As direct online sales of funds gain traction, Chinese asset managers are increasingly seeking to distribute products via mobile devices. Some are developing proprietary applications but doing so is not cheap, and they must compete against established e-commerce players such as Alibaba and Tencent.
Tianhong Asset Management – which uses the online and mobile platforms of Ant Financial, the financial services arm of Alibaba – is planning to launch its own direct mobile app.
But the firm, which had huge success selling its Yu’e Bao money-market fund online via Alipay, points to the expense of promoting proprietary apps.
Marketing costs are very high for such platforms, said Li Jun, deputy general manager of Tianhong’s product department. “It’s like a fund house opening a shop on the internet – it needs visitor traffic, then installations and transactions.”
For an internet finance firm to bring in a new user in China, the average cost is Rmb8 ($1.20), said Huang Xin, president of mobile app promoter JPush, in the Securities Times in April.
Still, managers clearly see the outlay as worthwhile. AsianInvestor found that 32 Chinese fund companies provide their own mobile app in the Apple store, and 21 companies are doing marketing on their website.
Most managers are using apps purely for selling MMF products, but firms such as Harvest, China AMC and China Universal have started to offer more functions, such as providing performance and market data.
Harvest was one of the first movers in online sales and mobile apps, and uses both third-party set-ups and its proprietary platform – but it declined to comment on the cost of marketing these offerings.
The firm has established an internet finance centre, comprising two units: an e-commerce platform division and e-commerce business division. The former is responsible for fund sales via the firm’s website and smartphone app, LiCaiJia, while the latter looks after partnerships with internet companies such as Tencent, JingDong, Baidu or Ant Financial.
Harvest is making direct sales of mutual funds and segregated account products via LiCaiJia, which is connected to 15 banks and supports money transfers from those firms. LiCaiJia has around 2 million users, most of which have come on board since the upgrade last September.
Chinese fund houses are keen to sell funds directly, but they don’t have the benefit of an extensive branch network and so cannot compete with banks on client reach, noted Wang Ling, Harvest’s executive director of internet finance. Hence their proprietary platforms need to offer a full range of products and services and competition is growing fiercer in this regard, he added.
Jony Li, director of Harvest’s internet financial centre, sees a trend for customers to set up fund accounts on their computers but execute transactions using mobile devices.
Mobile platforms account for 70-80% of transactions on Baidu financial platform, AsianInvestor understands.