Innovation is the key!

Enterprises across the world are coming up with innovative ideas to attract investment aimed to increase financial inclusion. Insurance companies, banks, telcos and MFIs are partnering and making arrangements that allow them to utilise each others infrastructure for their businesses. These arrangements enable companies to widen the customer approach, help transfer of funds for investment across boundaries, selling products like insurance policies through other channels. Due to increasing competitiveness, Pakistan has seen small banks and non-bank AMCs coming up with new ideas in order to compete with the larger banks that are benefiting from relatively higher margins. The National Investment Trust Limited (NIT) has come up with one such innovation; the launch of ATM based redemption facility for its NI(U)T fund, which allows redeeming of up to Rs.25,000 from any Summit Bank ATM or any 1Link ATM network. While talking to BR Research Hammad Aslam, Head of Research at Lakson Investments, said that the "process of redeeming investment from AMCs can take up to 2 days, whereas this new redemption facility allows 24-hour redemptions. Hence the hesitation that investors had due to conventional method of redeeming investments would slightly diffuse". He added that "asset managers are coming up with new ideas that aim to reduce the hassle that customers have to face while redeeming, managing and investing in mutual funds." Another example is the emergence of international funds that enable diversification and provide legal medium for taking exposure in the foreign markets. In the absence of proper channels, people send money out of Pakistan using illegal means like "hawala", to diversify their risk. This money drain has grown in recent times, as emerging markets are offering much better returns. An industry expert said that "recently Pakistan has seen the emergence of new funds that are offering investment in international equity, money and commodity markets, including the investors favorite emerging markets; hence enabling investors to diversify country risk." The ever increasing competition in the financial markets of Pakistan has forced AMCs/banks (especially small ones) to come up with new ideas that give more value to their customers, and in return attract investment and increase the pool of funds under their management.