Open Super is a new world of opportunity for funds
Generating genuine member engagement is the well-known superannuation utopia. But that elusive goal may soon take a big step closer to becoming reality.
The super industry is likely to quickly follow the banking sector into a new ‘open’ world of customer engagement, sparked by the twin developments of the New Payments Platform (NPP) and Open Banking.
In a new KPMG report out today we outline a potential ‘Open Super’ era which will see member and employer interactions transformed and superannuation integrated into everyday financial life, using emerging payment and connectivity capabilities.
In our increasingly connected societies, the right to data ownership has become a hot topic. With the Consumer Data Right (CDR) bill through Parliament, Australian customers will soon have with the right to direct the use of data that organisations hold about them.
While this will start with open banking in the next few months, super will not be far behind. We are already seeing significant interest from large Industry and Retail funds for insights on how these developments will impact the superannuation sector.
There is currently a perfect scenario for such developments, as we observe in the market a substantial pent-up demand to address a wide range of operational issues. Super funds spent much of 2018 and the first half of 2019 managing the demands of the Royal Commission and the Productivity Commission (PC) inquiry into the banking and superannuation sectors. Now they want to get on with making improvements.
To be fair, some of the PC’s recommendations will help in this respect. The PC’s conclusions were that the Government should automatically accredit super funds to be able to receive information held by banks under the Open Banking initiative, and that the CDR should be rolled out to the super industry, in parallel with the implementation of the elevated MySuper and Choice outcomes tests. There is though, as yet, no word from the Government on this.
We believe the payment and data enhancements will provide real opportunities for funds to introduce customer-centric products and solutions powered by personalised data.
Open Super solutions have the unique potential to cover many areas, both in cost reduction and in enhancing member engagement. Examples include real-time member contributions, streamlined member withdrawals and enhanced personal financial management – interacting with members whenever and however they want to handle their finances.
With the number of disruptors taking advantage of new technologies to enter the $2.8trn market, growth in Assets Under Management (AUM) is no longer guaranteed for incumbents, no matter how rosy the scene may appear at the moment.
All funds face rising costs and greater public scrutiny, which gives them a choice: should they just try to defend their patch by making incremental improvements – or revolutionise their business and get first mover advantage? Progressive funds are already identifying potential partners and constructively challenging their traditional business models.
Our report outlines several potential immediate and longer term solutions for funds.
The introduction of both Open Data and the NPP have a potentially transformational impact across the economy. For the super industry it will give funds the opportunity to overhaul current, sometimes sub-optimal processes, and develop long-term member relationships that result in higher rates of member satisfaction and retention.
All funds, Retail and Profit for Member, should be looking at these possibilities now. Welcome to the future!