April | 2021
New pressures are pushing superfunds to reimagine their operating models. The Australian government’s focus on reducing fees is shifting the burden to trustees, while the rapidly evolving regulatory environment is creating cost and member-engagement challenges. Members expectations are also changing. Transparency and clear communication are becoming must-haves for superfunds.
Funds typically rely on their administrators to provide member support and lead with innovative solutions. However, the traditional approach to administration has largely fallen short. The current environment demands an open, flexible, and cost-appropriate administration service that puts the power of choice in the hands of members and customers.
This whitepaper explores recent changes in member expectations, how superannuation administrators can best meet these new demands, and what fund trustees or executives need to consider when choosing an administrator.
Data management: Ensuring clarity and control
Traditionally, superfunds delegate backend operations, including data management, to administrators. From an efficiency perspective, this seems to make sense, but without clear definitions of data stewardship these arrangements tend to be more confusing than helpful. Some administrators — because they have been tasked with handling data, and communication between funds tends to be limited — believe they own the data and can manage it as they see fit. The truth, of course, is that the funds own member data and should control how it’s used.
To ensure clarity and control of data management, superfunds should clearly establish the boundaries of data stewardship and look for administrators who understand that their role is only to handle data, not to own it. Funds should always be able to access data and determine how it’s used to drive positive outcomes for all their members.
Prioritizing member experience
Members want more personalized, relevant support from their funds, such as help making investment decisions and saving for retirement. This kind of engagement requires deep insights, and data-powered technologies can help. Artificial intelligence (AI) and machine learning (ML) can process vast amounts of data. Recent developments in these technologies are making it easier for administrators to incorporate feedback into every interaction, using real-time dashboards to deliver greater insights and make member experiences more meaningful and agile.
Another way funds can improve member experience is by meeting members where they are. According to an IQ survey , 90% of members engage with their funds via Facebook, and 84% of members switch to Twitter to manage their interactions with their fund. The popularity of YouTube and Instagram suggests that video is still one the best mediums to pique member’s interest.
Trustees should work with superannuation administration service providers who have experience communicating via social media and leveraging data-driven insights from these platforms to create more engaging campaigns.
Embracing new-age tech trends
Technologies like AI, machine learning, and cloud computing have made their way into the superannuation fund industry. Today, Australia’s top superfunds use AI-powered bots and deep-learning algorithms to unify member journeys and create more seamless, supportive experiences. These new technologies are helping members make more informed decisions based on the insights into their spending and saving patterns. Digital advisors, for example, employ data analytics, AI, and ML to offer low-cost, single-issue advice to members, help them plan their investments, and chose suitable risk profiles.
Technology is also making it easier to manage operational costs. AI and automation have helped lower total cost to serve associated with superfunds, while advances in ML and data analytics are taking the guess-work out of compliance and risk processes using pattern recognition and advanced algorithmic approaches.
With the rise of cloud computing, subscription or as-a-service models are rapidly becoming the norm, meaning trustees no longer need to host and manage their own digital capabilities. These flexible offerings promote the scalability of the businesses and help them become resilient.
Superfunds must look for administrators who have made clear investments in new-age technologies and who can employ hybrid or as-is models to meet members’ varying needs: for example, leveraging automated mobile apps and intelligent retirement calculators to improve retirement outcomes, optimize client assets, or extend call/chat support after business hours.
The future of the superannuation industry will likely be dictated by open-source technologies like APIs, blockchain, and cognitive computing. With the perfect superannuation administrator, superfunds can constantly innovate their operational landscape, easily enhance member experiences, and secure a better future for their members.
Making way for end-to-end cybersecurity
While statistics showing 22% of superfunds using digital wallets and 56% funds using chatbots emphasize digital concentration in the superannuation industry, these also suggest the susceptibility to cybersecurity threats. Large money pools, complex third-party environments, and low member engagement have made the superannuation industry vulnerable to cybercrimes. In Australia, cybercriminals are exploiting the limited visibility and low cyber-maturity of superfunds.
When choosing an administrator, superfunds should look for specialists who can deploy comprehensive and proactive cybersecurity measures to protect members’ financial and data investments. Superannuation administrators must, for example, support victims and advise them on how to report fake-billing scams to authorities like the Australian Competition and Consumer Commission’s Scamwatch. They should immediately freeze the potentially compromised super account and enable members and funds to stay vigilant against follow-up scams, especially during the recovery period.
Providing scalability and resiliency with as-a-service models
To meet the competitive pricing needs of trusts, leading administration services providers are offering comprehensive yet flexible operating models that free trusts to employ technology on-demand, as a service.
Flexible admin models typically center on a variety of IT partnerships, and savvy administration vendors allow funds to engage additional expertise without impacting overall capital cost. The entry of global IT experts into the administration sector supports the shift from legacy-based systems to next-gen platforms and ensures that a fund’s overall IT capabilities are maximized throughout the transition and beyond.
Member engagement is a strong differentiator for funds and one of the top strategic aspirations of trustees. To stand out, superfunds must constantly evolve to keep pace with changing member expectations while optimizing costs and control of member data.
As member expectations continue to change, superfunds must continue to innovate and adapt their operations. They need administrators who are equally agile and forward-thinking, who will protect member data and provide insights for funds without trying to claim ownership of that data. All this can be achieved by collaborating with experienced administrators with a global network, strong digital capabilities, and an innovative approach to superfund management. In a technology-driven market, these partnerships will best enable funds to design a happy retirement for their members.
Citations
Bharat Bathi
Bharat Bathi is a wealth management and optimization expert at Wipro, with over 15 years of experience designing member journeys with Australian superfund directors, trustees, and investment managers. Wipro is a trusted client partner in the superannuation industry, known for working alongside the clients to fully analyze the employer journey before designing the member journey. The result: Each solution is uniquely crafted to fit the ‘ask’ of the employer and the fund.
John Burke
John Burke is an independent consultant to superfunds and service providers in Australia. For over 20 years, he has been advising funds and trustees on leveraging key technologies, including digital systems, core registry platforms, BPM solutions, and admin/BPO/ITO outsourcing vendors to deliver solutions focused on improving member outcomes. He leads major transformation processes with a thorough understanding of the operational and commercial drivers for modernization and digitization.
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