I don’t have to tell you that the current pace of transformation in super administration is perhaps the fastest it has ever been. Driven by technological advancements and regulatory oversight, the pressures on superannuation funds are growing.
Somebody I have a lot of time for, and Retirement & Superannuation Solutions chief executive officer at Link Group, Dee McGrath puts it this way: “One of the main challenges [for super funds] is the rate of change that is occurring right now with digitisation and what has occurred with the global pandemic.”
McGrath, who was previously managing partner, global business services Australia and New Zealand at IBM, points out that new requirements and regulations, such as APRA’s heatmap for superannuation funds, has funds focusing on their ability to provide the right level of oversight to members.
But the good news is technology is also adapting to make keeping up easier and is also helping facilitate a better member experience.
Patchworking and mending existing legacy systems can seem like the most cost-effective solution to data problems in wealth and superannuation, but sometimes, this can actually turn out to be the more expensive option.
I know that funds are under cost pressures, however even if the research and investment of time required to reveal the best course of action is significant, it usually pays off in the long run.
What’s the problem?
It’s a cliché but it’s a cliché for a reason. Sometimes you really can’t see the wood for the trees. When confronted with an issue, we may merely seek to mend it, rather than consider the broader problem.
Superannuation funds, with all the pressures outlined above, can hardly be blamed for seeking to find an immediate solution, particularly when member experiences are at stake. But we truly believe it is vital to take a step back and look at what is the real issue.
For example, perhaps a member survey has revealed that members are not satisfied with their interactions with the fund, however there is little information as to why. Instead of conducting another expensive time-consuming survey to discover the problem, the issue could be solved by installing a new telephony system that provides high quality transcripts and recordings that can be used to analyse the customers’ experiences.
There will be occasions when a new system is required but other times when you can build on an existing system.
“It’s very much horses for courses,” Dee says.
“I think there are times where replacement is good, it allows you to potentially leapfrog, there are other times when you can actually put in place tools and other technology [around existing systems] and the legacy is really a good engine that works well.”
Building the investment case
Good boards and management should not be too hard to convince of the financial benefits of making a new investment in a service or system, however you will still need to build a case.
Each organisation’s situation is different but a good starting point or frame of reference are members’ best financial interests. The two main pieces of this are administration costs and investment returns. The lower the administration costs, and higher the investment returns, the better the net outcome for the superannuation fund member.
This is also why decision-making bodies and boards in super funds have such a keen eye on administration costs, and are constantly trying to do more with less, as they have a substantial impact on net returns.
In terms of the competitive environment, many funds that are fully insourced are already directly investing in new administration systems. Even the funds that are fully outsourced are co-investing with their administrator in efficiencies in the backoffice, in data and AI to drive automation in the administration processes. The more efficient and low-touch these processes become, the better the end result for the member.
The bottom line
Making the decision to overhaul any kind of system you have – be that telephony, business processes, administration or data – can be a tough one. The benefits of a smoother more efficient system are important, but so too is minimal interruption to operations.
These are exactly the kind of situations we like to help out with and believe we have unique experience in. Novigi knows wealth management and superannuation well, and can provide a range of services, depending on the level of involvement required. We are also agnostic to specific systems and can provide a fresh pair of intelligent eyes.
I am excited by what’s currently happening in the super administration and technology space and look forward to helping more funds adapt to the new paradigm.
Ash Priest is the Chief Executive Officer at Novigi
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