Super fund administration is not a glamourous business, and it’s fiendishly difficult to do well and profitably at the same time. It’s a scale game, and for the past 35 years or so it has been gradually ground underfoot by ever-larger super funds demanding ever-cheaper services.

That’s not a great starting position to be in as funds face into at least two new big administration challenges: payday super and retirement. Both of these developments will, in different ways, place demands on administrators that they haven’t experienced before.

Which is why the idea that admin industry heavyweight MUFG Pension & Market Services (formerly Link) reportedly wants to buy relative newcomer Grow Inc makes sense on one level.

If the future of super fund administration is personalisation and handling vastly greater volumes of transactions, both in (payday super) and out (pensions), and if legacy technology isn’t up to that, then buying something that is makes good sense.

But this isn’t about just one potential acquisition. It’s a window into an admin market where legacy technology is suffocating incumbents, where funds are demanding capabilities that administrators can’t (yet) deliver, and where consumer expectations are already out of the starting blocks while administrators are still trying to work out what race they’re actually running.

MUFG is working through a major technology overhaul. Even if it executes flawlessly, it faces the repeated grind of build, test and migrate, while hoping none of its existing clients jump ship in the meantime.

The people who understand the legacy systems best are engineers now aged in their 50s and 60s. The people building new systems are, inconveniently, working elsewhere.

Were MUFG to acquire Grow, it would not only be buying a platform; it would also be buying a future workforce, and a bit of time. But unless its intended target is already alive to the changes coming for all administrators, that’s all it would be buying. It would not be buying a platform for real innovation. And let’s not even think about culture.

All administrators face the difficulty that funds’ internal processes are highly idiosyncratic and an administration system that works for one will not work for all. Viability for administrators relies on forcing standardisation across the whole industry. Without this, no admin platform can deliver process gains – through, for example, automation and straight-through processing – or drive meaningful cost reductions.

Without standardisation, every “innovation” is just a fund-specific workaround.

If admin businesses can’t push funds towards uniform processes, they’ll continue to be mired in exceptions, handling paper forms, and call-centre escalations when members can’t self-serve online.

The problem this causes for super funds is that even though the stereotype is that Boomers struggle with technology, the fact is that retirees are digitally savvy, phone-dependent and extremely unimpressed when tech fails or processes are clunky.

They know what real-time transactions are, because that’s what they already get from their banks. But administration constraints mean funds still run daily batch jobs that spit out ABA files and settle payments days later.

They know what proper fraud protection looks like because their bank flags suspicious transactions before they even know about them. In a world of instant money transfers, funds’ hands are tied by administration systems that can’t update ledgers fast enough to protect members from fraud.

And they know what great online service feels like, because any number of other businesses already do that incredibly well and have set expectations. But clunky admin means many super funds can’t even deliver a clean website experience, leaving members to negotiate the vagaries of call centres for simple tasks such as locating the right form (which they might still have to print out and mail in anyway).

All of this puts funds at the risk of members quietly heading for the exits. Try telling a retiree they can’t make a withdrawal from their allocated pension whenever they want and that they have to wait days to receive their funds, when they’re already agitated by their bank putting a 24-hour pause on transfers to “new payees”.

Legacy admin systems were built for a steady-state world where members contributed steadily for decades and rarely touched anything. The world that’s coming is quite different.