Scott Hartley has called on profit-for-member funds to work as a collective to match the investment made by banks in new technology.
At an AIST lunch in Sydney, the Sunsuper chief executive said if funds could keep adding services while maintaining or reducing fees, then banks would be deterred from competing.
Such collective action would show banks “the opportunity to make money out of super will be reducing further and further”, he said, pointing out that banks’ return on investment in super was already much lower than their investment on new banking capabilities.
Hartley qualified his remarks by stating that amongst the banks only Westpac had made a serious commitment to super with its BT operation.
The comments arose in a debate chaired by Tom Garcia, chief executive of AIST, with Peter Lambert, chief executive of Local Government Super, Angie Mastrippolito, chief executive of NESS Super and Hartley.
Both LGS and NESS are clients of AAS, and Hartley urged all such not for profit funds to act as a collective.
“If I was client of AAS I would certainly encourage fellow clients to get an agenda together that we can all sign up to. That is the only way funds can survive against the banks’ resources.”
Sunsuper has its own administration system, but is willing to participate in any collective of AAS clients seeking scale to work on new technology.
“That has got to be a very powerful and collaborative relationship,” he said.
The conversation arose around the opportunities and threats for AAS clients following its contract to provide services to AustralianSuper, Cbus, HOSTPLUS and HESTA.
Lambert said a threat from the merger with the Superpartners’ funds was that all clients of AAS would end up with a very similar proposition, but the positives were gaining scale to compete with the banks.
He agreed with Hartley in the potential for a collective of AAS clients to work together in sharing the costs of new innovation.
“The clients of AAS get together quite often,” he said. “If we are looking to white label something, then we look at half a dozen funds of a similar size and ask them whether they are thinking of the same thing. Funds have to do that, because we do not have the capacity to do those things on their own.”
The discussion in Sydney was sparked by a call made by Tom Garcia at CMSF in March, where he warned of the progress being made by banks in technology and that collaboration was the best form of defence.
“The not-for-profit sector as a whole, has a unique competitive advantage in the form of its culture and a willingness to collaborate,” he said.
* AustralianSuper to open up a specialised funds clearing house service to all registered employers at no cost.
QuickSuper is being promoted as an online superannuation payment solution that makes it simple for employers to pay and manage their staff super quickly and securely.
Shawn Blackmore, group executive, service & advice at AustralianSuper, said, “QuickSuper requires just one payment for a company’s entire workforce – regardless of how many super funds the staff members belong to.”
The fund already uses the service for 26,000 employers.