On 19th June, Moneylife Foundation and IDBI Mutual Fund held a workshop for mutual fund investors on the free online tools offered by leading registrars, Karvy and CAMS (Computer Age Management Services), to track portfolios. These tech-tools empower investors by providing a snapshot of their investments. A very lively interaction with a demanding audience gave us invaluable insights on customer issues and the solutions available. In this Cover Story, for the first time, Raj Pradhan offers you the most comprehensive information ever on tech-tools for managing your investments. Karvy has also decoded, especially for Moneylife readers, the process of ensuring hassle-free transmission of shares in an easy-to-understand format

We are in a world dominated by technology. One can sit anywhere in the world and execute a trade online, pay credit-card bills or buy insurance. You no longer have to call your broker to place a trade, pay bills by snail-mail or buy insurance only when an agent comes knocking on your door. Many tech-tools have already become a part of our lives, allowing us to transact, track our portfolios and receive transaction alerts from banks, brokers and service-providers on a 24-hour basis. Tools are available for pulling together data from different sources (Karvy and CAMS provide consolidated ‘Active Statements’), consolidate and monitor investments on an ongoing basis, either online or through software products that sit in our personal computer. Some of these services also allow you to execute many low-risk changes to your personal information records. Moneylife has surveyed almost the entire landscape of financial tools and tested some of them to bring you the findings.

Let’s start with personal money manager (PMM) tools. Their usefulness lies in their ability to not merely search and compare investments, but also to consolidate them. Most of us have multiple investments with a separate banking relationship for each of these; we may also have investments in different geographical locations. PMM allows us to pull these together to get a clear macro picture.
 
Online Options

An online PMM application gives you a 360-degree view of your finances by consolidating bank accounts, credit cards, loans, insurance and other investment details. All this information is available in a single window. The online money manager allows you to categorise and list your spending and track your balances, trades and purchases from your linked accounts, rather than tracking each account individually. This gives a clear insight into the health of your finances and, consequently, enables better financial decisions. PMM has a financial calendar also and sends alerts and reminders through email or SMS on your budgets, payments and dues, to help you avoid slip-ups, payment of late fees and penalties that could affect your credit score.

The three key players in the Indian market are: Intuit India (its parent company, Intuit Inc, is the market leader in personal finance tools in the US), Perfios Software and Arthamoney. Perfios is a Bengaluru-based company co-founded by VR Govindarajan (one of the founders of Aztec Software which was later taken over by Mindtree Consulting). Arthamoney is financially powered by the Times of India group. These products are targeted at the urban Indian customer base which is ambitiously estimated at a million users in three years. Each product allows you to create an online account without having to buy the software. While the other two are free currently, Intuit has a nominal charge and offers a free trial.
The key question is: Will Indians ever want to pay for such a product? Mint.com, a leading PMM in the US, is offered free. Intuit India’s managing director, Umang Bedi, tells us, “We believe a rupee a day is a fair price for the offering. We are the market leaders in North America because we believe that customers find our solutions to be superior. We have a similar belief about Intuit Money Manager wherein we charge for the product and reinvest the money into keeping it unmatched in safety and security, which is a big concern.”

Aditya Prasad, head of sales and business development of Perfios, says, “Our base product will continue to be free forever. The value-added services will be packaged as part of a paid subscription service. We are working on many monetisation avenues. Some of them are already in place and have been generating revenues.” Rahul Majumdar, CEO of Arthamoney, says, “We have kept the service free because we want the Indian consumer to first experience the service. However, we do plan to introduce a priced version shortly.” Arthamoney also has cross-selling arrangements with banking, insurance and financial services companies. Mr Majumdar says, “We do not share data but offer the products to our customers and if they are interested, we work with the partners to complete the service.” It is hard to believe that this will not involve a degree of push for partner products. This is how the three products compare on some key parameters:

Security Issues

An online money manager will work well only if you provide online access to banking accounts for a one-time setup. This raises security concerns, but here is how it works. The login username and password for individual online banking accounts is used to retrieve read-only data. The ‘transaction password’ for online banking should be different from the ‘login password’ for greater security. You don’t have to reveal your ‘transaction password’. Customers do not have to give any personally identifiable information, making the process safer. Moreover, the account is completely anonymous and requires only a username and password. All the banking accounts are linked to provide consolidated data. In the consolidation process, vendors will have access to your financial records on a read-only basis, but privacy policies of these entities should prevent abuse of information.

All three vendors use impressive technology with decent security features. They have security certification from several reputed third-party service-providers and, without getting into technical details, it can be safely assumed that the tracker is as secure as your online banking account. The caveat is that you are not directly connected to an online banking account but indirectly through the online money manager.

The vendors have worked at keeping customers’ login credentials for accessing the website safe; for this, the security of a password and its location are important. The three companies have dealt with this in different ways. Perfios has chosen to alleviate security concerns by locating the encrypted login on the customer’s personal computer (PC) and not on their server. Only the encryption key is stored on their server. But what if the customer’s PC is not secure? Intuit has built-in security at three levels: product, partner integration and company. Aditya Prasad points out that “In Perifos, the credentials are encrypted and stored in the customer PC, but the key to decrypt them are not stored in the user’s system. So, even if the customer PC is compromised, there will not be much damage. Similarly, if you change your PC, all you need to do is to re-create the credentials for your account. All the data is preserved and there is no need to create a new Perfios registration.” The other two vendors store the encrypted login on their server which they say is secured by enhanced physical security, firewall protection, electronic shielding and other security measures. According to Rahul Majumdar, Arthamoney does not find any major difference in security levels with respect to a PC-based solution for password location. “In fact, the reliability and security is better managed centrally on a server within a controlled environment,” he says.
 
How do the vendors fetch read-only data from an individual’s online banking website, when Indian banks don’t allow a third-party API (application programming interface)? Until the Reserve Bank of India (RBI) issues some guidelines or the banks open up their API, vendors have to rely on what is called  ‘screen-scraping’ or some equivalent technology. A screen-scraper collects character-based data from the display output of another program. They can extract the data and present it in a richer format with graphs or tables. The problem with screen-scraping is that when banks change the layout of their website, the data feed from which the vendors grab the read-only data may not work and need re-programming.

Umang Bedi tells us, “Most data communication from the partner site to ours is done using the Online Financial Exchange (OFX) standard which is adopted by over 5,000 banks and is deemed an industry benchmark. Alternatively, we use Web Connect, another leading global standard adopted by over 21,000 financial institutions worldwide.” Intuit also aggregates data via standards-based approaches, once it has the user’s consent to do so. The company refused to answer our specific question about the impact of changes to the layout of the bank’s website, saying, “The question is related to proprietary technology.” Mr Prasad tells us that Perfios’s application “is designed to handle the change in the layout of the bank’s web pages. To the extent possible, we shield these changes from our users and make the required changes even before our user notices them. In addition, we are also interacting with various banks to see how well we can integrate with them.” Rahul Majumdar says, “We use screen-scraping technology and have a team which continuously tracks and monitors changes on web interfaces of banks.” This, he claims, ensures that the Arthamoney site is always updated with accurate information.

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