Superannuation is ripe for disruption and super funds should seize advantage of transformative technologies to retain members and enrich member experience, says Joe Brasacchio, project and product director at PwC’s Intunity Digital Solutions.
“Technology plays a significant role in disruption of the superannuation industry yet there has been fairly low adoption of the many disruptors affecting players, such as cloud computing and mobility,” Brasacchio said. “Taking advantage of emerging technologies and leveraging ‘software as a service’ to run core components of the business will be key to lowering costs and risks.”
A chief technology officer has a key role to play in de-risking investments into emerging technologies as well as bringing their perspective into the boardroom, he said.
“They will also play a role in helping to navigate the timing and types of emerging technologies the organisation invests in to improve their service offering,” he added. “The chief information officer will play a role in building and creating a low-cost and low-risk approach. It’s important to note that the broader challenges of member acquisition costs, administration and management costs and retention costs are borne by the whole board, so this can’t be left to the CDO and CTO.”
Technology also has a role to play in reimaging the role of superannuation – in a piece written in 2018, Brasacchio noted that superannuation funds have churn of 15 per cent. He further noted that better member experiences, such as speed, convenience, transparency, personalisation and digital sophistication can play a role in securing members’ loyalty.
“Superannuation fund managers have quite a diverse member base, which should be segmented across the life journey in the first instance to feed into considerations on how to assist members,” he said. “Super is often thought of as an older person’s interest, relevant only in its delayed gratification, hence increasingly irrelevant to younger generations. Managers should consider a degree of personalisation to increase engagement, but they will need to test and learn so as not to annoy people.”
Superannuation funds have tremendous amounts of data available to them – age, occupation, address, gender – which provide insights into life circumstances and can be leveraged by funds for greater engagement. However, there are major costs associated with innovation, which is something that funds have to keep in mind.
“Spending the money of members is a big deal so the ability to invest in innovation has always been limited for superannuation funds,” Brasacchio said. “This is because innovation is seen as having a considerable failure rate – it’s a real challenge given their culture and a highly regulated market. With immense data resources at hand and around $2.7 trillion invested in the super, there is a place for superannuation to be at the forefront of innovation – both in terms of their customers and the broader industry. But we need to change the conversation from ‘failure’ to ‘learning’ first.”