In February this year, we featured an interview with Raghav Iyengar of ICICI Prudential MF covering the launch of the Medical Advantage Facility linked to their Savings Fund (A great new product to tap idle savings). I am reproducing here the intro para that I penned for that article:

"A year ago, we suggested a product idea: Simple idea to gather stable assets. In the last 2 WF conferences, we have been tabling this idea for the industry to take up. It is therefore with a deep sense of satisfaction that we write this intro piece for an interview with Raghav, where he discusses the launch of a product that taps very effectively into the vast pool of "contingency funds" that most Indian savers keep aside - largely for medical contingencies.

What Raghav and his team have done goes far beyond just branding and packaging of a contingency fund - the Medical Advantage Feature linked to the ICICI Prudential Savings Fund offers a host of conveniences you need when medical emergencies strike: cashless facilities across hospitals, medical discounts, 24X7 doctor access and second opinion on medical situation.

Your clients now have a solution that enables them to save smartly for medical contingencies, and get a load of benefits at no extra cost. You now have a great opportunity to attract huge pools of "safe money" that always eluded you and sat idle in savings accounts and savings account linked deposits.

Thank you, team ICICI Prudential, for taking up this idea and creating a product with a whole lot more."

Quantum leap forward in connecting with middle class savers

I sincerely believe that with this launch, the industry has taken a quantum leap forward in connecting with crores of Indian savers with propositions that appeal to them more readily than equity does. We know we are a nation of great savers but poor investors. There is a popular saying that one has to walk before learning to run. In the context of our industry, we need to first get Indian savers to become smart savers before they become smart investors. I believe the MAF facility is an important step in this direction, for the industry.

Imagine a whole range of such propositions

Imagine a situation a couple of years down the road, when you have the following features tagged to savings funds of various fund houses:

1. Medical Advantage Facility - like what I Pru has introduced, with a cashless facility on hospitalization, discounts on medical expenses, facility of second opinion from panel doctors, and a range of such thoughtful additions that help make hospitalization less stressful

2. Holiday Saver Plan - with a range of tie-ups with travel agents, discounts from international hotel chains, guidance on planning exotic holidays, and a range of such thoughtful additions that make your dream vacation truly memorable

3. Home Saver Plan - with a range of tie-ups with reputed builders across the country, discounts on home purchases, expert advice on legal documentation for your proposed home, discounts from home interiors stores, free guidance on interior decoration, and a range of such thoughtful additions to make your dream home a real "dream come true"

Compelling proposition for EVERY middle class family

Every middle class Indian family saves up for each of these 3, at some point or points of time in their lives - medical emergencies, a big holiday and down payment for a home. Every middle class Indian family can save smartly for all of these, if the industry comes up with intelligent ways of attracting these savings, like what I Pru has done with its Medical Advantage Facility. The need is clear, the product (Savings Funds) is superior to savings bank accounts, and the add-ons connect with the need so clearly that the overall proposition becomes truly compelling, especially when these add-ons come free!

Think of a situation where you get every middle class Indian family to start saving smartly with such propositions that they can connect with so easily. Think of this as your "foot-in-the-door", your opening batsman, your entry into the family's financial decision making. Can propositions like this be the ones that get us that elusive retail penetration that the industry is so desperately trying to achieve?

What I Pru's MAF facility linked to its Savings Fund has done is to create a new paradigm for mutual funds to connect with Indian savers. Its still only initial days, but what I Pru is seeing in the first couple of months is that interest in MAF is evenly spread across the two critical age groups that the industry focuses on. Around 40% each of MAF applications have come in from age groups 18-35 and 35-58, with smaller proportions coming in from the above 58 segment and the below 18 segment. MAF is finding appeal across young as well as middle aged savers.

More such propositions will follow from the industry, for sure. And with each such proposition, retail distributors will get newer and more powerful ways of making deeper and deeper inroads into the vast and rapidly growing Indian middle class.

In case you want to know more about I Pru's MAF linked to their Savings Fund: Raghav Iyengar's interview on WF: Click Here MAF microsite from I Pru: Click Here Comprehensive product presentation: Click Here

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