Fintechs worried as new customer consent flow for accessing mutual fund portfolio to increase cost, friction

MF Central consent process becomes harder

Fintech companies are concerned about the new customer consent process for accessing unified Mutual Funds portfolios via a single dashboard, which is scheduled for implementation in January 2026.

They fear that the new process through Mutual Fund Central (MF Central) is rather cumbersome and will cause customer drop-offs to soar, leading to significant customer acquisition costs and potential business loss.

“The simple customer consent journey over the past three to four years is what helped the country’s mutual fund industry grow by five times over the last six years. The new process suggested by the association and regulator complicates the journey and could turn the clock back in our digital journey,” said a product head at one of the fintechs working in the industry.

The new consent process

The new process suggested by the Association of Mutual Funds in India (AMFI) includes an OTP (One Time Password), the customer choosing which data to share with companies or fintechs, downloading a QR code that contains the customer data in PDF form, followed by uploading the QR code (which again acts as the customer voluntarily submitting the data to companies) on company websites or apps.

The rules for MF Central, as well as the mutual fund industry, are set by AMFI, a non-profit government organisation that acts as a supervisory body for the sector, and the body works with the markets regulator SEBI (Securities and Exchange Board of India).

All the Asset Management Companies (or mutual fund houses), brokers and distributors of mutual funds are part of AMFI. MF Central is run by the country’s largest mutual fund registrars - KFintech and CAMS.

Customer complaints

“The change came after AMFI received many customer complaints about the platforms accessing data for which they had not given any permission,” said a senior executive with a wealth-tech platform.

However, many customers felt that the earlier process was too simple, with low friction posing several compliance risks apart from the potential porting of customer assets easily. The one-time permission with OTP gave fintechs access to all of customer data without any control on how the data is going to be used.

Interestingly, while the process becomes harder through the MF Central, the Account Aggregator process still uses the same single OTP method.

Disrupting business models

A lot of new generation wealth-tech fintechs relied on being the platform where customers can see all their investments, including mutual funds linked to their demat accounts, in one place/dashboard.

Several fintechs' business models offered an analysis of the customer's investment strategy or performance, while recommending or suggesting other wealth products with similar or better returns, as well as for diversification of assets.

Without access to customers’ full investment portfolios, some of the offerings had no value, undercutting the fintechs’ value proposition.

Impact customer service

Some of the fintechs Moneycontrol spoke with argued that QR code data could be misused by fraud as much as in the earlier process, but the responsibility moves back to customers entirely.

“This will encourage the platforms to pass the buck, arguing that customers gave their consent. This will make it impossible to deliver better customer service as platforms will not have visibility into customers’ portfolios,” the founder quoted earlier said.

Over the last couple of years, there were several instances of customers taking to social media to complain that their investments in certain SIPs were missing, and the credits were not found in their demat accounts.

In the case of a unified dashboard, if one platform shows any errors because of bugs, customers could access the data in another platform or app, thereby reducing any confusion or dependence on a single platform.

“The beauty of the existing system was its simplicity and interoperability. If one platform showed incorrect data, investors could cross-check another app instantly, since all of them fetched information from MF Central’s APIs,” said a senior executive with a wealth-tech platform.

Increasing friction, drop off

Another senior executive mentioned that the new process is time-consuming and introduces friction that will result in significant customer drop-offs, particularly at the stage where users must download and upload the QR code within a 24-hour window.

“It is not clear what the QR process solves. Customers already chose what limited data they want to share, and for each set of data that is shared with a fintech, they enter OTP, giving them granular control over the data,” the fintech executive said, adding that not every customer is well-versed with using or understanding what a direct or regular mutual fund is or whether they want to share entire transaction history or just the summary.

“Not everyone wants this level of control. This makes the process cumbersome for most of them to drop off,” said the founder of a fintech startup who did some pilot tests with select customers.

“We found that only 5 percent of customers make it through to the full journey, as against the current standard of 50 percent of customers completing the process,” the founder added.

This means that only digitally savvy customers will be able to access all their portfolios under a single dashboard. Many companies will have to give customers multiple offers and discounts to compel them to complete the process.

Incentivising existing apps

The new process creates a barrier for customers looking to switch investment apps, making it difficult to access their entire portfolio on a new platform.

Over the past five years, a lot of customers have moved from legacy platforms to fintechs such as Groww, Dhan, INDmoney and Dezerv, which offer better user experience, products and offerings.

“The app with a much better user experience will not be able to convince the customer to move because porting of data is not easy, incentivising a clunky or legacy platform like banks or some AMCs, over one with a much better user experience,” the product head quoted earlier said.

Moreover, the complexity may compel customers to seek help from wealth managers, who could potentially deceive them into porting their assets without their full knowledge or consent.