market, the users seeing the value in them will come back for it. We live in a world of information, and information is gold.


After analyzing the IT systems of TFIs present on the market I am a bit dismayed. Appalled by how the systems look, how the customer's path to purchase looks, and how not User Friendly they are.

Not being able to buy online or not being able to log into the trading system before buying is not user friendly. Especially today, in the era of COVID and near-zero interest rates, access to online fund purchases, let alone mobile wallet insights, is important. Technology today offers enormous opportunities, which, according to the analysis, TFIs have so far very rarely used.

Finally, I will ask one more very important question. How TFIs are going to fight for a young client (18-24 years old)? A client who today concludes 90% of his transactions via smartphone. I understand that the best client for TFIs is a client 50+, but one day these twenty-year-olds will have a need to save or invest. Already today they should be educated and attached to the TFI, to which they will entrust their savings. It will be very difficult to win clients over from banks that have limited cooperation with independent TFIs or platforms such as Revolut. Young people are attracted to technology, gamification, simplicity and breaking schemes.

Each person at the beginning of his or her investment journey learns the term diversification. So how many legs do our TFIs stand on? You can say we have OFE (still), PPK and PPE, FIZs. But maybe it's also worth betting on diversification of sources? Do not look only at distributors and rely on an independent source of customers, loyal and educated by TFI and grateful for the knowledge transferred? Maybe it is worthwhile, however, to digitalize business, simplify processes and become User Friendly? And finally, maybe it's worth taking responsibility for customers, educating them and raising financial awareness, which is so lacking these days.

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