Australia’s $2.9 trillion superannuation industry may come under pressure from digital competitors once it follows the banking sector into an open architecture of information where consumer data can be shared with third parties, according to a KPMG report.
Just as open banking is expected to be a game changer for Australian lenders by helping people to easily switch banks, KPMG said the new “open super” platform could revolutionise the country’s pension industry by changing the way funds interact with employers and members. This also means that the strong asset growth that the industry has enjoyed can no longer be guaranteed as new players take advantage of technology.
KPMG said the combination of the New Payments Platform (NPP), launched in February 2018, which allows for fast payments in Australia and the passing of the Consumer Data Right bill has paved the way for the potential disruption of the sector. The accountancy firm said they had received “significant interest” from Australia’s largest industry and retail super funds asking how the developments could impact them.
“Those larger funds that are looking to invest and apply new technology will put the smaller funds under pressure,” said David Bardsley, KPMG Wealth Advisory Partner in an interview. “The more sophisticated super funds see this as an opportunity to further differentiate themselves and drive additional competitive advantage.”
Bardsley said changes to the industry were still another 18 to 24 months away because it takes time for funds to invest and apply the technology. He said funds will look to consider how they can improve service, drive costs down through automation and make it simpler for participants to access and use information.
“For advisors, members and employers – it will make it easier to share critical information,” he said. “But if you are not one of those sophisticated funds, you do run the risk of being disrupted by more efficient providers.”
KPMG said open super could lead to real-time member contributions, streamlined member withdrawals and enhanced personal financial management.